Volumes have been written about Liability insurance as used in business. There are many needs for liability insurance in conducting business in the United States and new needs arise continually. Each new “risk” may require either a new policy form, new Endorsement on an existing policy, or change of wording or definitions on existing policy forms. To describe in detail the technicalities of each and every Liability Insurance policy or Endorsement available would require several textbooks and many, if not most, of the risks covered would rarely, if ever, be seen by the average insurance agent, or required by a customer.

This text will concentrate on Commercial General Liability, the most used and well-known area of business liability insurance, with references to other types of business and Professional Liability coverages available. The knowledge of liability itself, and the problems that arise because of laws, statutes, ordinances or court decisions, will open the mind so that an unusual or different liability coverage can be better understood.

The Commercial General Liability policy will be examined in detail, with typical wording from the Insurance Service Office and which is the ‘standard” for other liability policies. Various jurisdictions may require additional or replacement wording, but if one understands the one policy form well, any differences can be quite easily understood also.

The term “Consumer Application” is used in this text as some states require that a “consumer application” be used to demonstrate how various situations and provisions apply to the consumer – the policyholder. These are not “case studies”, which are actual situations with legal ramifications, but for the most part, are fictitious in order to illustrate a point or provide an example. Incidentally, a “Consumer Application” may give an example that is not necessarily business, professional or commercial related, but is more applicable to “Personal” liability, such as that found in Personal Auto Policies. In these cases, the personal liability is easier to understand, the “principle” of the particular situation is what is important. For instance, it is easier to understand Contributory and Comparative Negligence when couched in personal liability terms.

Liability Insurance is fraught with legal consequences, perhaps more so than any other type of insurance as the definition of the risk – liability – is in most cases, a legal term that may require court definition, or the determination of liability must be decided by a court. The court decisions and policy wording will vary by jurisdiction. Therefore, it is most important that it is understood that this text is an educational tool and should not be used for legal purposes. Any liability policy sold for business, professional or commercial purposes should be reviewed by the client’s attorney if any questions arise regarding the operation or coverage of the policy.

For those who engage in marketing liability insurance, they are encouraged to become a member of the Professional Liability Underwriting Society (PLUS). This organization provides continual education in Liability Insurance – for instance, in Feb. 2000, the Fourth Annual D&O (Director and Officer) Symposium which covers litigation, legal developments in Securities Fraud legislation, Reinsuring D&O, etc.

PREFACE