Hard-to-place accounts such as restaurants or bars can be a challenge for insurance agents. The standard commercial general liability (CGL) policy offers great broad coverage, but contains exclusions that can leave some significant gaps for certain clients. CGL exclusions serve a number of purposes, and are usually designed to coordinate with other common types of coverage. Some exclusions serve to protect the insurer financially from risks that are deemed “uninsurable.” Additionally, there are “business risks exclusions” that are designed to place accountability on the insured regarding the quality of their work or products.
While exclusions are in place to protect both the insured and the insurer, the resulting coverage gaps can create costly problems for clients, especially those in the bar and tavern category. Here are three of the most commonly missed CGL policy exclusions, and how agents can help fill those coverage gaps.
The Liquor Liability Exclusion
A commercial general liability policy’s liquor liability exclusion precludes coverage for both bodily injury and property damage for which the insured may be held liable by reason of “causing or contributing to the intoxication of any person.” For establishments that derive a large portion of their business through the sale of alcoholic beverages, this is an exclusion that needs to be addressed.
The liquor liability exclusion exists for a good reason. Just as commercial general liability policies have an auto exclusion as not to be used as substitutes for auto policies, a liquor liability exclusion is there so that CGL policies are not used as substitutes for liquor liability policies.
The Assault and Battery Exclusion
One very often forgotten exclusion is the assault and battery (A&B) exclusion. This serves to exempt the insurer from paying for any “expected or intended” injuries. The A&B exclusion is often very broad, with many clients believing they are covered in the event an A&B case is brought against their establishment – until the lawsuit comes and they realize they’re not. Assault and battery coverage can easily fill in this coverage gap, and help protect clients from financial loss related to A&B lawsuits against their establishments.
The Subcontractor Exclusion
A standard commercial general liability policy often has exclusions surrounding the use of subcontractors such as bouncers or security guards. These types of contracted employees present a risk for establishments, largely due to the reputation of violence that bouncers tend to have. For establishments who need some type of door presence, an ID-checker is typically a more insurable option. For clients who insist on having security present during certain hours, agents may want to recommend they reduce their liability by hiring from a licensed and bonded security company.
About American Team Managers Insurance Services
Founded in 1998 by Chris C. Michaels, American Team Managers Insurance Services (ATM) has provided wholesale and MGA services to more than 5,000 independent insurance agents throughout the United States. Our goal is to establish close, long-term relationships with our agency partners and insurance carriers and provide competitive products for the Exclusive and Non-Exclusive markets that we serve. For more information on our products and services, give us a call at (714) 414-1200 to speak to a representative.