Comprehensive general liability insurance

The comprehensive general liability policy is arguably the most successful standard form insurance policy in history. It is used by virtually every American business. Yet, its provisions and coverage's remain a mystery to most lawyers.

The comprehensive general liability was introduced in 1940. It was created jointly by the National Casualty Rating Bureau and Surety Underwriters and the Mutual Casualty Rating Bureau. The policy was entitled "Comprehensive General Liability Policy "a name that remained until 1986, when it was renamed the"Commercial General Liability Policy ".

The comprehensive general liability definition of"bodily injury" has changed little over time. The policy insured "damages because of bodily injury, sickness or disease death at any time resulting there from ".

The comprehensive general liability policy is not alone in the lack of clarity about emotional distress; circular "bodily injury" definitions are often provided under homeowners, umbrella, automobile, and other liability policies. Thus, in many jurisdictions, the construction given "bodily injury" under non- comprehensive general liability policies provides the starting point for analysis, especially on this question of whether "bodily injury" extends to emotional distress.

Unfortunately, some non- comprehensive general liability policies utilize a "bodily injury" definition that is more specific about emotional distress than the comprehensive general liability.

Because the definition of bodily injury expressly included "mental anguish", the policyholder was entitled to coverage. "This Court need not enter the debate over whether "‘pure" mental anguish unaccompanied by physical manifestations constitutes "bodily injury". Such policies are of little use for comprehensive general liability analysis.

Similarly, in some states, workers compensation statutes expressly define "injury" to include mental damage.

The scope of "bodily injury" may also be modified by exclusions. Given this definition, coverage did not extend to a claim for emotional injuries that did not arise out of a physical injury.

Obviously, whenever the "bodily injury" definition or exclusion expressly addresses emotional injuries, the policy language will govern. For the comprehensive general liability, however, and other policies where emotional distress is not specifically addressed, the policy language does not clearly resolve the issue of coverage for emotional distress damages. As set forth below in courts differ as to the appropriate outcome.

PROPERTY DAMAGE

At first glance, comprehensive general liability coverage for property damage seems simple for counsel to analyze. There is coverage for two types of tangible property damage:

(1) injury to or destruction of property and

(2) loss of use of property.

Complexities emerge with many particular litigation issues, though, such as consequential damages, lost information, defective components, environmental cleanup costs, diminution in value, and successive insurers.

Counsel can safely predict that property damage coverage will be extended to claims of :

(1) destruction of tangible property;

(2) physical damage to tangible property;

(3) physical damage from the insuredÂs defective component;

(4) loss of use of tangible property; and

(5) consequential economic damage.

Depending upon the jurisdiction, there may also be coverage for claims of:

(1) loss of information when a tangible storage medium is damaged;

(2) diminution in value of tangible property;

(3) damage caused during the replacement of a defective component ; and

(4) environmental clean up costs from government ordered pollution clean up.

When damage occurs on property over a period of time spanning successive insurers, courts vary on the allocation of damages. Depending upon the jurisdiction, damages are allocated on theories of :

(1) pro rata, based usually upon "premiums paid";

(2) maximum loss, whereby insurers contribute equally to the lesser of policy limits, and the remaining coverage limits added in addition ; or

(3) joint and several liabilities.

The comprehensive general liability policy did not use the term "occurrence". Instead, coverage was simply triggered by an"accident".

The comprehensive general liability policy made things more complicated by substituting the word "occurrence" for the world "accident". However, an occurrence was simply a specific kind of accident : an accident, including injurious exposure to conditions, which results, during the policy period, the bodily injury or property damage neither expected nor intended from the standpoint of the insured.

When the policyholder seeks compensation for property damage or bodily injury claims, the practitioner must first evaluate whether to apply an objective or subjective test to the occurrence requirement. Courts ordinarily use a subjective approach no occurrence will be found if the insured actually expected or intended the result. However, an objective standard is often applied for reckless or inherently intentional conduct.

In most cases the occurrence requirement and intentional damage exclusion will present little difficulty for the practitioner. Ordinarily, there is coverage for damage the insured did not intend, even if the tort was intentional. However, for sex abuse cases and other cases involving reckless conduct, many courts imply intent to harm as a matter of law.

Applying these principles, most discrimination cases will not be insured, other than claims for negligent management or disparate impac

The states are divided, though, on whether a negligent misrepresentation is akin to fraud, and cannot be an occurrence. Others hold that the tort is negligence based, and must be an occurrence.