CGL Lawsuits, Rats and Lay-Ups

In the first Ace Insura adventure published in Independent Agent magazine, damage was caused by a skunk. One of the exclusions cited by the adjuster was for damage caused by rodents. You may have experienced similar claim denials with other critters such as squirrels. So the question is, outside of mice and rats, what is a “rodent”?

There are more than 1,500 species of rodents. To be more precise, there are more than 1,500 species of animals within three suborders—sciuromorpha, myomorpha and hystricomorpha—of the order of rodentia. Sciuromorpha means “squirrel-like” and includes squirrels, marmots, chipmunks, gophers, beavers, kangaroo rats and springhaas. Myomorpha means “rat-like” and includes rats, mice, hamsters, lemmings and voles. Hystricomorpha means “porcupine-like” and includes porcupines, cavies, capybaras, chinchillas and agoutis.

So, if the rodent exclusion is cited to deny a claim for damage caused by an animal, visit the Big “I” Virtual University and check out this complete listing of rodents. And you may want to save this article for future reference in case a “rat” is involved in a claim denial.

Commercial insureds may take vehicles out of commission during certain times of the year. Likewise, personal auto insureds might winter in Florida and want to suspend their auto insurance for several months to save money.

First of all, keep in mind that there is no “ISO standard” personal auto endorsement to accomplish this. So, be sure to carefully review any company’s proprietary form and, most importantly, determine if coverage must be expressly reinstated. The insured must also be made aware of possible coverage gaps while operating a vehicle while coverage is suspended, preferably in writing.

With regard to commercial auto, ISO has both standard suspension and reinstatement endorsements, but be sure you understand the CLM rules when using them. Also, be aware that the use of these endorsements is not without risk—to your insureds or your E&O policy.

For the caveats on suspending coverage, go to the VU.

One of the most common questions received by the VU’s Ask an Expert service involves how to provide “cross liability” coverage under the CGL. The question typically arises from a certificate request for the coverage or, more often, a request to remove a cross liability exclusion. The term “cross liability” deals with whether or not one insured can sue another under a liability policy. The bad news is that, under the ISO program, there is no endorsement to provide cross liability coverage. The good news is that there’s no endorsement because none is needed; it’s included in the CGL policy itself and has been since 1986:

Why people still ask for a “cross liability” endorsement to remove a nonexistent exclusion (unless they want to limit such suits) is a mystery. In fact, some states may have a statutory provision prohibiting the use of cross-suit exclusions in most basic liability policies. Most likely, you’re dealing with attorneys or consultants who either aren’t up on things or don’t know what they’re asking for—they’re just looking at an outdated “cheat sheet” that says they should ask for this.

To learn more about this issue, visit the Virtual University.