Who Is an Insured and Supplementary Payments

Who Is an Insured Under the CGL

Section II of the ISO CG 00 01 ("Who Is An Insured") determines exactly which persons and entities receive coverage. The status of the Named Insured in the declarations drives who else qualifies automatically. Getting this hierarchy right is essential because additional parties such as employees, executives, and newly acquired entities are insureds only within stated limits.

Automatic Insureds by Entity Type

Who qualifies depends on how the named insured is organized:

In every case, employees and volunteer workers are insureds for acts within the scope of employment or duties — but not for injury to fellow employees or to the named insured, and not for professional services rendered.

Newly Acquired Organizations and Important Limits

A newly acquired or formed organization (that the named insured owns more than 50% of) is automatically an insured — but only for the first 90 days or until policy expiration, whichever is earlier, and not if another similar policy covers it. There is no coverage before acquisition, and no products-completed operations coverage for that new entity during the interim period.

Key limiting rules to memorize:

• Employees are not covered for injuring co-employees (that is a WC matter)
• Real estate managers acting for the named insured are insureds
• A person operating mobile equipment registered for road use may be an insured under specified conditions

How Insured Status Varies by Entity

The CGL grants insured status differently depending on how the named insured is organized:

In every case, employees and volunteer workers are insureds for acts within the scope of employment or duties — but not for injury to a co-employee or for the employee's own product/professional services. Newly acquired or formed organizations are covered automatically, usually for up to 90 days.

Supplementary Payments — Paid in Addition to Limits

The CGL pays supplementary payments on top of the limits when it defends: all defense costs, up to $250 bail bonds, the cost of appeal/release-of-attachment bonds, up to $250 per day for the insured's lost earnings to attend trial, pre- and post-judgment interest, and other reasonable expenses incurred at the insurer's request.

Additional Insureds by Endorsement

Beyond the automatic insureds, businesses frequently add additional insureds by endorsement — landlords, lessors of equipment, vendors, and project owners — usually as required by contract. Because defense costs are outside the limits and additional insureds share the named insured's limit, understanding who automatically qualifies versus who must be endorsed on is a recurring CGL exam theme.

Employees, professional services, and the co-employee trap

The single most-missed point here is the co-employee exclusion: an employee who injures a fellow employee in the course of work is not an insured under the CGL for that injury, because workers compensation handles employee-on-employee work injuries. Likewise, employees are not insureds for professional services (a clinic needs separate professional liability), and they are not covered for damage to property the named insured owns, occupies, rents, or borrows. Understanding these carve-outs explains why a business carries CGL plus WC plus professional liability rather than relying on one form.

Supplementary Payments — Coverages A and B

Supplementary Payments are amounts the insurer pays in addition to the applicable limit of insurance — they do not reduce the General Aggregate or the Each Occurrence limit. They are paid only in connection with a claim or suit the insurer defends. This "on top of limits" feature is a favorite exam point: defense and the listed items below are outside the policy limit.

The Listed Supplementary Payments

The CGL pays, with respect to a claim it investigates or settles, or a suit it defends, the items below. Note the two $250 caps and the two kinds of interest — both are recurring exam distractors:

• All expenses the insurer incurs (including defense attorney costs)
• Up to $250 for bail bonds required because of an accident or covered traffic violation (the insurer has no duty to furnish the bond)
• The cost of bonds to release attachments, up to the applicable limit of insurance
• Reasonable expenses the insured incurs at the insurer's request, including up to $250 per day for actual lost earnings while assisting the defense
• All court costs taxed against the insured in the suit (this does not include attorneys' fees taxed against the insured)
• Pre-judgment interest awarded on the part of the judgment the insurer pays
• Post-judgment interest on the entire judgment until the insurer pays or tenders its applicable limit

Worked example — why "in addition to limits" matters

An insured with a $1,000,000 Each Occurrence limit loses a lawsuit. The judgment is $1,000,000 in damages, plus $120,000 in defense costs, $3,000 court costs, and $8,000 post-judgment interest.

• The $1,000,000 damages are paid from the Each Occurrence limit — fully exhausting it.
• The $120,000 + $3,000 + $8,000 = $131,000 in defense, court costs, and interest are Supplementary Payments paid on top of the limit.
• Total insurer outlay: $1,131,000, not capped at $1,000,000.

If supplementary payments counted inside the limit, the insured would owe $131,000 out of pocket — so candidates must know these costs are additional.