Most Liability Policies Do Not Provide Coverage for Earth Movement and Pollution

Most liability policies do not provide coverage for Earth movement and pollution.

A significant percentage of policies exclude coverage for damages caused by earthquakes, landslides, and other forms of Earth movement. This means that if your business suffers a loss due to these types of events, you may not be able to rely on your liability policy to help cover the costs.

In fact, according to industry estimates, over 70% of liability policies exclude Earth movement coverage. This can leave businesses vulnerable to significant financial losses in the event of a disaster.

Pollution is another area where liability policies often fall short. Most policies do not provide coverage for damages caused by pollution, including environmental contamination and cleanup costs. This can be a major concern for businesses that operate in industries that are prone to pollution, such as manufacturing or construction.

If this caught your attention, see: Dictionaries Provide

Expected or intended harm is a significant exclusion in most liability policies, meaning injuries or damage caused on purpose won't be covered.

Contractual liability arising from assumed obligations is also typically excluded, so if you sign a contract agreeing to indemnify another party, a CGL policy likely won't provide coverage.

Pollution-related claims are commonly excluded, although limited pollution coverage can sometimes be purchased as an endorsement.

Claims arising from the ownership or use of aircraft and watercraft are typically excluded as well.

Professional services are another area prone to exclusion, and CGL policies are not intended to cover claims arising from the provision of professional services, advice, or consultation.

Readers also liked: How Much Does Professional Liability Insurance Cost

Limitations and Endorsements can significantly impact your liability policy's coverage. Exclusions and Limitations in CGL policies can be complex and may not be fully understood. These exclusions can leave you vulnerable to unexpected losses.

For instance, many CGL policies exclude coverage for claims arising from professional services, pollution, employment practices, and prior known acts or omissions. An attorney can review your policy's specific exclusions and limits to ensure you understand what is and isn't covered.

Contractual Limitation Endorsements can also limit your coverage. The ISO Commercial General Liability Coverage Form provides broad contractual coverage, but some carriers may attach ISO form CG2139, which eliminates coverage for liability assumed in a construction agreement.

Independent Contractors Limitation/Subcontractor Warranty Endorsements can also impact your coverage. These endorsements establish minimum requirements for subcontractors, such as written indemnification agreements and certificates of insurance. Failure to comply with these requirements can result in penalties, including nullification of coverage, higher deductibles, or lower limits of liability.

Contractual Limitation Endorsements can severely limit your contractual coverage, particularly in construction agreements. This is because they often eliminate section f. of the definition of "insured contract", which includes liability assumed in contracts.

Carriers may attach ISO form CG2139 (10/93), Contractual Liability Limitation, to eliminate section f. or use proprietary forms with similar effects. This makes careful review of your policy imperative.

Most contractual coverage is removed when section f. is eliminated, including coverage for liability assumed in construction agreements and "Action Over" type claims. Contractors often rely on these contracts, making this limitation particularly problematic.

Carriers rarely comply with the requirements of construction agreements when using these limitations, so it's essential to review your policy language carefully.

For your interest: When a Company Provides Services on Account?

Injury Endorsements can be a crucial aspect of construction agreements. These forms typically eliminate "Labor Law" or "Action Over" coverage as respects injury to independent contractors and their employees.

The elimination of coverage for these "Action Over" type claims presents a major gap in coverage for contractors utilizing sub-contractors. This is because the upstream contractor or job owner would typically look to the downstream sub-contractor for coverage.

Independent Contractors Limitation is a crucial aspect of risk management in construction projects. These endorsements establish minimum requirements for subcontractors relative to insurance and risk management controls.

To ensure compliance, you'll often need to obtain written indemnification agreements from subcontractors, as well as certificates of insurance. Specific minimum limits of insurance are also typically required.

Additional insured status on the subcontractor's General Liability policy is another common requirement. This helps protect the insured in case of worker injury or other related issues.

For your interest: Eeo Policy Risk Report

Failure to comply with these endorsements can result in penalties, including nullification of coverage for losses resulting from the subcontractor's work, known as a hammer clause. Higher deductibles or retained limits may also apply.

Here are the four types of penalties that can result from non-compliance:

If removal of such endorsements is not possible, every effort should be made to avoid the first type of penalty, the hammer clause.

Cross Suits can be a major concern for businesses, especially in states like New York where employee "Action Over" claims are common.

These endorsements can exclude coverage for suits brought by any party included as an additional insured under the named insured's policy, which may leave a job owner without coverage if they bring a direct suit against the named insured.

If a business can't remove this type of endorsement, they should try to limit its applicability to suits between organizations in which the named insured has a controlling interest.

