Chapter 8

Question 1

What are the five distinct sections in the 2005 IBC CGL wording?

Answer 1

1- Coverages
2- Who is an Insured
3- Limits of Insurance
4- Conditions
5- Definitions

Question 2

What are the four insuring agreements under the CGL policy?

Answer 2

1- Bodily Injury and Property Damage Liability

2- Personal and Advertising Injury Liability

3- Medical Payments

4- Tenants’ Legal Liability

Question 3

Insuring Agreement

Answer 3

Explains what the policy intends to cover.

Defines the scope of coverage.

Question 4

What are the key points mentioned in the insuring agreement for Coverage A. Bodily Injury and Property Damage?

Answer 4

The insurer agrees to pay those sums that the insured becomes legally obligated to pay as compensatory damages because of bodily injury or property damage to a third party.

Question 5

What does the phrase “legally obligated to pay” in the CGL policy signify?

Answer 5

There must be a legal obligation for the insured to pay a claim before coverage is triggered.

Question 6

What are compensatory damages?

Answer 6

Those that compensate the third party for the injury sustained.

Question 7

Bodily Injury

Answer 7

Bodily injury, sickness, or disease sustained by a person including death resulting from any of these at any time.

Question 8

Property Damage

Answer 8

Physical injury to tangible property including all resulting loss of use of that property.

Question 9

Define occurrence.

Answer 9

An accident including any continuous event or exposure to substantially the same general harmful conditions.

Question 10

What is the difference between an occurrence policy and a claims-made policy?

Answer 10

Occurrence policy - triggers coverage when damage occurs during its policy term.

Claims-made policy - triggers when the third party first makes a claim against the insured. The timing of the event that caused the damage does not wholly determine coverage.

Question 11

What coverage territory is specified in the CGL policy?

Answer 11

Canada, the United States, its territories or possessions.

International waters or airspace is included if the injury or damage occurs in the course of travel or transportation between these two countries.

Question 12

Under the CGL policy, when is an international injury inflicted by the insured covered?

Answer 12

1- Goods or products made or sold by the insured in Canada, the United States, its territories or possessions

2- Activities of an insured person away from the defined coverage territory for a short time on business

3- Personal and advertising injury offences that take place through the Internet provided the insured’s responsibility to pay damages is determined in an action on the merits, in the coverage territory, or in a settlement agreed to by the insurer.

Question 13

What coverage does the CGL policy provide for contractual liability?

Answer 13

Contractual liability is excluded except for compensatory damages arising from liability the insured would have had whether there was a contract or not, and compensatory damages arising from liability in an “insured contract” as described in the policy.

Question 14

Describe the exclusion for injury to the insured’s employees under Coverage A of the CGL policy.

Answer 14

Employer’s liability arising from bodily injury to an employee during the course of employment is not covered.

This exclusion does not apply to liability assumed under an insured contract or to a claim brought by an employee who was denied coverage or benefits by a provincial workers’ compensation authority even though contributions to the plan were required.

Question 15

What types of activities relating to vehicles are excluded?

Answer 15

1-The ownership, maintenance, use, or entrustment to others of any automobile, loading, unloading of any automobile owned or operated by or on behalf of the insured.

2-Any motorized snow vehicle, its trailers, any vehicle while being used in any speed, demolition contest, or in any stunt or in practice, and preparation for any such contest or activity are excluded.

3-Negligent supervision, hiring, employment, training, or monitoring of others by that insured in regard to claims involving automobiles are excluded.

Question 16

When is watercraft covered under the CGL policy?

Answer 16

1- Watercraft on shore at premises the insured owns or rents

2- Non-owned watercraft less than 8 metres long and not being used to carry people or property for a fee

3- Contingent employer’s liability with respect to employees on whose behalf contributions are required to be made to a provincial workers’ compensation board but where the board denies coverage and does not pay benefits

Question 17

When is automobile covered under the CGL policy?

Answer 17

1- Contingent employer’s liability

2- Damage arising out of a defective condition in, or improper maintenance of, any automobile owned by the insured while leased to others for a period of 30 days or more provided the lessee is obligated under contract to insure it

3- Ownership, use or operation of machinery, apparatus or equipment mounted on or attached to any vehicle while at the site of the use or operation of such equipment, but this exception does not apply when such equipment is used for loading or unloading

Question 18

Why is property that is owned, rented, or occupied by the insured not covered under the CGL policy?

