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Section II – General Liability Coverages

D – Who Is An Insured 

Actual Policy Language

Explanation

SECTION II -- GENERAL LIABILITY COVERAGES

II. General Liability

The General Liability section of the Auto Dealers Coverage Form closely tracks the Commercial General Liability Coverage Form (04 13 edition). 

D. Who Is An Insured

D. Who Is An Insured

The following are "insureds" for General Liability Coverages: 

1. You.

1. You

“You” is defined in the opening section of the Auto Dealers Coverage Form as the named insured shown in the Declarations, and the named insured’s spouse if the named insured is an individual.

The individual named insured and spouse are covered only for their interest in auto dealerships solely owned by the named individual. If the individual, or spouse, is involved in additional dealerships of which he or she is not sole proprietor, those dealerships must be added to the policy or insured separately. Of course, liability for personal activities (non-business) is not intended to be covered under this policy.

2. Your partners and their spouses, if you are a partnership, but only with respect to the conduct of your "auto dealer operations".

2. Partners of Partnerships

A partnership is a legal entity, usually described as including the individual partners: "John Doe and Joe Blow, doing business as (d.b.a.) Blow & Doe." This description does not mean that the partners are being named as individual insureds. Under usual experience rating rules, an individual partner (or officer in the case of corporations) can be added to the policy declarations only when that individual owns more than 50% of the named insured business. In that case, the individual named partner would be covered additionally for any auto dealership of which he is sole proprietor.

A partnership can also be comprised of one or more partners that are not individuals, such as corporations, LLCs and LLPs. In this case, it is usual to include the names of the partners in the declarations. (Example: John Doe, Inc. and Joe Blow, LLP, a partnership, dba Blow and Doe)

There is no automatic coverage for newly-acquired or -formed partnerships involving different partners (Paragraph 6 below).

3. Your members, if you are a limited liability company, but only with respect to the conduct of your "auto dealer operations". Your managers are also "insureds", but only with respect to their duties as your managers.

3. Members and Managers of Limited Liability Companies

A limited liability company is similar to a corporation, but its owners are called members and its executives are called managers. Members and managers are covered when acting within the scope of their duties. However, there is no automatic coverage for newly-acquired or –formed LLCs (Paragraph 6 below).

4. Your "executive officers" and directors, if you are an organization other than a partnership or limited liability company, but only with respect to their duties as your officers or directors. Your stockholders are also "insureds", but only with respect to their liability as stockholders.

4. Executive Officers and Directors of Corporations

This paragraph describes corporate insureds, among others. Executive officers and directors are not covered when acting outside the scope of their duties. This might involve a business activity or a personal activity not related to the named insured dealership.

An officer owning more than 50% of the corporation can be individually named on the policy. He would be protected for his or her activities relating to the named corporation and other dealerships of which he is sole proprietor.

5. Your "employees", other than either your "executive officers" (if you are an organization other than a partnership or limited liability company) or your managers (if you are a limited liability company), but only for acts within the scope of employment by you or while performing duties related to the conduct of your "auto dealer operations". However, no "employee" is an "insured" for:

5. Employees

Employees of the named entities are protected by the policy, subject to the exceptions shown below.

Note that a corporate executive officer is covered under paragraph 4 above and excluded from this section, and thus not subject to the exceptions shown in paragraphs “a” and “b” below. For example, an executive officer who is sued by an injured employee is covered on this policy.

a. "Bodily injury" or "personal and advertising injury":

Exceptions to Insured Status for Employees

(1) To you (if you are an individual), your partners (if you are a partnership), your members (if you are a limited liability company) or a fellow "employee" of the "insured" while in the course of his or her employment or while performing duties related to the conduct of your "auto dealer operations";

(2) To the spouse, child, parent, brother or sister of that fellow "employee" as a consequence of Paragraph (1) above;

(3) For which there is any obligation to share damages with or repay someone else who must pay damages because of the injury described in Paragraph (1) or (2) above; or

a.(1)(2)(3) Injury to Fellow Employees

Employees are not covered for bodily injury or personal injury to fellow employees, or to the named individual insured, or to the named insured's partners or members.

This exclusion is necessary to avoid liability protection for injuries that should be covered by workers' compensation.

In Texas, an injured employee who collects workers' compensation benefits is barred from suing a fellow employee for the injury. Employers who do not carry workers' compensation insurance leave employees exposed to liability claims, many of which may not be covered under the employee's homeowners liability.

