3.2 DC Liability Insurance
Key Takeaways
Commercial General Liability (CGL) protects businesses from third-party bodily injury and property damage claims
DC requires workers' compensation for employers with 1 or more employees
Professional liability (E&O) insurance is essential for service professionals
Umbrella and excess liability policies provide additional protection above underlying limits
DC's urban environment creates unique liability exposures for businesses
Commercial General Liability (CGL)
Commercial General Liability insurance is fundamental protection for DC businesses against third-party claims.
CGL Coverage Structure
The standard ISO CGL policy includes three main coverage parts:
Coverage A - Bodily Injury and Property Damage Liability
| Feature | Details |
|---|---|
| Covered Claims | Third-party bodily injury and property damage |
| Trigger | Occurrence-based (injury/damage during policy period) |
| Defense Costs | Paid in addition to policy limits |
| Typical Limits | $1M per occurrence / $2M aggregate |
Coverage A Examples:
- Customer slips and falls in your store
- Your employee damages client property during service call
- Product you sell causes injury to consumer
- Operations cause property damage to neighbor
Coverage B - Personal and Advertising Injury Liability
| Feature | Details |
|---|---|
| Covered Claims | Non-physical injury claims |
| Trigger | Offense committed during policy period |
| Typical Limits | Often shares aggregate with Coverage A |
Coverage B Offenses Include:
- Libel and slander
- False arrest or detention
- Malicious prosecution
- Wrongful eviction
- Copyright infringement in advertising
- False advertising
Coverage C - Medical Payments
| Feature | Details |
|---|---|
| Covered Claims | Medical expenses for injured third parties |
| Trigger | Injury on premises or from operations |
| Typical Limits | $5,000 - $10,000 per person |
| Fault Requirement | No fault required (goodwill coverage) |
CGL Policy Limits Structure
| Limit Type | Purpose | Typical Amount |
|---|---|---|
| Per Occurrence | Maximum for any single occurrence | $1,000,000 |
| General Aggregate | Maximum for all claims in policy period | $2,000,000 |
| Products-Completed Operations | Separate aggregate for product/completed operations | $2,000,000 |
| Personal & Advertising Injury | Per person/organization limit | $1,000,000 |
| Damage to Rented Premises | Fire damage to rented premises | $100,000 - $500,000 |
| Medical Payments | Per person medical expenses | $5,000 - $10,000 |
Key CGL Exclusions
| Exclusion | Description |
|---|---|
| Expected/Intended Injury | Intentional acts not covered |
| Contractual Liability | Most contractual assumptions excluded (exceptions apply) |
| Workers' Compensation | Employee injuries covered under WC, not CGL |
| Pollution | Most pollution excluded (buy separate coverage) |
| Professional Services | Errors in professional services excluded (buy E&O) |
| Auto Liability | Covered under auto policy, not CGL |
| Liquor Liability | Excluded unless specific endorsement purchased |
| Employment Practices | Discrimination, harassment excluded (buy EPLI) |
Exam Tip: CGL covers third-party claims only. Employee injuries are covered by workers' compensation, not CGL. Professional errors require separate E&O coverage.
DC Workers' Compensation Insurance
DC Workers' Compensation Requirements
DC has one of the strictest workers' compensation requirements in the nation:
| Requirement | DC Rule |
|---|---|
| Coverage Required | For employers with 1 or more employees |
| Domestic Workers | Covered if working 240+ hours/quarter |
| Corporate Officers | May elect to be excluded |
| Sole Proprietors | May elect coverage |
| Penalties | $1,000 per day uninsured + criminal prosecution |
Critical: DC requires workers' compensation for ANY employer with at least ONE employee. This is stricter than most states, which often exempt employers with fewer than 3-5 employees.