Answer 18

Damage to property owned by the insured does not constitute a liability claim.

Such property is more appropriately covered under a first party property policy.

Question 19

What is the “alienated premises” exclusion?

Answer 19

Property damage to premises that are sold, given away, or abandoned by the insured.

Question 20

What kind of property in the insured’s care, custody, or control is not covered?

Answer 20

1- Property that is loaned to the insured

2- Personal property that is in the insured’s care, custody, or control

3- That particular part of any real property on which the insured or any contractor or sub-contractor is working

4- That particular part of any property that must be restored, repaired, or replaced because the insured’s work was incorrectly performed on it

Question 21

Describe the product recall exclusion.

Answer 21

The cost of recalling the insured’s product or work or any product or work of which the insured’s product or work forms a part, is not covered.

Question 22

What does the Personal and Advertising Injury insuring agreement cover under the CGL policy?

Answer 22

1- False arrest, detention, or imprisonment

2- Malicious prosecution

3- Wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord, or lessor.

4- Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products, or services

5- Oral or written publication of material that violates a person’s right of privacy

6- Use of another’s advertising idea in the insured’s “advertisement”

7- Infringing upon another’s copyright, trade dress or slogan in the insured’s advertisement

Question 23

Define trade dress.

Answer 23

The total image and overall appearance of a company or product that may include features such as size, shape, colour or colour combinations, texture, graphics, or even particular sales techniques.

Question 24

What are the provisions of the Medical Payments insuring agreement?

Answer 24

It covers reasonable medical expenses incurred by a 3rd party regardless of fault.

The bodily injury must occur accidentally on premises the insured owns or rents; on a way next to such premises; or as a result of the insured’s operations.

Question 25

Who would not be covered under the Medical Payments insuring agreement?

Answer 25

1- Any insured under the policy except volunteers

2- A person hired to do work for or on behalf of any insured or a tenant of any insured

3- Any person injured on premises normally occupied by the injured party

4- Anyone who is entitled, at the time of the injury, to compensation from a provincial workers’ compensation plan

5- Persons taking part in athletics which includes practicing, instructing, or participating

6- Products-completed operations hazard

Question 26

What perils are covered under the Tenants’ Legal Liability insuring agreement?

Answer 26

All perils (unless specifically excluded) resulting in damage to the rented (real property) premises.

Question 27

Tenants’ Legal Liability Exclusions

Answer 27

1-Property damage expected or intended from the standpoint of the insured

2-Contractual liability except that which:
a- the insured would have had in the absence of a contract
b- is assumed in an insured contract

Question 28

What are the Common Exclusions of the CGL policy?

Answer 28

1- Any claim caused by asbestos

2- Fungi or spores

3- Bodily injury and property damage resulting from the hazardous properties of nuclear material (isotopes are sometimes permitted)

4- Pollution

5-Terrorism

6- War risks

Question 29

Part 1 of the Pollution Exclusion

Answer 29

Injury or damage arising out of an actual, alleged, or threatened spill, discharge, emission dispersal, seepage, leakage, migration, release, or escape of pollutants.

Question 30

Part 1.a. Pollution Exclusion

Answer 30

At or from any premises of the insured whether it was at any time owned, occupied, rented to, or loaned to the insured.

Question 31

Part 1.a. Pollution Exclusion Exceptions

Answer 31

• Bodily injury resulting from smoke, fumes, vapour or soot from the building’s heating, cooling, dehumidifying equipment
• Pollution from premises of an additional insured named in a contractors’ liability policy.
• Claims arising out of heat, smoke, or fumes from a hostile fire.

Question 32

Part 1.b. Pollution Exclusion

Answer 32

At or from any waste disposal or treatment site used by or for any insured.

Question 33

Part 1.c. Pollution Exclusion

Answer 33

Which were at any time transported, handled, stored, treated, disposed of or processed as waste by the insured or anyone else for whom the insured is legally responsible.

Question 34

Part 1.d. Pollution Exclusion

Answer 34

At or from any premises, site, or location on which any insured or their contractors or sub-contractors are performing operations if the pollutants are brought on or to the premises, site, or location by such insured, contractor or subcontractor.

Question 35

Part 1.d. Pollution Exclusion Exceptions

Answer 35

• Bodily injury or property damage due to the accidental escape of operational fluids that form part of a storage component to hold fluids.
• Bodily injury or property damage caused by the release of gases, fumes, or vapours from materials brought into a building in connection with the insured’s operations.
• Smoke and fumes from a hostile fire at premises where an insured performed operations.

