July 5, 2016

Five Things You Need to Know About General Liability Insurance: 2) “Notice” is Not as Easy as You Might Think

Today in our series “Five Things You Need To Know About General Liability Insurance” we discuss the complexities of providing proper notice under general liability insurance policies.  If you have been following our blog, you know that providing proper notice, under any kind of insurance policy, can be complicated. Yet, providing proper notice is one of the most important things a policyholder can do.  If done properly, it can result in coverage.  If done improperly, it can lead to an unnecessary denial of coverage.     

Most corporate policyholders are sensitized to the complexities of notice with claims made policies. Claims made notice is one of the most difficult tasks that policyholders face.  Depending on the claim, the same may hold true for general liability insurance policies as well. 

The takeaway from today’s discussion is that in house counsel should approach notice with a great deal of care.  With general liability insurance policies, more often than not, a number of policy years are implicated.  Determining just how many years may be implicated requires a careful analysis of the policy and the allegations of the underlying claim.  Being told that notice was given may not answer the more important question of whether notice was given under all of the relevant insurance policies. 

If the claim has allegations of bodily injury, property damage, advertising injury, or personal injury that extend back a number of years in time, multiple general liability insurance policies are triggered.  Insurance brokers may provide notice only under the current policy year, which may or may not be one of the years for which coverage is triggered.  When possible, all policies for which coverage is triggered should be identified in the initial notice letter.

This, however, is much more than an academic issue.  With general liability insurance policies, older policies are oftentimes the most valuable.  This is the case because newer policies often contain exclusions that may or may not be valid.  But the older policies typically do not.  Over time, insurance carriers attempt to exclude costly claims.  We saw this with mold, asbestos, and, most recently, certain kinds of intellectual property claims under advertising injury coverage.  Newer policies may exclude coverage, but the older policies may pick up the claim. 

 If you have any questions about general liability insurance coverage, or about notice in general, please contact us.  We would be happy to help.

Below is the transcript of the video:

Five Things You Need to Know About General Liability Insurance: 2) “Notice” is Not as Easy as You Might Think

Point number 2 under General Liability policies: Notice is not as easy as you might think. And, I know that’s a common theme here, these top things you need to know. Under general liability policies, you might think it’s a little bit easier than under D&O policies or those types of claims made policies because you don’t get into these issues of retroactive dates, when the claim took place, did you have a claim, didn’t you have a claim? On the surface it looks pretty simple. General liability policies cover an occurrence during the policy period. Then you look at the definition of occurrence. Occurrence is bodily injury, property damage or advertising injury. If you have any one of those things during the period, sure enough, you got coverage. Then you start thinking about it. What if I advertise for 10 years? Ok, Interesting.

What if the complainant says they’re going to hold you responsible for activities that took place in your copyright over 5 years? Well, that’s more than one policy. That’s not just the one policy that’s current when the lawsuit came in, which would be your obvious reaction if it was a D&O policy. But, a general liability policy, what will happen is someone in the company will tender it, “Hey, give them the GL policy, maybe it’s covered.” They give them the GL policy, and the insurance company says, “That’s got an exclusion for that,” and it may. They may be legitimately correct on that, and then it dies.

What didn’t get done is no one thought, do I have the right policy? Should I go back 5 years, should I go back 10 years? Sure enough, if you go back 10 years you might find that the first 2 years didn’t have that exclusion, and that’s very commonplace because the way these exclusions get put on these policies is they’re not there. The policy covers everything unless excluded. Then someone says, “Shoot, we got a lot of mold claims. What do you want to do? Let’s put on mold exclusion,” so a mold exclusion comes on. That appears 3 years after the mold claims start coming out. Asbestos, saw the same thing. Pollution, saw the same thing. Copyright, starting to see that now in the GL policies.

What’s happening is you got to find the early policies, if you want to find the coverage. A lot of times those are the policies that are not looked at. The point is they cover occurrences during the period, and that may trigger multiple policies, not just one.


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