Glossary

The commercial general liability (CGL) policy is a standard insurance policy issued to business organizations to protect them against liability claims for bodily injury (BI) and property damage (PD) arising out of premises, operations, products, and completed operations; and advertising and personal injury (PI) liability. The CGL policy was introduced by Insurance Services Office, Inc. (ISO), in 1986 and replaced the "comprehensive" general liability policy.

Employers liability (EL) coverage is provided by part 2 of the workers compensation policy. It provides coverage to the insured (employer) for liability to employees for work-related bodily injury or disease, other than liability imposed on the insured by a workers compensation law.

A corridor self-insured retention (SIR), also known as a "bikini deductible," is a self-insured layer, separating the primary layer of risk—whether insured, self-insured, or funded in a captive—from the layer immediately excess of the primary. It was first used in health insurance, inserting a deductible (a real deductible, not an SIR) between a first dollar insured health plan and major medical coverage, which is excess of the primary health insurance policy. The structure resembles a bikini because there's defined protection on the bottom and on the top but nothing in the middle. Corridor SIRs migrated from health insurance to property and casualty applications when risk managers, brokers, and creative excess insurance underwriters were looking for more sophisticated methods of allocating and funding risk. Typically, the corridor SIR layer is unfunded. It's used to lower the cost of (or provide access to) excess or umbrella insurance while relieving the insured from the requirement to fund for expected losses. It is also used in structured insurance arrangements. Corridor SIRs can be designed to cover non-aggregated per occurrence limits or a combination of per occurrence and aggregate limits. A typical corridor SIR will include per occurrence limits perhaps subject to an annual aggregate, depending on the risk and the excess insurance pricing.

Nonconcurrency is the condition created by two or more policies covering the same loss exposure that do not have identical inception and expiration dates. Nonconcurrency of an insured's umbrella policies and the liability policies required by the umbrella as underlying insurance is a problem because the nonconcurrent policy terms make it possible for a loss under an underlying policy's annual aggregate limit to use up part of the limit required by the umbrella and thus violate its underlying limits requirement.

Policy territory refers to insurance policy provisions that specify the geographic area in which coverage applies. With property and inland marine insurance the territory will usually specify where the property must be located when damage occurs for the policy to apply. Similarly, liability insurance will generally specify where the injury or damage must occur for coverage to apply. Some liability insurance policies may specify a broad territory for coverage but require that the suit must be made in a more restricted territory. For example, an umbrella liability policy might provide coverage worldwide but only if the claim or suit is brought in the United States.

Cross-liability coverage is coverage in connection with a suit brought against an insured by another party that has insured status under the same policy. Cross-liability coverage is provided as an intrinsic feature of the standard commercial general liability (CGL) policy by means of the "separation of insureds" condition. Some umbrella and professional liability policies contain insured-versus-insured exclusions that eliminate cross-liability coverage.

Coordination of coverage is the process of reviewing and possibly modifying the scope or nature of coverage provided by an insured's various liability policies to eliminate gaps or overlaps. For example, if an insured has an occurrence-based commercial general liability (CGL) policy and an umbrella policy written with a claims-made trigger, coverage gaps could result. Coordinating coverage in this instance might involve replacing the umbrella policy with an occurrence form.

Personal injury coverage is found under the commercial general liability and homeowners policies. This coverage pertains to a category of insurable offenses that produce harm other than bodily injury (BI). As covered by the 1986 commercial general liability (CGL) policy, PI includes: false arrest, detention, or imprisonment; malicious prosecution; wrongful eviction; slander; libel; and invasion of privacy. Also addressed in the homeowners policy. Under umbrella liability insurance, a broad category of insurable offenses that includes both BI and the offenses defined as "personal injury" in CGL policies.

Discrimination in an insurance context is the act or process of evaluating insurable risks and determining premiums on the basis of likelihood of loss. Insurance laws prohibit "unfair discrimination"—that is, the formulation of rates on the basis of criteria that do not fairly measure the actual risk involved. Unfair or illegal treatment of or denial of rights to persons on the basis of certain arbitrarily chosen attributes or characteristics, including race, gender, religion, creed, age, medical condition, pregnancy, sexual orientation/preference, physical appearance, marital status, physical or mental disability, or national origin. Discrimination does not usually fall within the coverage terms of the commercial general liability policy (and may even be specifically excluded by endorsement) but may be covered as a form of personal injury under some umbrella policies. However, employment practices liability insurance covers a variety of employment-related claims, including discrimination.

Ultimate net loss (UNL) is a term used to specify insured damages in an umbrella liability policy. Most umbrella policies include a specific definition of the covered damages encompassed by the term. This will typically include amounts actually payable to claimants in settlement or judgment. If defense and other supplementary payments are included within the policy's limit of liability, they may also be included in the policy's ultimate net loss definition.