General Liability Insurance in Hawaii

General liability insurance protects businesses and individuals from claims of bodily injury, property damage, and personal injury to third parties. Hawaii's tourism economy creates unique liability exposures.

Commercial General Liability (CGL) Insurance

What CGL Covers

Coverage A: Bodily Injury and Property Damage Liability

Covers claims for:

• Bodily injury to customers, visitors, or the public
• Property damage caused by business operations
• Medical expenses for injured parties
• Legal defense costs and settlements
• Judgments and court costs

Common CGL Claims in Hawaii:

• Slip and fall accidents in hotels or restaurants
• Tourist injuries during activities (snorkeling, hiking, zip-lining)
• Property damage from business operations
• Product liability for sold or manufactured goods
• Injury to visitors on business premises

Coverage B: Personal and Advertising Injury

Covers claims for:

• Libel, slander, defamation
• False advertising or misrepresentation
• Copyright or trademark infringement
• Invasion of privacy
• Wrongful eviction

Coverage C: Medical Payments

• Pays medical expenses regardless of fault
• No-fault coverage (up to policy limit, typically $5,000-10,000)
• Covers injuries on premises or from operations
• Goodwill coverage to prevent lawsuits

CGL Policy Limits

Occurrence Limits:

• Per Occurrence Limit: Maximum per single incident
• Aggregate Limit: Maximum per policy period (annual)

Typical Limits:

• $1,000,000 per occurrence
• $2,000,000 general aggregate
• $2,000,000 products/completed operations aggregate
• $1,000,000 personal & advertising injury
• $5,000 medical payments (per person)

Higher Limits for Hawaii Businesses:

• Tourism businesses often carry $2M-5M occurrence limits
• Hotels and resorts may carry $5M-10M+ limits
• Umbrella/excess liability policies for higher limits

Hawaii-Specific Liability Exposures

Tourism and Hospitality Liability

Hawaii's economy relies heavily on tourism, creating significant liability exposures:

Hotels and Resorts:

• Guest injuries (slip and fall, pool accidents)
• Property damage to guest belongings
• Beach and pool drownings or near-drownings
• Injuries from recreational activities (surfing, snorkeling, water sports)
• Food poisoning or foodborne illness
• Premises liability for grounds and facilities

Tour Operators and Activity Providers:

• Injuries during activities (helicopter tours, diving, zip-lining, hiking)
• Equipment failures causing injury
• Inadequate instruction or supervision
• Transportation accidents
• Ocean activities (drowning, shark encounters, jellyfish stings)

Restaurants and Bars:

• Slip and fall on wet floors or uneven surfaces
• Food poisoning or allergic reactions
• Burns from hot food or equipment
• Liquor liability (overserving patrons)
• Premises liability for parking areas and walkways

Outdoor Activity Liability

Hawaii's natural environment creates unique exposures:

Ocean-Related Activities:

• Snorkeling, diving, surfing, paddleboarding injuries
• Drownings and near-drownings
• Marine life encounters (sharks, jellyfish, sea urchins)
• Coral cuts and infections
• Strong currents and riptides

Land-Based Activities:

• Hiking trail injuries (falls, heat exhaustion)
• Volcano viewing hazards
• ATV and off-road vehicle accidents
• Zip-lining and aerial adventure parks
• Rock climbing and rappelling

Waivers and Liability:

• Waivers may limit but not eliminate liability
• Gross negligence cannot be waived
• Minors' waivers unenforceable in Hawaii
• Proper waivers still recommended but not complete protection

Exam Tip: Hawaii law prohibits waiving liability for gross negligence. Activity providers cannot completely eliminate liability through waivers, especially for injuries caused by reckless or intentional conduct.

Premises Liability

Business Owners' Duties:

• Maintain safe premises for invitees and customers
• Warn of known hazards
• Inspect for dangerous conditions
• Repair hazards promptly
• Adequate lighting and security

Common Premises Claims:

• Slip and fall on wet surfaces (common in rainy Hawaii climate)
• Uneven walkways or stairs
• Inadequate lighting in parking areas
• Swimming pool accidents
• Elevator and escalator injuries
• Falling objects (coconuts, tree branches)

Product Liability

Manufacturers and Sellers:

• Defective product injuries
• Failure to warn of dangers
• Manufacturing defects
• Design defects
• Breach of warranty

Hawaii Considerations:

• Imported goods (significant port activity)
• Tourist souvenirs and gifts
• Food and beverage products
• Beach and water equipment

Liquor Liability Insurance

Liquor liability (dram shop) insurance is critical for businesses serving alcohol in Hawaii.

