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Learning Objective: Define the terms: “coverage territory,” "bodily injury," and"property damage."Coverage TerritoryBecause our economy has become global, Coverage Territory is important and isdefined by three categories:US, Puerto Rico, & CanadaThe first part of the definition lists specific geographic locations that make up the"coverage territory:" the United States of America (including its territories andpossessions), Puerto Rico, and Canada.Note:Because of its proximity and because of the North American Free Trade Agreement, someindividuals think Mexico would be included in the “coverage territory.” Mexico is notautomatically included in the “coverage territory.”International Waters or AirspaceThe "coverage territory" also includes international watersor airspace during the course of transportation, providedthere is no transportation between points outside the listedgeographic locations in part a. of the definition. A planegoing from New Orleans, Louisiana to San Juan, PuertoRico is considered to be in the "covered territory."However, the same plane flying between New Orleans andMexico City would not be in the "covered territory."Rev. 03/1042

Learning Objective: Define the terms: “coverage territory,” "bodily injury," and"property damage."The third category of the definition of "coverage territory" is as follows:All Parts of the World under Certain CircumstancesAll parts of the world are considered as being in the "covered territory" if the injury ordamage arises out of goods or products made or sold by the insured in the territorydescribed in the first part of this definition.Example The insured makes a product in St. Louis, and ships it directly to their customerin Europe. The product was made in the "coverage territory."Business activities of persons whose home is located in the geographic location listed inpart a. of the definition, but are away from home for a short time (not defined) on theinsured's business.Example A factory representative who lives in Boston causes a covered loss whileattending a 10 day business show in Paris, France.The concept of worldwide coverage requires further explanation.Due to the internet's ability to cross all national boundaries, ISO has found it appropriateto expand the worldwide section in the "coverage territory" to include many internetactivities such as Personal and Advertising Injury offenses that occur through theinternet or other electronic means of communication.The second condition that must be met is that the insured's responsibility must bedetermined in a "suit" filed and decided in the geographic location listed in part a. of thedefinition or determined in a settlement the insurance company agrees to.Requirements that must be met before worldwide coverage applies:Tip:Goods must be made or sold in a. above or caused by a covered person residing in a. abovewhile traveling on business or be a Personal and Advertising Injury offense that occurs throughthe internet or other electronic means of communication.andLegal action brought in a. above or settlement agreed to by the insurance company.Rev. 03/1043

Learning Objective: Define the terms: “coverage territory,” "bodily injury," and"property damage."Covered TerritoryClick on a number see a Covered Territory example.1. The first part of the definition lists specificgeographic locations:The United States of America, (including its territoriesand possessions), Puerto Rico and Canada.2 The "coverage territory" also includes internationalwaters or airspace during the course oftransportation, provided there is no transportationbetween points outside the listed geographiclocations in part a. of the definition.3. All parts of the world are considered as being in the "covered territory" if both ofthe following apply:a)The injury arises out of either of:Goods or products made or sold by theinsured in the territory described in thefirst part of this definition.ORBusiness activities of persons whosehome is located in the geographiclocation listed in part a. of the definition,but are away from home or a short timeon the insured's business.ANDb)The second condition that must be met is that the insured's responsibilitymust be determined in a "suit" filed and decided in thegeographic location listed in part a. of the definition or determined ina settlement the insurance company agrees to.Rev. 03/1044

Knowledge CheckYour client manufactures machinery in the USA and sold a machine to a company inMexico. The machine injured a worker at the Mexican factory. Choose the statementthat best describes how your client's Commercial General Liability (CGL)Coverage Form will respond.A. There is no coverage provided by the CGL Policy under any circumstances forthis loss.B. The CGL Policy extends worldwide coverage for products made or sold in theUSA, its territories and possessions, Puerto Rico, and Canada if theresponsibility for damages is determined by a suit in the previously describedterritory.The correct answer is B. The CGL Policy extends worldwide coverage for productsmade or sold in the USA, its territories and possessions, Puerto Rico, and Canada ifthe responsibility for damages is determined by a suit in the previously describedterritory.Learning Objective: Define the terms: “coverage territory,” "bodily injury," and"property damage."Bodily InjuryBodily injury means physical harm to the body,sickness, or disease, including resulting death. The intentof the CGL Policy is that "bodily injury" is defined assome type of physical manifestation that must besustained by an injured person. However, "bodily injury"has been expanded by case law in some states toinclude things such as mental anguish, emotional trauma,loss of companionship, and other claims where there isno actual physical harm to the body tissue.Rev. 03/1045

