ISO has revised its commercial general liability coverage forms and endorsements to reflect the changing needs of insurance companies and policyholders.

The changes, which took effect in April, include both broadening and narrowing of coverage, as well as editorial changes that have no impact on coverage. Agents should check with their companies to find out if they will adopt the changes.

Narrowing of coverage can present an errors & omissions exposure for agents. ISO’s changes that reduce coverage include provisions related to additional insured endorsements. Some of these changes are:

Revisions to Various Additional Insured Endorsements

Various additional insured endorsements provide an additional insured with certain liability coverage, including coverage with respect to vicarious liability or contributory negligence.

Many states have antiindemnification laws that prohibit provisions in construction contracts that require a party to indemnify another party against liability for the other party’s own negligence or fault. In addition, some states prohibit providing insurance as an additional insured for the party’s own negligence.

The new language will provide insurance to an additional insured “only to the extent provided by law.” It also clarifies that coverage afforded to the additional insured will not be broader than that which the named insured is required to provide the additional insured by a contract or agreement. 

It also clarifies that, if coverage provided to the additional insured is required by a contract or agreement, the most the insurer will pay is the lesser of the amount required by the contract or agreement or the policy limits. This provision also provides that the endorsement will not increase the policy limits shown in the declarations.

Some additional insured endorsements that address professionals, such as Additional Insured–Engineers, Architects, or Surveyors, will also include revisions consistent with those applied to the professional services exclusion endorsements.

The endorsement, CG 20 37 Additional Insured–Owners, Lessees or Contractors–Automatic Status When Required in Construction Agreements with You, is being revised to include reference to the Products/Completed Operations Liability Coverage Part. The provisions of the additional insured endorsements that indicate coverage will be provided to the extent permitted by law and limit coverage to the lesser of the contract requirements or the policy limits could be seen as clarifications or reductions of coverage.

Revisions to Various Professional Services Exclusion Endorsements

In Liberty Life Insurance Co. v. Travelers Indemnity of Illinois, the court considered if a negligent supervision claim was covered, even though the act of the person being supervised was excluded. The suit sought damages from Liberty Life, based upon its alleged negligence in the hiring, supervising and retaining of an employee.

The court ruled the exclusions in the insurer’s policy did not apply to Liberty Life in its oversight role as the agent’s principal. 

To reinforce the professional services exclusion in various CGL endorsements, the exclusion is being enhanced to address claims alleging negligence or other wrongdoing in “hiring, employment, training, supervision or monitoring of others by any insured.” 

This is a reinforcement of coverage intent, but it may result in a reduction of coverage in states where courts have ruled professional services exclusions are not applicable to negligent supervision claims and other similar types of claims.

In addition, the endorsement, CG 22 32 Exclusion–Professional Services–Blood Banks, is revised to make minor changes to provide consistency with the PR 00 07 09 08 Blood Banks Professional Liability Coverage Form.

Revision to CG 20 08 Additional Insured–Users Of Golfmobiles Endorsement

The current endorsement provides additional insured status to any person using or legally responsible for the use of golfmobiles loaned or rented to others by the named insured. The current endorsement does not limit additional insured status to persons using the golfmobile for the purpose of playing golf.

The revision introduces a definition of “golfmobile,” which states it is “designed…for the purpose of playing golf.”

This may be considered a reduction in coverage because coverage is potentially limited by the introduction of the definition.

Ted Kinney is director of education and technical affairs for the Alabama Independent Insurance Agents.

More information on ISO’s 2013 changes to its CGL program, including coverage gaps and other changes to additional insured endorsements, is explained in a one-hour Virtual University webinar, Be Careful What You Ask For…The New 2013 ISO CGL Changes.