Can One CGL Insured Sue Another One?

One of the most common questions received by the Big “I” Virtual University’s Ask an Expert service is how to provide “cross-liability” coverage under commercial general liability. 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:

7. Separation Of Insureds

Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Coverage Part to the first Named Insured, this insurance applies:

a. As if each Named Insured were the only Named Insured; and

b. Separately to each insured against whom claim is made or “suit” is brought.

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or consultants who either aren’t up on things or don’t know what they’re asking for—they’re just looking at an outdated “cheat sheet” that says they should ask for this.

Bill Wilson is director of the Big “I” Virtual University.

For answers to other coverage questions, including the rodent damage and temporarily suspending auto coverage, read this month’s Independent Agent.