Learning Objective: Define the terms: “coverage territory,” "bodily injury," and"property damage."Property DamageThis definition includes damage to tangible property as well as the loss of use of thatdamaged property. It also includes the loss of use to tangible property that does notsuffer actual damage.Example While digging, an insured accidentally cuts anelectrical cable. The cost to repair and/or replace thedamaged cable is covered as damage to tangibleproperty. The power company loses income becauseit could not sell electricity while the cable is beingrepaired and/or replaced. This loss of income iscovered as loss of use of that damaged property.Business owners in the area suffered loss of income because they were withoutpower. Although their property did not suffer direct tangible loss, the loss ofincome because they were without electricity is an example of loss of use oftangible property that does not suffer actual damage.EmployeeThe CGL Policy does not actually define employee. The definition only tells us thatemployee does include "leased worker" (one leased by a labor leasing firm), but doesnot include "temporary worker" (a substitute for a permanent employee).Rev. 03/1046

Learning Objective: Give examples of the Personal and Advertising Injury perils.False arrest, detention, or imprisonment: Example: Wrongfully detaining a suspected shoplifterMalicious prosecution Example: Filing charges and making false statements against someone withoutcause and with maliceWrongful eviction from, wrongful entry into, or invasion of the right of privateoccupancy of a room, dwelling or premises that a person occupies by or onbehalf of its owner, landlord, or lessor. Example: A landlord wrongfully evicts a tenant in order to lease out the premisesat a higher rental rateOral or written publication of material that violates a person's right of privacy. Example: Releasing privileged and/or protected personal information such as aSocial Security number or medical condition.Oral or written publication of material that slanders or libels a person ororganization or disparages their goods, products, or services. Slander is spoken;libel is printed. Example: Making false statements about the quality of a competitor'sworkmanship to improve your chances of getting a production contract.The use of another's idea in your advertisement. Example: An individual opens a fast-food establishment, using the same buildingplans, color schemes, uniform design, menu offerings and layout of anestablished fast-food chain. Although the new establishment uses a differentname and logo, they used the ideas of the established chain.Infringing upon another's copyright, trade dress, or slogan in your"advertisement". Example: Using gold colored, arched Ms to advertise McCales Burgers andFries.Please refer to the end of Lesson 2 Topic B to complete Self Quiz 3.Rev. 03/1047

Lesson 2 Topic C - Who is Insured?The CGL Policy provides coverage for a number of different people and/or entities. Inthis section of the policy, you will learn whom the CGL Policy protects (covers) in theevent of a lawsuit or claim. Remember that these are the people and entities that theCGL Policy will defend if a claim occurs.In this topic, we cover the four major categories of insureds:1. Named insured2. Others with respect to business operations3. Newly acquired or formed entities4. TrustsPlease refer to the section Who is an Insured that begins on page 9 of the CGL.Note:Learning Objective: Determine who is an "insured" under the provisions of theCGL Policy for specific situations.Named InsuredsThe CGL Policy gives coverage to the Named Insured shown in the Declarations. TheNamed Insured is defined as "you" or "your." Named Insureds have the broadestcoverage of any insured under the policy.Examples of Named Insureds include: Individuals Partnerships or Joint Ventures Organizations Limited Liability Company (LLC) TrustsRev. 03/1048

Learning Objective: Determine who is an "insured" under the provisions of theCGL Policy for specific situations.The following named insureds provide automatic coverage for those who are "downline."IndividualsMany businesses consist of one person who owns theoperation. When these businesses are notincorporated, they are known as sole proprietorships.You will often see them named on an insurance policythis way: Margie Marvelous d/b/a Margie's InsuranceTraining Service. The d/b/a merely tell us what Margiedoes.The Named Insured is considered to be an individual. When the Named Insured is anindividual, both the Named Insured and a spouse (if one exists) are consideredinsureds, but only with respect to the conduct of a business which is solely owned bythe Named Insured.Rev. 03/1049

Knowledge CheckYes or No: Is the spouse of a sole proprietor considered an automatic insured withrespect to the conduct of the business insured by the CGL?The correct answer, “Yes.”Learning Objective: Determine who is an "insured" under the provisions of theCGL Policy for specific situations.Partnerships or Joint VenturesA partnership is an agreement between two or moreindividuals to combine capital, labor, skill, and effort, inwhole or part, for the operation of a business. A partnershipis designed to continue for the life of the partners. A rule ofgeneral partnership law is that partners share profits andare responsible to pay losses. Partners are individuallyliable for debts, including those arising from liability lossesof the partnership.A joint venture operates like a partnership, with the exception that it has a limitedpurpose and operates for a limited time. Parties of a joint venture are commonlyreferred to as members. One example of a joint venture is building a strip shoppingcenter, with the intent of selling it at a specified time.When a partnership or joint venture is the Named Insured in the Declarations, then theindividual partners or members are automatically considered insureds. Spouses of eachpartner or member are also automatic insureds with respect to the conduct of thatpartnership or joint venture.Knowledge CheckYes or No: Is the spouse of a partner or member in a joint venture considered anautomatic insured under the CGL with respect to the conduct of that partnership or jointventure?The correct answer, “Yes.”Rev. 03/1050

