Businesses are faced with numerous types of liability exposures. Since businesses vary in their operations and activities, so too will their exposures vary. Common business exposures include: • Ownership of property • Business operations on and off the premises • Manufacturing • Completed operations • Contractual liability The Commercial General Liability (CGL) policy may be written on an “occurrence” basis requiring the event occur and be reported during the policy period or on a “claims-made” basis.

The claims-made trigger is the date when the claim is reported by the named insured. There is no coverage for claims that occur before the “retroactive date” shown in the Declarations. If no date is shown, the policy will apply to all injury and damage covered by the policy for a claim made during the policy period, no matter when the injury or damage occurred. Both claims-made and occurrence policies have three extended reporting periods available. Two are built into the policy itself. These are known as the "basic extended reporting periods." The basic periods begin when the policy period ends and are activated if there is a break in coverage.

Claims arising out of occurrences after the retroactive date, but before the expiration date of the policy, will be covered if they are reported during a 60 day period following the expiration date. This is known as the 60 day or “Mini” tail. The policy also covers claims communicated within 5 years of the expiration date of the policy arising out of happenings communicated to the insurer during the policy period OR within 60 days following the expiration date (“Midi” tail). The insured may also purchase a supplemental “Maxi” tail for an extra premium. This tail may not be terminated (ever) by the insurer once purchased. Its purpose is to lengthen the claim submission period but not the policy term.

The CGL, whether written on an occurrence or claims-made basis, includes three coverage sections (A, B, C). Coverage A Coverage A provides coverage against two exposures: 1. Premises and operations 2. Products and completed operations Premises and Operations Liability coverage is for normal operations occurring at locations specified on the Declarations page, newly acquired property if the insurer is notified within 30 days of acquisition, ways immediately adjoining the insured premises and for incidental operations occurring elsewhere.

Products and Completed Operations Liability Coverage protects the insured for bodily injury and property damage occurring away from premises owned or rented to the insured and arising out of the insured's products. An injured person can sue manufacturers, wholesalers and retailers due to their negligence that can be based on: • Breach of Warranty - there is an implied warranty that the product is safe for use. • Strict Liability - an example would be the improper manufacturing of packaged food. • Negligence - which can be caused by one of the following:

•Improper product design •Improper assembly of the product •Failure to inspect or test the product •Failure to warn of inherently dangerous characteristics •Deceptive advertising •Containers, materials, parts or other furnished in connection with a product. Note: The product must have been relinquished to the third party to qualify as a products claim.

Products coverage protects a business that markets a product. For example, if a toy company manufactures a product that is found to be responsible for causing injuries to children who play with it, the business would be protected by the policy. Completed operations coverage is similar to products coverage, but involves liability for work that has been completed for others such as operations completed away from the premises of the company performing these operations and warranties or representations regarding these operations.

Completed operations claims usually involve negligence on the part of a person performing work or a service. For example, if a water heater is installed improperly by an employee of a business and a leak later damages a customer's property, the named insured would be protected by the policy against this negligent act.

Several exclusions that apply to commercial liability coverage include: •Intentional damage or injury caused by the named insured. •Contractual liability except for insured contracts as defined by the policy. •Liquor liability which involves BI or PD to others resulting from the insured furnishing alcohol to any person. •Injuries to employees eligible for Workers' Compensation benefits. •Pollution. There is no coverage for clean up costs or for any BI or PD that might arise from the discharge of pollutants.

•Autos, aircraft and watercraft. This involves BI or PD to others if resulting from the use by the insured of any of these items that are owned, operated by, rented to or loaned to any insured. •BI or PD arising out of the use of mobile equipment. •BI or PD to an insured. Damage to property in the insured's care, custody or control is not covered. •Damage to an insured's product. •Damage to impaired property. Impaired property is property which is not actually damaged but is diminished in value in some way.

Coverage B This section provides protection to a business owner against personal injury and advertising injury losses. Do not confuse the term "personal injury" with bodily injury. Personal injury would include: False Arrest, Detention or Imprisonment The unlawful detention of a person. Malicious Prosecution When one person sues another person without cause and the person who sued lost the case, the person who won the case, sues based on malicious prosecution because the first party sued when he/she had no case, but sued out of malice.

Wrongful Eviction The physical eviction of an individual from a public place in violation of his/her civil rights. Defamation of Character The spreading of untruths of a person by slander (orally) or libel (in writing). Invasion of Privacy Everyone has a right to his privacy, invading that privacy by illegally searching one's house without a warrant, is wrong. Advertising injury

Advertising injury means injury arising out of oral or written defamation committed during the course of advertising one's goods, services or products. It would also cover copyright infringement or the misappropriation of advertising ideas. Under either type of coverage, the injury must occur during the policy period and within the coverage territory. Coverage C This section of coverage functions in a similar fashion as the medical payments under a HO policy. However, it will pay the reasonable medical expenses incurred within one year of the date of the accident.

This covers the insured for his/her responsibility for injury to others. Therefore, it does not cover injuries sustained by anyone who is a named insured under the policy. Like an HO policy, negligence does not have to be established in order for the policy to pay under this section of coverage. To be covered the occurrence must be during the policy period and: 1) Accidental 2) On premises (owned or rented) 3) Result of the insured's operations

Separation of Insureds CGL coverage applies as if each named insured were the only named insured, and applies separately to each insured against which a claim is made. Limits General Aggregate Limit The most that will be paid for the sum of Coverages A, B and C, except for damages arising out of the products-completed operations hazard. Per Occurrence Limit The most that will be paid for the sum of damages under Coverages A and C because of all bodily injury, property damage and medical payments arising out of any one

occurrence. This limit is subject to either the General Aggregate Limit or the Products-Completed Operations Aggregate Limit, whichever is applicable. Products-Completed Operations Aggregate Limit Represents the most that will be paid under Coverage A because of injury and damage arising out of the products-completed operations hazard.

The CGL Policy Territory • United States of America including its territories and possessions, Puerto Rico, and Canada • International waters or air space • Anywhere in the world for injury or damage arising from a product sold or made in the covered territory. Injury may occur anywhere (must have Products Liability to be covered) but most companies will require suits to be filed in covered territory.

A CGL covers all of the following as insureds: • An individual, the named insured and a spouse, are covered only with respect to their conduct regarding the business of which the named insured is the sole owner. • A partnership or joint venture, the named insured and all members and managers, are covered only with respect to their conduct within the insured business. • A limited liability company, the named insured and all members and managers, are covered only with respect to the insured business and their related duties.