11.5 CGL Coverages B and C, Limits, Professional Liability and EPLI

1. CGL Coverage B, Coverage C & Limits Structure

Coverage B: Personal and Advertising Injury Liability

Coverage B protects the commercial enterprise against claims arising out of specific defined intentional tort offenses committed in the course of advertising goods, products, or services. It does not cover bodily injury or physical property damage. Covered offenses include:

1. False arrest, detention, or imprisonment.
2. Malicious prosecution.
3. Wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling, or premises that a person occupies.
4. Oral or written publication of material that slanders, libels, or disparages a person's or organization's goods, products, or services.
5. Oral or written publication of material that violates a person's right of privacy.
6. The use of another's advertising idea in your "advertisement".
7. Infringing upon another's copyright, trade dress, or slogan in your "advertisement".

Key Exclusions: Knowing violation of rights of another; material published with knowledge of its falsity; criminal acts; breach of contract; and liabilities of insureds in the media, advertising, or internet broadcasting industries.

Coverage C: Medical Payments

Coverage C is designed as a goodwill, no-fault coverage that pays reasonable medical, surgical, ambulance, hospital, nursing, and funeral expenses for bodily injury caused by an accident on premises owned or rented by the insured, or arising from the insured's ongoing operations.

• No Fault Required: The injured third party does not need to prove negligence or legal liability on the part of the insured.
• Statutory / Contractual Window: Expenses must be incurred and reported to the insurer within one (1) year of the date of the accident.
• Excluded Persons: Does not cover any insured; anyone hired to do work for an insured (employees, casual labor); tenants occupying the premises; athletic participants; or anyone entitled to workers' compensation benefits.

Products and Completed Operations Hazard

The Products and Completed Operations hazard covers third-party bodily injury and property damage that occurs away from premises owned or rented by the insured and arises out of:

• "Your Product": After physical possession of the product has been relinquished to the purchaser; or
• "Your Work": After the contractual operations have been completed, put to their intended use, or abandoned.

Claims Impact: A slip and fall inside a grocery store falls under Premises/Operations and erodes the General Aggregate Limit. A consumer food poisoning claim from spoiled canned tuna eaten at home falls under Products-Completed Operations and erodes a completely separate Products-Completed Operations Aggregate Limit.

CGL Limits of Insurance Structure

CGL Policy Declarations (Limits Architecture)
├── General Aggregate Limit (Maximum paid for A, B, and C combined per policy period)
│   ├── Each Occurrence Limit (Maximum paid for any single BI/PD occurrence under Cov A & C)
│   ├── Personal & Advertising Injury Limit (Maximum paid per person/org under Cov B)
│   ├── Damage to Premises Rented to You (Fire Legal Liability - e.g., $100,000 limit)
│   └── Medical Expense Limit (Per-person limit under Cov C - e.g., $5,000 or $10,000)
└── Products-Completed Operations Aggregate Limit (Dedicated separate aggregate)

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2. Specialty Casualty: Professional Liability (E&O) & EPLI

Standard CGL policies strictly exclude claims arising out of professional services or employment practices. Commercial enterprises manage these exposures through specialized casualty endorsements or standalone policies.

Professional Liability / Errors & Omissions (E&O)

Professional Liability insurance protects individuals and organizations from financial losses resulting from wrongful acts, errors, negligent advice, or omissions committed in the rendering of specialized professional services.

• Nomenclature: Known as Malpractice Insurance for medical practitioners and attorneys, and Errors & Omissions (E&O) for insurance agents, claims adjusters, architects, engineers, and real estate brokers.
• Policy Trigger: Virtually always written on a Claims-Made basis.
• Defense Inside Limits ("Eroding Limits"): Unlike CGL policies where defense is paid outside limits, professional liability policies typically feature defense within limits (eroding or "cannibalizing" limits), where each dollar spent on legal defense reduces the available indemnity limit.
• The "Hammer Clause" (Consent to Settle): Professional liability policies historically required the insured's written consent to settle a claim to protect professional reputation. Standard modern forms contain a hammer clause: if the insured refuses to consent to a settlement recommended by the insurer and agreed to by the claimant, the insurer's liability is strictly capped at the proposed settlement amount plus defense costs incurred up to the date of refusal.

Employment Practices Liability Insurance (EPLI)

Employment Practices Liability Insurance fills a major coverage gap left by CGL policies, which exclude employment-related practices and bodily injury to employees. EPLI covers civil claims brought by employees, former employees, or employment applicants alleging:

• Wrongful termination, retaliatory discharge, or constructive dismissal.
• Sexual harassment, hostile work environment, and workplace intimidation.
• Discrimination based on race, sex, age, religion, national origin, pregnancy, or disability under federal (Title VII, ADA, ADEA) and Florida civil rights statutes.
• Wrongful discipline, failure to employ or promote, and negligent employee evaluation.

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3. Supplementary Payments and How the Aggregates Work

Supplementary Payments — Coverages A and B

Supplementary payments are owed in addition to the limits of insurance, which is why a heavily defended claim can cost the carrier far more than its each-occurrence limit. Under CG 00 01 the insurer pays:

• All expenses it incurs, including the entire cost of defending a suit it has a duty to defend.
• Up to $250 for the cost of bail bonds required because of accidents or traffic law violations arising out of the use of a vehicle to which the bodily injury coverage applies.
• The cost of bonds to release attachments, within the applicable limit of insurance; the insurer does not have to furnish the bond.
• Reasonable expenses incurred by the insured at the insurer's request to assist in the investigation or defense, including actual loss of earnings up to $250 a day.
• All court costs taxed against the insured, prejudgment interest awarded against the insured on damages the insurer pays, and all post-judgment interest accruing after entry of judgment and before the insurer pays or tenders its limit.

The duty to defend — and with it the supplementary payments — ends when the insurer has used up the applicable limit paying judgments or settlements.

How the Six Limits Interact

Two adjuster consequences follow. First, the aggregates restore at each renewal, not at each occurrence, so a late-year claim on an eroded aggregate may have very little left behind it. Second, because products-completed operations has its own aggregate, allocating a loss between ongoing operations and completed work is not bookkeeping — it decides which pot pays and how much remains for the rest of the year.

Claims-Made Features on the Specialty Forms

Professional liability and employment practices liability are almost always written claims-made, and three dates control coverage: the retroactive date, before which no wrongful act is covered; the policy period, during which the claim must first be made and reported; and the extended reporting period. A basic extended reporting period is typically included automatically for a short window after cancellation or nonrenewal, while a supplemental extended reporting period — the "tail" — must be purchased within a stated number of days. Advancing or deleting a retroactive date silently strips years of coverage, so the first thing to confirm on a claims-made file is the retroactive date on the declarations page.