Hawaii Liquor Liability Law

Dram Shop Liability:

• Bars, restaurants, and servers can be held liable for overserving patrons
• Liability for injuries caused by intoxicated patrons to third parties
• Liability for serving minors or obviously intoxicated persons

When Liability Attaches:

1. Overserving: Continuing to serve obviously intoxicated person
2. Serving Minors: Serving alcohol to persons under 21
3. Proximate Cause: Intoxication proximately caused injury to third party

Not Covered by CGL:

• Liquor liability typically excluded from standard CGL policies
• Separate liquor liability policy or endorsement required
• Essential for bars, nightclubs, restaurants with alcohol service

Liquor Liability Coverage

What It Covers:

• Bodily injury caused by intoxicated patron
• Property damage caused by intoxicated patron
• Legal defense costs
• Settlements and judgments

Typical Limits:

• $1,000,000 per occurrence
• $2,000,000 aggregate
• Often matches CGL limits

Hawaii Tourism Impact:

• Waikiki bars and nightclubs face high exposure
• Tourist unfamiliarity with alcohol tolerance
• Vacation "party" mentality increases risk
• Higher limits recommended for tourist-area establishments

Professional Liability Insurance

Professional liability (Errors & Omissions) insurance protects service providers from negligence claims.

Who Needs Professional Liability

Covered Professions:

• Insurance agents and brokers (E&O insurance)
• Real estate agents and brokers
• Attorneys (malpractice insurance)
• Accountants and CPAs
• Financial advisors and planners
• Architects and engineers
• Medical professionals (malpractice)
• Technology and IT consultants

Hawaii Insurance Producer E&O

Coverage for Insurance Producers:

• Errors in coverage recommendations
• Failure to obtain requested coverage
• Failure to explain policy exclusions
• Missing policy renewals
• Misrepresentation of coverage

Common E&O Claims:

• Lava zone property insurance failures
• Hurricane coverage gaps not explained
• Flood insurance not recommended (then flood occurs)
• Condo association coverage inadequacies
• Failure to increase limits when values rise

Recommended E&O Limits for Hawaii Producers:

• Minimum: $1,000,000 per claim / $1,000,000 aggregate
• Preferred: $2,000,000 per claim / $2,000,000 aggregate
• High-volume agencies: $5,000,000+ limits

E&O Premiums:

• Based on annual commissions/premium volume
• Claims history significantly impacts premium
• Deductibles: $2,500-25,000 typical

Medical Malpractice in Hawaii

High-Risk Environment:

• Hawaii has shortage of medical specialists
• High costs lead to large malpractice awards
• Tourist medical emergencies common
• Difficult to attract doctors due to costs

Malpractice Limits:

• Physicians typically carry $1M-3M per occurrence limits
• Hospitals carry $5M-20M+ limits
• Specialists (surgeons) may carry higher limits

Umbrella and Excess Liability

Umbrella policies provide additional liability coverage above underlying policies.

How Umbrella Coverage Works

Coverage:

• Provides additional limits above CGL, auto, employers' liability
• Typically $1M-10M+ limits
• Broader coverage than underlying policies (may cover some excluded perils)
• Must maintain required underlying limits

Example:

• CGL policy: $1M per occurrence limit
• Umbrella policy: $5M additional
• Large claim: $3.5M judgment
• CGL pays: $1M
• Umbrella pays: $2.5M
• Total coverage: $3.5M (claim fully paid)

Underlying Policy Requirements:

• Must maintain minimum underlying limits (e.g., $1M CGL, $1M auto)
• Umbrella won't respond if underlying limits insufficient
• Annual verification of underlying coverage required

Who Needs Umbrella Coverage

Recommended for:

• High net worth individuals (protect assets)
• Business owners with significant exposures
• Hotels, resorts, and tourism businesses
• Activity providers with high injury risk
• Any business facing catastrophic loss potential

Benefits:

• Affordable additional coverage ($150-500 per $1M typical)
• Protects personal and business assets
• Peace of mind for catastrophic claims

Workers' Compensation in Hawaii

Workers' compensation insurance is mandatory for Hawaii employers.

Who Must Carry Workers' Comp

Mandatory for:

• All employers with one or more employees
• Full-time, part-time, and temporary employees
• Family members employed in business (with exceptions)
• Corporate officers (can opt out in some cases)

Coverage:

• Medical expenses for work-related injuries
• Lost wages (2/3 of average weekly wage)
• Temporary total disability
• Permanent partial disability
• Permanent total disability
• Death benefits to dependents

Hawaii Workers' Comp Specifics

No-Fault System:

• Employees receive benefits regardless of fault
• Employer immune from tort lawsuits (exclusive remedy)
• Exceptions: Intentional injuries, intoxication, willful misconduct

Benefits:

• Medical: All reasonable and necessary treatment
• Temporary Total Disability: 2/3 of wages (subject to max)
• Permanent Disability: Based on impairment rating
• Vocational Rehabilitation: Job retraining if cannot return to work

Premiums:

• Based on payroll and risk classification
• Experience modification factor (claims history)
• Tourism/hospitality often higher rates (injury risk)

Penalties for No Workers' Comp

Criminal Penalties:

• Misdemeanor: Fine up to $10,000, imprisonment up to 1 year
• Each day without coverage is separate violation

Civil Penalties:

• Stop work order (business shut down until coverage obtained)
• Back premiums owed
• Personal liability for employee injuries
• Fines and assessments