Learning Objective: Determine who is an "insured" under the provisions of theCGL Policy for specific situations.Organizations (corporations, municipalities, etc.)When the Named Insured is a business organization,other than a partnership, joint venture, or LLC; it iscategorized under Other Organizations. Examplesinclude corporations, associations, and municipalities.When the business falls into this category, the followingare automatic insureds under the CGL Policy: Executive officers and directors, but only with respect to their duties as officers ordirectors of the named business. Stockholders, but only with respect to their liability as stockholders.Knowledge CheckYes or No: Is the spouse of a corporate officer or executive director considered anautomatic insured with respect to the conduct of that corporation?The correct answer, “No.”Knowledge CheckYour insured is Green Grow, Inc. Which statement best describes "Who is anInsured" under Green Grow's unendorsed Commercial General Liability CoverageForm?A. Green Grow Inc., its executive officers, its directors, its stockholders and itsemployees.B. Green Grow Inc., its executive officers and their family members, its directors, itsstockholders and its employees.C. Green Grow Inc., its executive officers, its directors, its stockholders, employeesand an existing company in which Green Grow, Inc. has 25% ownership.D. Green Grow Inc. and its employees only.The correct answer is A, “Green Grow Inc., its executive officers, its directors, itsstockholders and its employees.”Rev. 03/1051

Learning Objective: Determine who is an "insured" under the provisions of theCGL Policy for specific situations.Limited Liability Company (LLC)A Limited Liability Company is a type of business ownership that combines theattributes of a partnership and a corporation. Members and managers control itsoperation. Like a partnership, the members and managers share in the profits and aretaxed as individuals. Like a corporation, the members and managers are not at risk forcorporate debt, including liability losses of the company. Even though members andmanagers cannot be held individually liable for liability losses suffered by the LLC, theycan be named individually as a defendant in any law suit seeking such damages.When the Limited Liability Company is the Named Insured in the Declarations, themembers and managers are automatically considered insureds. Automatic coverage formembers and managers applies to their duties as a manager and their liability as amember.There is no automatic coverage for spouses of members or managers of a LimitedLiability Company.TrustsIn a Trust, you are an insured. Your trustees are also insureds, but only with respect totheir duties as trustees.Other Insureds with Respect to Business OperationsIn addition to the Named Insured, other people or entities are considered to be insuredsunder the CGL Policy. Each of the following five groups is also an insured under thepolicy. These five groups include:1. Employees2. Volunteer Workers3. Real Estate Managers4. Temporary Custodian of a Deceased Individual'sBusiness5. Legal RepresentativeRev. 03/1052

Knowledge CheckYes or No: Are spouses of members or managers of a Limited Liability Companyconsidered automatic insureds with respect to the conduct of the LLC?The correct answer, “No.”Learning Objective: Determine who is an "insured" under the provisions of theCGL Policy for specific situations.1. EmployeesEmployees of the Named Insured are insureds while working for the NamedInsured, but only for acts related to the conduct of the Named Insured's business.For example, if a passer-by is injured at the insured's construction site, he or shecould sue the Named Insured and the individual employee who caused the injury.The CGL Policy will provide coverage for the employee in this situation.There are certain times when an employee will not be considered an insured forbodily injury, personal injury, or property damage. Coverage is not provided foran employee who causes: Bodily or personal injury to the Named Insured, partners, members of alimited liability company, or co-employees while doing their job. Property damage to property owned, occupied, or used by the NamedInsured, any employees, or any partner or member. Property damage to property rented to, in the care, custody or control of,or over which the Named Insured, its employees, any partner, or anymember are exercising physical control for any purpose.2. Volunteer WorkerVolunteer worker means a person who is not your employee, and who donateshis or her work and acts at the direction of and within the scope of dutiesdetermined by you, and is not paid a fee, salary or other compensation by you oranyone else for their work performed for you.Rev. 03/1053

Learning Objective: Determine who is an "insured" under the provisions of theCGL Policy for specific situations.3. Real Estate ManagersPersons (other than employees) or organizations such as a managementcompany acting as a real estate manager for the Named Insured are consideredinsureds under the CGL Policy.4. Temporary Custodians of a Deceased Individual’s BusinessWhen the person who serves as sole proprietor dies, so does the business. TheCGL Policy allows for a temporary custodian of the deceased’s property to betreated as an insured.5. Legal RepresentativeOnce a legal administrator or executor is appointed, then they become a NamedInsured with respect to the rights and duties of the CGL Policy.It is advisable to inform the company underwriter if an individual dies and that a temporarycustodian or permanent administer/executor is responsible for running the business. The CGLPolicy will only provide liability coverage to the legal representative for acts that arise out ofthe administration of the deceased's business.Tip:Newly Acquired or Formed OrganizationsIf the Nam

The Commercial General Liability (CGL) Policy forms a foundation for most business liability coverage. It is designed to provide liability coverage for a variety of business liability exposures. The policy we will discuss in this lesson is the Insurance Service Office (ISO) Commercial General Liability Coverage Form (CG 00 01). Because of its .