When Policy Forms Don’t Do What You Think They Do

This post was originally published on Insurance Commentary on Sept. 2nd

This week, I was part of an email discussion among some fellow insurance coverage nerds. One of them insured a cemetery monument company whose ISO CGL policy had a non-ISO “voluntary property” damage endorsement attached. The claim involved an improperly done etching on a headstone.

The problem with the endorsement was that it modified exclusion j.(4) and removed exclusion j.(5), but left exclusion j.(6) untouched and that is the exclusion that likely applies to the damage. This is very common with non-ISO CGL “broadening” endorsements that modify or remove part of an exclusion, but not all of it. Some of them, in fact, remove an entire exclusion, but not another exclusion that applies to the specific facts and circumstances of a claim.

This reminded me of two webinars I did with the late, great John Eubank, CPCU, ARM where we spent two hours examining policy forms that agents should avoid or be wary of, including those that don’t do what the agent or underwriter thinks they do. Two of those forms were the ISO CG 22 93 – Lawn Care Services – Limited Pollution Coverage and CG 22 64 – Pesticide Or Herbicide Applicator – Limited Pollution Coverage. The titles of these endorsements used to be “Lawn Care Services COVERAGE” and “Pesticide Or Herbicide Applicator COVERAGE” (EMPHASIS added].

At the request of the Big “I” Technical Affairs Committee which advocates with ISO, NCCI, ACORD, and others on behalf of agents and their customers, ISO was asked to modify these forms to clarify that there were limitations on the coverage provided. Each of these forms modified the ISO CGL pollution exclusion, but not completely and, worse, they did nothing to address exclusions J. and L. in the form which often apply to claims involving the application of pesticides and herbicides. As a result, I published this article in 2013:

The CGL and Damage Caused by Pesticides and Herbicides

This first came to my attention when Ohio passed a law requiring firms using chemicals like this to insure the exposure. These endorsements were touted as a means to accomplish that but, reviewing the statute, it was clear that neither form adequately complied with the law.

The lesson here is that many policy forms, from “broadening” endorsements to auto driver exclusion endorsements don’t do what many people think they do. Always remember to caveat emptor and RTFP!

Bill Wilson, CPCU, ARM, AIM, AAM

Founder at InsuranceCommentary.com

One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America.