Question 36

Part 1.e. Pollution Exclusion

Answer 36

While the insured, its contractor, or sub-contractor, are engaged in pollution clean-up.

Question 37

Part 2 of the Pollution Exclusion

Answer 37

Any loss, cost, or expense arising out of any:

• request, demand, order, statutory or regulatory requirements that any insured or others test for, monitor, clean-up, remove, contain, treat, detoxify or neutralize, or in any way respond to or assess the effects of pollutants are not covered
• claim or suit by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, moving, containing treating, detoxifying, or neutralizing or in any way responding to or assessing the effects of pollutants are not covered.

Question 38

What are the Supplementary Payments coverages under the CGL policy?

Answer 38

1- Expenses incurred by the insurer

2- Cost of a bond to release seized property for bond amounts within the limit of insurance

3- Reasonable expenses incurred by the insured at the insurer’s request including loss of earnings up to $250 per day

4- All costs assessed against the insured

5- Interest accruing after entry of judgment will be paid by the insurer. Only that part of the judgment that falls within the limit of insurance will be considered.

6- The insurer will defend and pay defence costs of qualified indemnitees under the policy if they are named in a suit.

Question 39

Who is an insured under the CGL policy?

Answer 39

1- The spouse of the insured with respect to the conduct of the business when the insured is an individual, a partnership or joint venture

2- Limited liability company

3- company members, executive officers, directors, and shareholders

4- Volunteer workers or employees while performing duties related to the conduct of the insured’s business

5- Trustees, real estate managers, or legal representatives and those having temporary custody of the property if the named insured dies

6- Any newly acquired or formed organization is covered until the 90th day after its acquisition or formation, or, the end of the policy period

Question 40

What is the general aggregate limit?

Answer 40

The total amount payable in any one policy period and it applies collectively to :

A. Bodily Injury and Property Damage,

B. Personal and Advertising Injury, and

C. Medical Payments.

An additional aggregate limit applies to the products-completed operations hazard.

Question 41

Each Occurrent Limit

Answer 41

The maximum amount payable for any one occurrence for
A. Bodily Injury and Property Damage and
C. Medical Payments.

Question 42

Personal and Advertising Injury Limit

Answer 42

The maximum amount payable for any such injury sustained by any one person or organization.

Question 43

Medical Expense Limit

Answer 43

The maximum amount payable for each person.

Question 44

Tenants’ Legal Liability Limit

Answer 44

The maximum amount payable because of property damage to any one premises the insured rents.

Question 45

List six insured contracts under the CGL policy.

Answer 45

1. A lease of premises
2. A sidetrack agreement
3. An easement or licence agreement in connection with vehicle or pedestrian private railroad crossings
4. Any other easement agreement
5. An obligation to indemnify a municipality
6. Elevator maintenance agreement
7. A hold harmless agreement

Question 46

What is impaired property under the CGL policy?

Answer 46

Tangible property, other than the insured’s product or work that cannot be used or is less useful, because

• it incorporates the insured’s product or work that is known or thought to be defective, deficient, inadequate, or dangerous;
• the insured has failed to fulfill the terms of a contract or agreement;
  if such property can be restored to use by its repair, replacement, adjustment or removal, or, the insured’s fulfilling the terms of the contract.

Question 47

What is a side track agreement?

Answer 47

Between a railroad and a property owner - holds the railroad harmless from liability as it relates to the use of a sidetrack railway leading to the property owner’s premises.

The railroad requires that the property owner assume liabilities for damaged goods or bodily injury resulting from use of the sidetrack.

Question 48

What is an easement?

Answer 48

A right of one party to use the land of another.

The person who has the use of land assumes the liability of the property owner.

Question 49

What is a hold harmless agreement?

Answer 49

The insured agrees to assume the negligence of another party, including legal costs.

Question 50

Give an example of a :

1) products loss,
2) operations loss,
3) completed operations loss,

under a CGL policy.

Answer 50

Products - floor damage from faulty dishwasher

Operations - floor damage from a technician called in to repair the dishwasher

Completed Operations - floor damage from faulty repairs of dishwasher after the contractor finished repairs and left the site

Question 51

Cross Liability

Answer 51

Where more than one insured is named on a policy, the policy will respond as if each named insured had a separate policy. This allows one insured to bring an action against another. The limits of liability are not compounded.