Rural Water - Quarter 3, 2017 - 43
Liability Coverage Basics
BY R. CHRISTOPHER BARGER, CPCU, CIC, AIM
NATIONAL PROGRAM DIRECTOR, UTILITY SERVICES, THE CINCINNATI INSURANCE COMPANY
During my discussions with
water utility professionals, questions often
arise about commercial general liability
coverage and why certain claims aren't
covered by insurance. My answer usually
begins with the disclaimer that every claim
is different and adjusted on its own merits,
and many factors come into play that can
affect how insurance coverage may apply.
In each instance, an investigation takes
place to determine whether coverage
exists. Let's look at a realistic, hypothetical
claim scenario to see how this might apply.
On a blistering hot day, the kind where
heat waves coming off the pavement
appear to turn it to liquid, a water main
breaks and thousands of gallons of water
gush into the street. You immediately begin
emergency action protocols and your crew
expertly repairs the line in record time.
Two weeks later, a lawsuit arrives alleging
extensive water damage to expensive
landscaping-including a rare specimen of
plant-and it was caused by your utility.
The first thing you do is call your
insurance agent and ask, "Am I covered?"
That is not an easy question to answer.
Sometimes this type of claim is covered
and sometimes it isn't. Understanding
liability, negligence and how insurance
works can help reduce potential frustration
with this seemingly vague answer.
Your CGL policy is a legal contract
between you and your insurance company.
At its most basic level, your policy may
state that the insurance company, "will
pay those sums that [you] become legally
obligated to pay as damages because of
bodily injury or property damage to which
this insurance applies." To determine if your
insurance will pay for those rare plants,
your claims representative considers:
1. Are you legally liable? In simple cases,
this is usually determined by the claims
investigation process. In more complex
cases, courts make this decision.
2. Does insurance apply? This question
is usually easier to answer. Your policy
includes multiple coverage provisions
and exclusions, so any existing
coverage is included in the policy
language. If there is coverage, many
CGL policies provide for your legal