What it does
CP 00 40 is a liability-type coverage written inside the property program. It pays the sums the insured becomes legally obligated to pay as damages for loss to covered property of others: a described building, or personal property in the insured's care, custody or control. The loss must be caused by an accident and result from a Covered Cause of Loss under the attached Causes of Loss form. The insurer has the right and duty to defend suits seeking those damages, and supplementary payments are added.
Key provisions
- Coverage applies only where the insured is legally liable, such as through negligence. It is not first-party property coverage for the owner.
- Covered perils, exclusions and limitations come from the attached Causes of Loss form, so the liability coverage is only as broad as the Basic, Broad or Special form chosen.
- Covered Property is tangible property of others in your care, custody or control described in the Declarations or the Legal Liability Coverage Schedule. Electronic data is excluded, except data that runs building systems.
- Supplementary payments, such as defense expenses, bond costs and up to $250 a day for the insured's lost earnings, are paid in addition to the limit. Extensions cover newly acquired organizations (90 days) and newly acquired property.
Who needs it
The CGL's damage-to-premises-rented coverage applies only to fire and premises rented for short periods. Tenants who occupy a whole building or large space often need more for perils beyond fire. Bailees holding customer goods may need protection for their liability to customers.
Quoting and selling notes
- Review the lease. If the tenant must insure the building itself, buy direct building coverage instead. If the tenant is only responsible for negligence, legal liability coverage may satisfy the lease at lower cost.
- Compare it with an inland marine bailee form for customer goods. That form may pay regardless of liability.
