Author: Chris Boggs

Insurance Services Office (ISO) promulgates and maintains hundreds of Commercial General Liability (CGL) endorsements. Some enhance coverage, some reduce coverage. However, insurance carriers don't necessarily limit their library of available endorsements to those provided by ISO; many carriers utilize and attach proprietary endorsements to alter even ISO forms.

ISO endorsements are reasonably well understood due to their familiarity; but proprietary endorsements aren't standardized or always familiar. And keep this in mind regarding proprietary endorsements, a product manager once told me that a proprietary endorsement can say just about anything the carrier wants it to say if it is just titled correctly. This means agents must read all endorsements – ISO and especially proprietary endorsements.

“Duh!" You say. “Come on, Boggs; we all know this."

While I have little to no doubt most agents know to read endorsements, my question is this – do most agents actually read the endorsement language, especially proprietary endorsements? Or do agents take the easy route and depend on the title and ignore the language?

Randy Maniloff, an insurance attorney and publisher of the newsletter Coverage Opinions, recently wrote an article that ultimately highlighted the dangers that may be found in non-ISO endorsements. In his article, Maniloff cautioned that carriers are taking exclusionary language to extremes. Following is one example of such dangerous exclusionary endorsements:

Bodily Injury to Employees, Workers or Contracted Persons of Insureds or Contracted Organizations

This insurance does not apply to “bodily injury" to:

(1)    Any person who is an “employee", “leased worker", “temporary worker", “volunteer worker" of you or any insured arising out of and in the course of:

1. Employment by you or any insured; or
2. Performing duties related to the conduct of your or any insured's business;

(2)    Any person who contracted with you or with any insured for services arising out of and in the course of performing duties related to the conduct of any insured's business;

(3)    Any person who is employed by, is leased to or contracted with any organization that:

1. Contracted with you or any insured for services; or
2. Contracted with others on your behalf for services;
   
   Arising out of an in the course of employment by that organization or performing duties related to the conduct of that organization's business; or

(4)    The spouse, child, parent, brother or sister of any of those persons as a consequence of the “bodily injury" described in Paragraphs (1), (2) or (3) above.

For the purposes of this exclusion, contracted with includes contracting with an oral or written contract.

This exclusion applies:

1. Whether the insured may be held liable as an employer or in any other capacity; and
   
2. Whether the insured may have any obligation to share damages with or repay someone else who must pay damages because of the injury. 
   

Close examination of this endorsement shows this language is the CGL's employer's liability exclusion (2.e.) on powerful (and maybe illegal) steroids. Exclusion 2.e. removes coverage for injury to the insured's employee (except in third-party-over situations). However, this proprietary endorsement excludes injury to the insured's employees and injury to employees of any other person or entity in a contractual relationship with the insured. Can such a broad exclusion be managed by any means?

According to Maniloff, some carrier endorsements are excluding CGL protection for injury to any person on the job site – whether or not they are in a contractual relationship with the insured. Such an amazingly broad exclusion leaves the insured open to expensive coverage gaps.

Apparently, agents are facing a coming new world of unimaginable exclusionary endorsements. If carriers continue to develop broad exclusionary endorsements to protect themselves from risk they perceive to be greater than that for which they are collecting premium, agents must be prepared to address the new gaps with their clients – and maybe complain to the departments of insurance.
 

Last Updated: February 10, 2025

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