Rplu 02 Commercial General Liability Glossary

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Additional Insured

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An individual or organization that is covered under an insurance policy based on a relationship to the named insured

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Aggregate Limit

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The maximum amount the insurer will pay within a specific policy period for all of the claims incurred under an insurance policy

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Alternative Dispute Resolution

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The methods of settling disputes by means other than court trial that are typically less costly and more expeditious than the litigation process

Example: Mediation and arbitration

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Amendment

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A written document that revises the provisions of an insurance policy

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Arbitration

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A method of alternative dispute resolution that allows the disputing parties to present arguments and evident to an independent and impartial third party (arbitrator) and that usually binds the parties to the arbitrator's decision

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Broad Form Comprehensive General Liability (BFCGL) Endorsement

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A revision to Comprehensive General Liability coverage that combines many endorsements into a single standard endorsement

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Broad Form Nuclear Exclusion

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An exclusion attached to a CGL Policy that excludes exposures related to nuclear energy

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Claims-Made Policy

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An insurance policy that is trigged by the reporting or making of a claim during the policy period

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Claims-Made Coverage Trigger

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The activation of claims-made policy by the reporting of an incident during the policy period

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Commercial General Liability Insurance (CGL)

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A type of insurance that provides coverage for commercial risks for losses arising out of business operations involving bodily injury and property damage, except those specifically excluded, including professional services

Note: May also include advertising/personal injury coverage

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Comprehensive General Liability (CGL) Policy

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A standard commercial liability policy that was precursor of the CGL Policy and that simplified the language and format of CGL Policies (1) by using a policy jacket common for provisions and (2) by adding other provisions applicable only to the insured

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Concurrency of Policy Periods Provision

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A feature of an Umbrella or Excess Policy that requires the primary policy's aggregate limit to be exhausted during the policy period of the Umbrella or Excess Policy

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Conditions

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A section of an insurance policy that establishes the responsibilities the insured must meet for coverage to apply and that may limit or qualify an insurer's promises

Note: Also called general rules

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Consequential Bodily Injury

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The bodily injury that is the result of or caused by personal or advertising injury

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Continuous Injury Trigger Theory

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A theory that determines the timing of injury or damage and that states coverage is triggered by the initial exposure, by continuing exposure, and by the manifestation or diagnoses of injury or damage

Note: Also called the Triple Trigger Theory

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Contributions by Equal Shares

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A CGL insurance method of sharing in the amount of loss with other primary insurance policies in which each insurer pays equal amounts up until its applicable limits have been reached or no loss remains

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Contribution by Limits

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A CGL insurance method of sharing in the amount of loss with other primary insurance policies in which each insurer pays its pro-rata shares of the loss based on the ratio of its applicable limits to the total applicable limits of all insurers

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Coverage Form

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The heart of the CGL Policy that includes the coverage agreement, definition, limits, and the exclusions that define policy coverage

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Coverage Trigger

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The event that activates a policy to respond to a claim and that determines which policy covers a particular claim for loss

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Damage-In-Fact Trigger Theory

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A theory that determines the timing of injury or damage and that states coverage is trigged by the date that the damage actually occurs, regardless of the length of exposure or whether the conditions manifested itself

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Damage to Premises Rented to You Limit

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The maximum amount of CGL insurer pays for property damage to property rented to you or for fire damage to property rented to or occupied by you

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Declarations

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A section of an insurance policy that provides information about the property, person, or activity to be insured

Note: Also called the Dec Page

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Dec Page

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See Declarations

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Deductible

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The portion of a loss that the insured must bear and that may apply to the indemnity payment, defense costs, or both and that typically the insurer pays insurer and then collects from the insured

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Definitions

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A section of an insurance policy that defines terms used throughout the policy

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Drop Down Provision

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A feature of an Umbrella Policy that establishes the extend to which that policy either replaces or continues the underlying policy's limit once the underlying policy's limit has been exhausted

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Each Occurrence Limit

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Under CGL Insurance

The maximum amount a CGL insurer pays for the sum of damages that arise under Coverage A - Bodily Injury and Property Damage and under Coverage C - Medical expenses because of any one occurrence

Under Excess and Umbrella Insurance

The maximum amount an insurer pays for the sum of all ultimate net loss under Coverage A - Bodily Injury and Property Damage of any one occurrence.

