Ask PIA

Rating LLC members on a commercial general liability policy

My client installs fences and is a single-member limited liability company. Initially, only the single member performed the work. Over time, however, he hired a staff of 20 employees. The member has no payroll, but just draws from the profits.

I was advised that the commercial general liability premium base must include a minimum payroll for the member, even if he has no regular payroll. The client does not want to renew because he thinks he’s being overcharged.

Could you please explain the correct way to rate this CGL policy, as I am getting conflicting opinions?

Discontinued products—completed operations

When contractors go out of business, we always recommend they buy “discontinued operations liability coverage” for products and completed operations exposures going forward. If incorporated contractors dissolve their corporations, are they free from liability? If a deck they built collapses and hurts someone, can they be sued? If the corporation is dissolved, can the individual officers of the old corporation still be sued? Should we still quote coverage for this potential liability?

New locations, operations

Does the ISO Commercial General Liability Policy cover new locations and operations of an insured automatically? Is coverage limited to the classifications shown in the declarations?

Theft from customer

We insure a beauty salon under a commercial general liability policy. One day, robbers walked in and took a $10,000 ring worn by one of the salon’s clients. What will happen if the woman sues the salon for the value of the ring?

‘Damage to property’ exclusion

Our insured was installing a sign for a business when the sign slipped. The sign scraped a wall going down, causing $12,000 worth of damage. How would the property damage exclusion j.(5) apply to the insured’s commercial general liability policy in this situation?

Audit premium for ‘inadequate’ subcontractor limits

We wrote a commercial general liability policy for a contractor with a $500,000 liability limit. He engaged a subcontractor with only $300,000 in liability coverage.

Our company is saying that the subcontractor’s limits must match our CGL limits or, upon audit, they will charge for the subcontractor as if he had no insurance of his own. Is this right?

Carpet damage

My client is a carpet cleaner, who goes to locations to clean carpets. We have submitted a claim for a carpet which was damaged by his cleaning. The carrier denied the claim citing the exclusion for damage to “your work.” Is this proper?

Health club professional liability

From a coverage standpoint is it better to rely on the silence of a commercial general liability policy for professional coverage if it is not excluded? The exposure is a health/athletic club. No exclusions apply. Or is it better to purchase a miscellaneous professional liability policy?

Additional insureds and downstream contractors

A general contractor is named as an additional insured on a subcontractor’s policy. The downstream (sub-sub) contractor has a cross-liability exclusion on his policy. If an employee of the downstream contractor gets injured and sues the general contractor, will the subcontractor’s policy respond in lieu of the downstream contractor’s policy? Does it matter whether the subcontractor also has a cross-liability exclusion on his policy?

Partners and DBAs

When insuring a partnership entity for commercial general liability insurance, should the registered DBA (“doing business as”) and the partners be listed as named insureds?

Bring-your-own liquor

I insure a small restaurant that permits customers to bring their own wine for consumption on the premises. Can this be covered without a liquor liability policy?