Liquor Liability Coverage Changes under New ISO Forms

ISO has revised its commercial general liability forms and endorsements, including making changes to coverage for liquor liability.

The changes—which are among several that ISO made to its CGL program in 2013—took effect in April, although agents should check with their insurance companies to find out if they plan to adopt the revisions. Some changes result in a narrowing of coverage, which can present an errors & omissions exposure.

Among the changes related to liquor liability:

Revisions to the Liquor Liability Exclusion

The liquor liability exclusion is being revised to state the exclusion applies in the following cases, even if the claims allege negligence or wrongdoing:

• The supervision, hiring, employment, training or monitoring of others; or
• Providing or failing to provide transportation with respect to any person who may be under the influence of alcohol.

The exclusion is also revised to provide that a bring-your-own establishment is not considered to be in the business of selling, serving or furnishing alcoholic beverages. The BYO revision is a broadening of coverage, while the other revisions expand the exclusion and therefore narrow coverage.

Revisions to CG 00 33 (Occurrence) and CG 00 34 (Claims Made) Liquor Liability Coverage Forms

“Section II – Who is an Insured” is being revised to include trusts as named insureds. Trustees are now automatically included with respect to their duties as trustees. This is a broadening of coverage.

Revisions to Liquor Liability Endorsements

• CG 21 50 Amendment of Liquor Liability Exclusion (Used with CGL Coverage Part)
• CG 21 51 Amendment of Liquor Liability Exclusion–Exception for Scheduled Premises or Activities (Used with CGL Coverage Part)
• CG 29 52 Amendment of Liquor Liability Exclusion (Used with Products/Completed Operations Coverage Part)
• CG 29 53 Amendment of Liquor Liability Exclusion-Exception for Scheduled Premises or Activities (Used with Products/Completed Operations Coverage Part)

The current CG 21 50 Amendment of Liquor Liability Exclusion Endorsement may be used to extend the liquor liability exclusion of the CGL to also apply to businesses that regularly serve alcoholic beverages, whether or not profit is derived. The CG 29 52 is similar, except it is used with the Products-Completed Operations Coverage Form.

The CG 21 51 and CG 29 53 endorsements are similar; however, they contain an exception to the liquor liability exclusion for specific activities, which can be listed in the endorsement schedule.

There are three changes to the endorsements:

1. Endorsements CG 21 50, CG 21 51, CG 29 52 and CG 29 53 are being revised to indicate the exclusion will apply if one of the reasons for which any insured may be held liable for “bodily injury” or “property damage” is causing or contributing to the intoxication of any person. That includes causing or contributing to the intoxication of any person because alcoholic beverages were permitted to be brought on your premises and for consumption on your premises. The result is a reduction in coverage.
2. For consistency with revisions made to the liquor liability exclusion in the various CGL coverage forms, ISO is revising the exclusions found in the CG 21 50, CG 21 51, CG 29 52 and CG 29 53 endorsements to explicitly state that the exclusions apply, even if the claims against any insured allege negligence or wrongdoing in “the supervision, hiring, employment, training or monitoring of others; or providing or failing to provide transportation with respect to any person that may be under the influence or alcohol.” This is a clarification of coverage, but may be a reduction in states where courts have ruled the exclusion is not applicable for liquor-related claims alleging negligent supervision, failure to detain an intoxicated person or failure to provide transportation.
3. The CG 21 50, CG 21 51, CG 29 52 and CG 29 53 endorsements are being revised to indicate the exclusion will apply, if the insured permits any person to bring alcoholic beverages on the named insured’s premises for consumption on the named insured’s premises. The result is a reduction in coverage.

Introduction of CG 24 06 Liquor Liability–Bring Your Own Alcohol Establishment Endorsement

To complement the revised CG 21 50 and CG 21 51 endorsements, the CG 24 06 endorsement is being introduced to amend the liquor liability coverage form insuring agreement to extend liquor liability coverage to insureds who permit any person to bring alcoholic beverages for consumption on the insured’s premises, whether or not a fee is charged for such activity or if a license is required.

This change may be considered a broadening of coverage in that it contains an express grant of coverage with respect to allowing any person to bring alcoholic beverages on an insured’s premises for consumption.

Introduction of CG 25 14 Designated Location(s) Aggregate Limit Endorsement

The optional endorsement CG 25 04 Designated Location(s) General Aggregate makes a separate general aggregate available for operations at specifically scheduled locations. The endorsement indicates the general aggregate limit applies with respect to losses that can be attributed only to operations at the designated location. Losses that cannot be attributed to a single location are subject to the policy general aggregate or products/completed operations aggregate.

The new CG 25 14 endorsement is to be used with the liquor liability coverage form. The endorsement makes the designated location aggregate applicable to “the selling, serving or furnishing” of alcoholic beverages from a single location. Losses that cannot be attributed to a single location will be subject to the policy aggregate limit.

Ted Kinney is director of education and technical affairs for the Alabama Independent Insurance Agents.