DC Workers' Compensation Benefits
| Benefit Type | Coverage Details |
|---|---|
| Medical Benefits | 100% of reasonable medical expenses (no deductible) |
| Temporary Total Disability (TTD) | 66 2/3% of wages, max $1,913.88/week (2026) |
| Temporary Partial Disability (TPD) | 66 2/3% of wage difference during light duty |
| Permanent Total Disability (PTD) | 66 2/3% of wages for life |
| Permanent Partial Disability (PPD) | Scheduled benefits based on body part/impairment |
| Death Benefits | Spouse: 50% of wages; Children: additional percentages |
| Vocational Rehabilitation | Retraining for return to work |
DC Workers' Compensation Waiting Period
| Period | Duration | Details |
|---|---|---|
| Waiting Period | 3 days | Benefits begin after 3 days of disability |
| Retroactive Period | 14 days | If disabled 14+ days, benefits paid from day 1 |
Exclusive Remedy Doctrine
DC workers' compensation is the exclusive remedy for workplace injuries:
| Principle | Application |
|---|---|
| No Lawsuit Against Employer | Employees cannot sue employer for work injuries |
| Exceptions | Intentional injury by employer, third-party claims |
| No-Fault System | Benefits paid regardless of who was at fault |
| Employer Protection | Shields employer from tort liability |
DC Office of Workers' Compensation (OWC)
| Function | Details |
|---|---|
| Administers DC WC Law | Oversees all workers' compensation matters |
| Dispute Resolution | Hearings for contested claims |
| Employer Compliance | Ensures employers maintain coverage |
| Benefit Calculations | Determines benefit amounts |
| Contact | (202) 724-7000 |
Professional Liability Insurance
Errors and Omissions (E&O) Insurance
Professional liability insurance protects service professionals from claims of negligence, errors, or omissions:
| Feature | Details |
|---|---|
| Coverage Trigger | Claims-made (claim filed during policy period) |
| What's Covered | Negligent acts, errors, omissions in professional services |
| Defense Costs | Usually within policy limits |
| Typical Limits | $1M per claim / $3M aggregate |
Professionals Needing E&O in DC
| Profession | Key Exposures |
|---|---|
| Insurance Producers | Failure to procure coverage, bad advice |
| Real Estate Agents | Misrepresentation, failure to disclose |
| Accountants | Tax errors, audit failures |
| Attorneys | Malpractice, missed deadlines |
| Consultants | Bad advice, project failures |
| Technology Companies | Software failures, data breaches |
| Architects/Engineers | Design defects, specification errors |
Claims-Made vs. Occurrence Coverage
| Feature | Claims-Made | Occurrence |
|---|---|---|
| Trigger | Claim filed during policy period | Injury/damage during policy period |
| Retroactive Date | Coverage limited to claims from acts after retro date | No retroactive date limitation |
| Tail Coverage | May need extended reporting period (ERP) | Not needed |
| Premium Pattern | Increases annually until mature | More level premiums |
| Common Usage | Professional liability | CGL, property |
Exam Tip: Professional liability is typically claims-made. Producers changing policies should understand retroactive dates and the need for tail coverage to avoid gaps.
Directors and Officers (D&O) Liability
D&O Coverage for DC Organizations
| Feature | Details |
|---|---|
| Who's Covered | Directors, officers, sometimes employees |
| What's Covered | Wrongful acts in capacity as D&O |
| Coverage Trigger | Claims-made |
| Three Insuring Agreements | Side A, Side B, Side C (entity coverage) |
D&O Wrongful Acts Include
- Breach of fiduciary duty
- Mismanagement
- Failure to comply with regulations
- Employment practices violations (if included)
- Securities violations
- Conflicts of interest
- Negligent oversight
DC Nonprofit D&O Considerations
| Consideration | Details |
|---|---|
| Volunteer Protection | DC law provides some volunteer immunity |
| Board Service | Personal assets at risk without D&O |
| Employment Claims | Common source of nonprofit D&O claims |
| Fundraising Issues | Donor restrictions, misuse of funds |
Employment Practices Liability Insurance (EPLI)
EPLI Coverage
| Feature | Details |
|---|---|
| What's Covered | Employment-related claims by employees |
| Coverage Trigger | Claims-made |
| Defense Costs | Usually within policy limits |
| Deductible | Often $10,000 - $50,000 |
EPLI Covered Claims
- Sexual harassment
- Discrimination (race, gender, age, disability, religion)
- Wrongful termination
- Retaliation
- Failure to promote
- Hostile work environment
- Wage and hour disputes (if endorsed)
DC Human Rights Act Considerations
DC has robust anti-discrimination laws under the DC Human Rights Act:
| Protected Class | DC Protection |
|---|---|
| Standard Protected Classes | Race, color, religion, national origin, sex, age, disability |
| Additional DC Protections | Sexual orientation, gender identity, marital status, family responsibilities, political affiliation, personal appearance, genetic information, matriculation, credit information |
Exam Tip: DC's Human Rights Act is one of the most comprehensive anti-discrimination laws in the nation, creating significant EPLI exposures for DC employers.