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Endorsement

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A written document attached to the original policy that may add to, delete, or modify the original insurance policy's provision

Note: Also called a rider

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Employment Practices Liability Insurance (EPLI)

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A type of insurance that protects businesses against damages and legal defense expenses resulting from wrongful acts arising from their employment practices, including discrimination, sexual harassment, wrongful termination, and other related workplace issues

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Errors and Omissions Insurance (E&O)

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A type of insurance covering professionals and professional organizations from financials loss resulting from alleged errors, omissions, or negligent acts arising from their professional activities

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Excess Insurance

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A type of insurance that protects against catastrophic losses, that provides higher liability limits over an underlying primary policy or self-insured retention, and that covers losses in excess of the primary policy's liability limits or the self-insured retention

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Exclusion of Specific Accidents, Products, Work, or Location Endorsement

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A tool that underwriters use to exclude specific exposures from coverage and that allow the insured to obtain coverage for other exposures

Note: Also called the Laser Endorsement

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Exclusions

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A section of an insurance policy that describes the types of exposures, property, damages, or activities that the policy is not intended to cover

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Exposure Trigger Theory

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The theory that determines the timing of injury or damage and that states coverage is triggered by the first exposure to harmful conditions

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Extended Reporting Period

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An extension of the claims-reporting provisions for a specific time period beyond the policy expiration date for any claims arising from incidents that occurred after the retroactive date and before the expiration of a claims-made policy

Note: Also called Tail Coverage

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Extrinsic Facts Test

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A tests that is applied by courts to determine an insurer's duty to defend an insured and that uses the complaint and all additional information as the basis for the determination

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First Named Insured

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An insured, typically the primary insurance purchaser, that is named in the policy Declarations and that has special rights and duties, pays premiums, and receives return premiums and loss payments

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Four Corners of the Complaint Test

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A test that is applied by courts to determine an insurer's duty to defend an insured and that uses only the complaint as the basis for the determination

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Follow Form Features

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The provision of an Excess Policy that apply the terms, conditions, and exclusions of the underlying policies

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General Aggregate Limit

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The maximum amount of CGL insurer pays for the sum of damages under (1) Coverage A, excluding damages that arise from Products-Completed Operations, (2) damages under Coverage B and (3) medical expenses under Coverage C

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General Liability Insurance

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A type of insurance that provides coverage for losses arising out of business operations involving bodily injury and property damage

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Hold Harmless Agreement

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A form of agreement in which one party contractually assumes the liability of another

Note: Also called indemnity agreement

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Indemnify

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An action that an insurer takes to compensate an insured for a loss covered by the insurance policy

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Indemnitee

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The party being held harmless or released from liability by the insured

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Indemnity

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The principle under which an insurance company protects and compensates an insured against the financial consequences of a covered loss

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Independent Contractor

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A person who is hired to do work for another person or business and who is not an employee of that person or business

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Injury/Damage

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The physical harm or financial loss that is suffered by a party due to the insured's negligence and that is one of four criteria required for proving negligence

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Injury-in-Fact Trigger Theory

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The theory that determines the timing of injury or damage and that states coverage is trigged by the date the injury actually occurs, regardless of the length of exposure or whether the condition manifests itself

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Insuring Agreement

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A section of an insurance policy that describes the coverage the insurer provides, subject to policy limitations, exclusions, and conditions

Note: Also called a coverage agreement

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Insured Contract

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A type of contract defined in the CGL coverage form that is insured and that typically includes leases of premises, elevator maintenance agreements, and other agreements related to business in which the insured assumes legal liability for another party

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Judgment

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An official decision or payment determined by the court to resolve a dispute and determine the rights and obligations of each party

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Known Loss Rule

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A principle under which one cannot arrange for insurance if a loss is already known to have existed

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Laser Endorsement

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A type of endorsement that modifies coverage in a CGL Policy by excluding specific coverage or exposures

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Limit

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The maximum amount of benefit that an insurer pays for a covered loss

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Long-Tail Losses

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The losses that are paid for claims on expired occurrence policies and that are potentially paid years after expiration

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Manifestation Trigger Theory

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The theory that determines the timing of injury or damage and that states coverage is trigged when the insured first becomes aware of the injury or damage

