Key Takeaways
- Commercial General Liability (CGL) protects businesses from third-party bodily injury and property damage claims
- Professional liability (E&O) covers errors and omissions in professional services
- Umbrella and excess liability provide additional coverage above underlying policies
- Kentucky businesses face various liability exposures requiring comprehensive coverage
- Understanding coverage triggers and exclusions is essential for proper risk management
Last updated: January 2026
Kentucky Liability Insurance
Commercial General Liability (CGL)
Overview
Commercial General Liability insurance is essential for Kentucky businesses, providing protection against third-party claims for bodily injury, property damage, and personal/advertising injury.
CGL Coverage Parts
The standard CGL policy includes three main coverage sections:
Coverage A - Bodily Injury and Property Damage Liability
| Element | Description |
|---|---|
| Bodily Injury | Physical harm to third parties |
| Property Damage | Damage to others' property |
| Trigger | Occurrence basis (typically) |
| Defense | Duty to defend included |
Examples of Covered Claims:
- Customer slips and falls in store
- Product causes injury to consumer
- Contractor damages client's property
- Delivery driver causes accident
Coverage B - Personal and Advertising Injury Liability
| Offense | Description |
|---|---|
| False Arrest | Wrongful detention |
| Malicious Prosecution | Wrongful legal action |
| Defamation | Libel or slander |
| Privacy Violations | Wrongful entry, invasion of privacy |
| Copyright Infringement | In advertising |
| Wrongful Eviction | For landlords |
Coverage C - Medical Payments
| Feature | Description |
|---|---|
| Purpose | Goodwill coverage for minor injuries |
| Fault | No-fault coverage |
| Limit | Typically $5,000 - $10,000 |
| Scope | Medical expenses for injuries on premises |
CGL Exclusions
Standard CGL exclusions include:
| Exclusion | Rationale |
|---|---|
| Expected/Intended Injury | Not accidental |
| Contractual Liability | Requires endorsement |
| Liquor Liability | Requires separate coverage |
| Workers' Comp | Covered elsewhere |
| Pollution | Requires environmental policy |
| Auto Liability | Covered by auto policy |
| Professional Services | Requires E&O coverage |
| Employment Practices | Requires EPLI |
CGL Limits Structure
| Limit Type | Typical Amounts |
|---|---|
| Each Occurrence | $1,000,000 |
| General Aggregate | $2,000,000 |
| Products/Completed Ops Aggregate | $2,000,000 |
| Personal/Advertising Injury | $1,000,000 |
| Damage to Rented Premises | $100,000 |
| Medical Expense | $5,000 |
Professional Liability (Errors & Omissions)
Who Needs Professional Liability
Kentucky professionals who should carry E&O coverage:
| Profession | Exposures |
|---|---|
| Insurance Agents | Failure to procure coverage, misadvice |
| Real Estate Agents | Misrepresentation, disclosure failures |
| Attorneys | Malpractice, missed deadlines |
| Accountants | Audit failures, tax errors |
| Architects/Engineers | Design defects |
| Medical Professionals | Medical malpractice |
| Consultants | Negligent advice |
E&O Coverage Features
| Feature | Description |
|---|---|
| Coverage Trigger | Claims-made basis (typically) |
| Retroactive Date | Coverage for past acts back to this date |
| Extended Reporting | Tail coverage after policy ends |
| Defense Costs | May be inside or outside limits |
Claims-Made vs. Occurrence
| Aspect | Claims-Made | Occurrence |
|---|---|---|
| Trigger | Claim filed during policy period | Event during policy period |
| Tail Coverage | May need ERP | Not needed |
| Premium | Generally lower initially | Generally higher |
| Long-Tail Claims | Requires continuous coverage | Covered regardless |
Umbrella and Excess Liability
Umbrella Liability
Provides:
- Additional limits over underlying policies
- Broader coverage than underlying policies
- Drop-down coverage for gaps
- Higher limits for catastrophic losses
Underlying Insurance Requirements
| Policy | Minimum Underlying Limit |
|---|---|
| CGL | $1,000,000 per occurrence |
| Auto | $1,000,000 combined single limit |
| Employers Liability | $500,000/$500,000/$500,000 |
Excess Liability
- Follows form of underlying policy
- Same coverage as underlying (no broader)
- Pure additional limits
- Generally less expensive than umbrella
Umbrella vs. Excess Comparison
| Feature | Umbrella | Excess |
|---|---|---|
| Coverage Breadth | May be broader | Same as underlying |
| Drop-Down | Yes | No |
| Premium | Higher | Lower |
| Self-Insured Retention | Has SIR | Usually no SIR |
Kentucky-Specific Liability Considerations
Pure Comparative Negligence Impact
Kentucky's pure comparative system affects liability claims:
- Defendants may be liable even if plaintiff mostly at fault
- Multiple defendants share proportional liability
- Increases claim frequency potential
- Adequate limits more important
Premises Liability in Kentucky
Property owners owe duties based on entrant status:
| Status | Duty Owed |
|---|---|
| Invitees | Highest duty - inspect and maintain |
| Licensees | Warn of known dangers |
| Trespassers | No willful/wanton harm |
| Child Trespassers | Attractive nuisance doctrine applies |
Dram Shop Liability
Kentucky has limited dram shop liability:
- Licensed sellers may be liable for serving minors
- Limited liability for serving intoxicated adults
- Social host liability is limited
- Liquor liability coverage still recommended
Exam Tip: Understanding the difference between CGL coverages (A, B, C), occurrence vs. claims-made triggers, and umbrella vs. excess policies is essential for the Kentucky P&C exam.
Test Your Knowledge
Which CGL coverage section covers defamation claims against a Kentucky business?
A
B
C
D
Test Your Knowledge
What type of coverage trigger is typically used for professional liability (E&O) insurance?
A
B
C
D
Test Your Knowledge
What additional feature does umbrella liability provide that excess liability does NOT?
A
B
C
D
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