Umbrella and Excess Liability Insurance
Umbrella Liability
| Feature | Details |
|---|---|
| Function | Provides additional limits above underlying policies |
| Underlying Policies | CGL, auto liability, employers liability |
| Drop-Down Coverage | May cover claims excluded by underlying policies |
| Typical Limits | $1M - $25M+ |
| Self-Insured Retention | Applies when umbrella drops down |
Excess Liability
| Feature | Details |
|---|---|
| Function | Follows form of underlying policy |
| No Broader Coverage | Only increases limits, no drop-down |
| Premium | Generally lower than umbrella |
| Claims Handling | Underlying insurer typically handles |
When DC Businesses Need Umbrella/Excess
| Business Type | Recommended Limit |
|---|---|
| Small Retail | $1M - $2M umbrella |
| Professional Services | $2M - $5M umbrella |
| Contractors | $5M - $10M umbrella |
| Federal Contractors | $5M - $25M+ (contract requirements) |
| Transportation Companies | $5M+ excess |
DC-Specific Liability Considerations
Federal Government Contractor Liability
| Consideration | Details |
|---|---|
| Contract Requirements | Often require specific insurance limits |
| Security Clearances | May require cyber liability coverage |
| Sovereign Immunity | Federal government immune from some claims |
| False Claims Act | Exposure for fraudulent billing |
Embassy and International Organization Liability
| Consideration | Details |
|---|---|
| Diplomatic Immunity | May limit ability to pursue claims |
| Foreign Workers | Special workers' compensation considerations |
| International Events | Host liability for international functions |
Urban Premises Liability
| Exposure | DC Consideration |
|---|---|
| Sidewalk Liability | Property owners may be liable for adjacent sidewalks |
| Snow/Ice Removal | Must clear within specific timeframes |
| Street Trees | Maintenance responsibility issues |
| Construction Sites | High pedestrian traffic increases exposure |
| Special Events | Permits and insurance requirements |
Liquor Liability in DC
DC Dram Shop Law
DC does not have a traditional dram shop law, but businesses serving alcohol face liability:
| Liability Type | Exposure |
|---|---|
| Negligence | Serving visibly intoxicated persons |
| Minor Service | Serving alcohol to minors |
| Over-Service | Continuing to serve impaired patrons |
| Host Liability | Social hosts may have limited liability |
Liquor Liability Coverage
| Feature | Details |
|---|---|
| CGL Exclusion | Standard CGL excludes liquor liability for businesses selling alcohol |
| Endorsement Needed | Must add liquor liability endorsement |
| Typical Limits | $1M per occurrence |
| Premium Factors | Alcohol sales percentage, hours of operation, history |
How many employees must a DC employer have before workers' compensation is required?
1 or more employees
3 or more employees
5 or more employees
10 or more employees
What type of coverage trigger is typically used for professional liability (E&O) insurance?
Occurrence
Claims-made
Hybrid
Accident-only
Which of the following is NOT typically covered by a standard CGL policy?
Customer slip and fall on premises
Employee work-related injury
Advertising injury to competitor
Product liability claim
Sections you finish are checked off in the contents.