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Manuscript Endorsement

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An endorsement that is used to customize an individual insurance policy so that it is unique to the insured

Note: Also called a Nonstandard Endorsement

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Medical Expense Limit

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The maximum amount a CGL insurer pays for medical expenses for bodily injury for any one person from an accident under Coverage C

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Named Insured

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The person or organization that is identified in the Declarations Page of an insurance policy and that is covered under the policy

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Notice of Circumstances or Potential Claim

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The notice the insured gives to the insurer of facts or circumstances that may give rise to a future claim and that treats any future claim as a claim made during the policy period

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Occurrence

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An accident, including continuous or repeated exposure to substantially the same general harmful conditions

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Occurrence Policy

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An insurance policy that is triggered by the date an incident occurs and that covers the incident as long as it occurred during the policy period, regardless of when the incident is reported to the insurer

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Occurrence Coverage Trigger

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An event or incident that results in injury or damage and that occurs during an occurrence policy period

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Pay-On-Behalf Provision

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An insurance provision under which an insurer pays damages on the insured's behalf once the insured is legally obligated

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Personal and Advertising Injury Limit

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Under CGL Insurance

The maximum amount of CGL insurer pays for damages that arise under Coverage B - Personal and Advertising Injury from any one person or organization

Under Excess or Umbrella Insurance

The maximum amount an insurer pays for all ultimate net loss that arises from Coverage B - Personal and Advertising Injury from any one person or organization

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Policy

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A contract that specifies the coverage and terms of the agreement between the insured and the insurance company

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Premium

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The fee, rate, or price an insured pays to an insurer for the insurer to assume risk and accept financial responsibility for covered loss

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Primary Insurance

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The insurance that pays up to its applicable limit before any other insurance policy is required to pay

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Products-Completed Operations Aggregate Limit

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The maximum amount of a CGL insurer pays for damages under Coverage A that arises from Products-Completed Operations

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Professional Liability Insurance (PLI)

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A type of insurance that provides coverage to professionals for liability claims that arise from he provisions of their professional activities or services.

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Protective Liability Insurance

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A type of insurance that is purchased on behalf of and in the name of a third party, that is usually a result of a business relationship or as required by contract, and that does not cover the party purchasing the policy

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Reservation of Rights

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An insurer's notification to the policyholder that potential coverage issues exist and that the insurer reserves the right to not pay a claim or part of a claim determined not to be covered under the policy because the insurer does not have enough information to make that determination early in the claims process

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Retained Limit

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The available limit of the underlying insurance, or self-insured retention, whichever applies

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Self-Insured Retention

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A specific sum or percentage of loss that is the insured's responsibility and that is not covered under the policy

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Settlement

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An agreement in which the parties have resolved a dispute, established, a decision or payment, and have determined each party's rights and obligations

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Stand-Alone Features

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The provisions of an Excess Policy that follow its own policy's term, condition, and exclusions

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Subrogation

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The policy provision that provides that in the event of any payment under the policy, the insurer will be subrogated to all the insured's rights of recovery against any person or organization and that when the insurer has paid damages on the insured's behalf, the insured's potential right of recovery for a certain claim is passed to the insurer

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Third-Party Claim

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A claim that is filed against an insured by someone who is not a party to the insurance contract

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Transfer of Rights of Recovery

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The insurer's right to pursue recovery of payment made on an insured's behalf

Note: Also called subrogation

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Triple Trigger Theory

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The theory that determines the timing of injury or damage and that states coverage is triggered by the initial exposure, by continuing exposures, and by the manifestation or diagnosis of injury or damage

Note: Also called the Continuous Injury Trigger Theory

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Ultimate Net Loss

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The amount that an excess or umbrella insurer pays in the excess of the underlying policy's available limit or self-insured retention and that is reduced by any amounts recovered or salvaged

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Umbrella Insurance

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A special type of excess insurance that provides additional limits over several policies, that may provide coverage for claims not covered by the underlying policies, and that pays after the underlying policies' deductible or self-insured retention has been met

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Underlying Policy

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The primary insurance policy that pays before other forms of insurance and on which excess and umbrella insurance rest

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Written Notice Provision

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A claims-made policy provision that requires written notification of a claim to trigger the policy

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Wrongful Act

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An error, omission, or negligent act that a professional commits during the provision of professional services.