Most Cross Suits exclusions are very broad and may exclude coverage for suits by any insured against any other insured, which can be a major limitation.

Related reading: Deferred Tax Liabilities Should Be Netted against

General liability insurance doesn't cover damage to your commercial property, so you'll need a separate policy for that.

Intentional damage or illegal activities that lead to destruction, damage, or theft of another person's belongings aren't covered either. This means you'll want to review your policy with your insurance provider to ensure you have the right coverage for your business.

Damage to property you own or control is also not covered by general liability insurance, so you'll need a separate property insurance policy to protect your assets.

For your interest: What Is Commercial Liability Insurance Coverage

General liability insurance has its limitations, and it's essential to understand what's not covered to avoid unexpected costs.

Damage to your commercial property is not covered by general liability insurance, so you'll need to look into other types of insurance for that.

Intentional damage or illegal activities that lead to destruction, damage, or theft of another person's belongings are also not covered.

Recommended read: How Much General Liability Coverage Do I Need

Many business owners choose to enhance their general liability insurance policy with umbrella liability insurance, which covers the gaps left over by other liability coverages.

Commercial general liability policies typically exclude expected or intended harm, so if you intentionally cause injuries or damage, you won't be covered.

Claims arising from assumed contractual obligations, such as indemnifying another party, are also typically excluded.

Pollution-related claims are commonly excluded, although limited pollution coverage can sometimes be purchased as an endorsement.

Claims related to the ownership or use of aircraft and watercraft are typically excluded as well.

Professional services, like medical malpractice or legal malpractice, are not covered by general liability insurance.

A fresh viewpoint: What Is Not Covered by an Umbrella Policy

Earth movement exclusions are becoming more common, and underwriters may agree to remove them if you can show proper controls and no history of subsidence claims.

Subsidence or earth movement exclusions can be particularly problematic for contractors involved in ground up construction, foundation construction, excavation, or other activities that involve moving earth.

These exclusions create a significant coverage gap, especially for contractors in these high-risk activities.

Proper controls, such as routine geotechnical review, can help you demonstrate to underwriters that you're taking steps to mitigate the risk of earth movement.

Liquor liability insurance is a must-have for businesses that serve or facilitate the use of alcohol, as it protects against loss or damages from intoxicated patrons.

If your business manufactures, sells, serves, or facilitates the use or purchase of alcohol, you'll need this coverage to avoid costly claims.

A standard commercial general liability policy won't cover liquor-related claims, so you'll need to purchase liquor liability coverage separately or as an add-on.

A unique perspective: Is Bop Liability Coverage Claims Made

CGL policies don't cover property you own, so you'll need a separate property insurance policy to protect buildings, equipment, and other business assets.

A separate property insurance policy is needed to cover damage to your own property, whether it's a building, equipment, or a vehicle.

CGL insurance only covers liability for third-party property damage, not damage to your own property.

See what others are reading: General Liability Fire Damage Coverage

Residential exclusions can be very broad or narrowly focused, specifying the maximum annual number of new starts for home builders.

Some forms may exclude coverage for work involving new condominiums, multi-unit habitational or tract homes entirely.

Contractors of all types may get involved in residential work, even if on a very incidental basis, and these exclusions can cover such work.

It's essential to understand the scope of such exclusion to ensure gaps in coverage don't exist.

For another approach, see: How Do Insurance Policies Work

In Nevada, you're required to have a minimum of $25,000 in bodily injury per person and $50,000 in bodily injury per accident.

The minimum motor vehicle liability insurance coverage in Nevada is $25,000 in bodily injury per person and $50,000 in bodily injury per accident, with an additional $20,000 in property damage.

You can purchase more coverage than the minimum level of coverage required, but it's not mandatory.

This level of coverage is known as "25/50/20".

Most liability policies do not provide coverage for expected or intended harm, so if you're planning to cause injury or damage, don't expect your policy to kick in. This exclusion is a significant one, and it's essential to understand its implications.

Pollution-related claims are also commonly excluded, which means if your business is involved in activities that could lead to environmental damage, you may not have coverage. However, some policies may offer limited pollution coverage as an endorsement.

Claims arising from the ownership or use of aircraft and watercraft are typically excluded, so if your business involves these types of activities, you'll need to explore other coverage options.

Professional services are another area prone to exclusion, which means medical malpractice, legal malpractice, and similar professional errors or omissions would not be covered under a standard liability policy.

Here are some common exclusions to be aware of:

Contractual liability is another area where policies may have limitations, particularly when it comes to construction agreements. These agreements often require specific language and coverage, so it's essential to review your policy carefully.