Notice that executive officers of a corporation and managers of an LLC are not considered employees under Paragraph 5 above. These individuals would be protected for suits from injured employees.

(See CGL technical report Injuring Fellow Employees.)

(4) Arising out of his or her providing or failing to provide professional health care services.

a.(4) Professional health care employees

The term "professional" is the key to this exclusion of employees. Only trained medical personnel (doctors, nurses) are excluded from coverage and only for their medical professional activities.

The named insured business is covered for the liability created by such personnel.

Employees without medical training who provide first aid at the time of an injury are not excluded by this paragraph, but paragraph (1) above eliminates coverage for bodily injury to a fellow employee, unless they are executive officers. See CGL technical report Defibrillator Liability.

b. "Property damage" to property:

(1) Owned, occupied or used by;

(2) Rented to, in the care, custody or control of, or over which physical control is being exercised for any purpose by

you, any of your "employees", any partner or member (if you are a partnership), or any member (if you are a limited liability company). 

b. Property Damage Claims

This exclusion avoids picking up what amounts to "first party" property insurance under this policy. A business cannot sue its employee for damage to its property and hope to recover under its liability insurance.

First-party coverage for damage to property of employees may be available under the employee's Homeowners policy.

6. Any "auto" dealership that is acquired or formed by you, other than a partnership or limited liability company, and over which you maintain ownership or majority interest, will qualify as a Named Insured if there is no other similar insurance available to that "auto" dealership. However:

a. Coverage under this provision is afforded only until the 90th day after you acquire or form the "auto" dealership or the end of the policy period, whichever is earlier; and

b. Coverage does not apply to:

(1) "Bodily injury" or "property damage" that occurred; or

(2) "Personal and advertising injury" arising out of an offense committed

before you acquired or formed the "auto" dealership.

6. Newly Acquired Dealerships

This automatic coverage for newly acquired or formed dealerships contains several important limitations:

  • It does not automatically cover partnerships or joint ventures or limited liability companies.
  • The named insured must be a majority owner of the new organization.
  • The insurance is contingent on no other insurance being available to the new organization.
  • The automatic coverage is afforded for only 90 days. After that time, the new entity must be named on the policy.
  • This coverage does not apply to occurrences that took place before the insured's acquisition. However, new occurrences of injury or damage arising out of prior activities of the organization would be covered.

Endorsement CA 25 53 (Exclusion - Newly Acquired or Formed Auto Dealership) eliminates this automatic coverage.


No person or organization is an "insured" with respect to the conduct of any current or past partnership or limited liability company that is not shown as a Named Insured in the Declarations.

Exception - Partnerships and LLCs Not Listed in Declarations

The exception makes it clear that only partnerships and limited liability companies named on the policy have protection. Partners in a partnership retain individual liability for the acts of the partnership, and the concern is that such liability might be covered under the policy without naming the legal entity itself. This is particularly the case where there is a sharing of premises or employees between entities.

The exception also blocks coverage for past partnerships and limited liability companies not named on the policy.

Additional Insureds

Endorsement CA 25 09 (Additional Insured - General Liability Coverages - Owners of Leased or Rented Land or Premises) covers the insured’s landlord as an additional insured.

Endorsement CA 25 29 (Additional Insured - General Liability Coverages - Concessionaires Trading Under Your Name) adds a concessionaire as an additional insured, with respect to their liability while trading under the named insured's name.

Endorsement CA 25 30 (Additional Insured - General Liability Coverages - Controlling Interest) adds an entity having financial control of the insured as an additional insured.

Endorsement CA 25 31 (Additional Insured - General Liability Coverages - Grantor of Licenses - Automatic Status When Required by Licensor) automatically adds an entity having a license with the insured as an additional insured, when the grantor requires additional insured status by contract.

Endorsement CA 25 32 (Additional Insured - General Liability Coverages - Grantor of Licenses) adds an entity having a license with the insured as an additional insured.

Endorsement CA 25 45 (Additional Insured - General Liability Coverages - Lessor of Leased Equipment - Automatic Status When Required in Lease Agreement With You) automatically adds lessor of leased equipment as an additional insured, when such status is required by written contract.

Endorsement CA 25 46 (Additional Insured - General Liability Coverages - Co-Owner of Insured Premises) adds premises co-owner as an additional insured.