Independent contractors and subcontractors can also create issues with liability coverage, especially if they don't meet certain requirements, such as having adequate insurance or certificates of insurance. Failure to comply with these requirements can result in penalties, including nullification of coverage, higher deductibles, or lower limits of liability.

Exclusions are a crucial part of liability policies, and it's essential to understand what's not covered. One significant exclusion is for expected or intended harm, which means injuries or damage caused intentionally by the policyholder are not covered.

Pollution-related claims are also commonly excluded, although limited pollution coverage can sometimes be purchased as an endorsement. This is a critical exclusion to be aware of, especially for businesses that work with hazardous materials.

Damage to work performed by subcontractors on behalf of the policyholder is another area prone to exclusion. This can create a significant gap in coverage for general contractors who utilize subcontractors.

Prior work exclusions also exist, which exclude coverage for work completed prior to the inception date of the policy. This means any future "occurrence" related to work done prior to the policy inception is excluded.

Total pollution exclusions are also a concern, as they can be more restrictive than the standard ISO GL pollution exclusion. These exclusions can eliminate exceptions to the standard exclusion, leaving businesses vulnerable.

Commercial general liability insurance typically doesn't cover liability for injuries or illnesses sustained by your employees. Workers' compensation insurance is mandated by law in Nevada to provide coverage for work-related employee injuries and occupational diseases.

The ISO Commercial General Liability Coverage Form provides an exception to the exclusion for bodily injury to the insured's employees, but only if the insured has assumed liability under an "insured contract." This exception is often eliminated by carriers, particularly for contractors operating in New York.

These endorsements, known as "Labor Law" exclusions, preclude coverage for claims by injured employees or workers, often alleging violations of "safe place to work" requirements. The specific exclusionary language is often contained within endorsements labeled as Employers Liability Exclusion or Contractual Limitation.

The general contractor, upstream contractor, or owner would typically look to the injured employee's employer for coverage via the indemnification agreement in the construction agreement.

Related reading: Employee Benefits Liability Coverage

General liability insurance often excludes damage to work performed by subcontractors on your behalf. This exclusion can be found in the ISO form CG2294 (10/01) or a carrier's equivalent endorsement.

If you use subcontractors, this exclusion can create a significant gap in coverage. For general contractors, it virtually eliminates completed operations property damage coverage for work done by subcontractors.

The Liability Coverage Form (CG0001 04/13) provides coverage for injury or damage caused by an "occurrence" during the policy period, regardless of when the work was done. However, this does not compensate for damage to your own work performed by subcontractors.

This exclusion can be particularly problematic for businesses that rely heavily on subcontractors. It's essential to review your policy with your insurance provider to understand the implications.

Pollution liability is a type of coverage that provides protection for industrial, commercial, and agricultural property owners, managers, and developers against unforeseen environmental exposures. This coverage is essential for businesses that may be at risk of pollution-related claims.

If this caught your attention, see: Environmental Liability Coverage

The standard ISO Commercial General Liability Coverage Form (CG0001 04/13) has a pollution exclusion, but it does provide limited pollution coverage for certain situations. For example, coverage is not precluded for injury or damage arising out of the products and completed operations hazard.

Pollution-related claims are commonly excluded in commercial general liability policies, but limited pollution coverage can sometimes be purchased as an endorsement. However, carriers in the E&S space often attach a "Total Pollution Exclusion" to their policies, which is much more restrictive and eliminates the exceptions to the standard exclusion.

Contractors, in particular, should be aware of the pollution exclusion in their general liability policies, as they often require separate pollution coverage. Consideration should always be given to the purchase of a separate Contractors Pollution Policy to ensure adequate protection against unforeseen environmental exposures.

Readers also liked: Limited Liability Company Llc

Prior work exclusions can be a significant headache for businesses. These exclusions exclude coverage for work completed prior to the inception date of the policy.

The coverage limitation created by prior work exclusions can result in a substantial gap in protection. Any future "occurrence" related to work done prior to the policy inception is excluded from coverage.

This means that if you've already completed a project before purchasing a policy, you may not be protected if something goes wrong with it later on.

If you intentionally cause harm to someone or damage to property, your standard liability policy likely won't cover it.

Pollution-related claims are also commonly excluded from standard liability policies, although you can sometimes purchase limited pollution coverage as an endorsement.

Claims arising from the ownership or use of aircraft and watercraft are typically excluded as well.

Professional services, like medical malpractice or legal malpractice, are another area prone to exclusion in standard liability policies.