10.7 Section V – Definitions

The CGL policy includes a separate Definitions section at the end of the coverage form. This section explains the meaning of important terms used throughout the policy. Many of these definitions are also common to other commercial liability policies, so understanding them helps learners interpret liability coverage forms more accurately.

Coverage Territory

The coverage territory includes the United States, its territories and possessions, Puerto Rico, and Canada. The coverage territory also includes international waters and airspace, but only in limited circumstances. Coverage may apply in international waters or airspace when the bodily injury or property damage occurs during travel or transportation between places that are included in the coverage territory.

Vehicles

In the CGL policy, an auto is a land motor vehicle, trailer, or semitrailer designed for travel on public roads. The term also includes any attached machinery or equipment. An auto also includes any land vehicle that is subject to financial responsibility laws or other motor vehicle insurance requirements. In addition, certain self-propelled vehicles with permanently attached equipment may be considered autos, such as vehicles equipped for snow removal, road maintenance other than construction, or street cleaning.

An auto does not include mobile equipment. Mobile equipment generally refers to land vehicles designed for uses other than regular travel on public roads. Mobile equipment includes land vehicles that are:

• Designed for use mainly off public roads;
• Designed for use only on or next to premises owned by or rented to the insured;
• Designed to travel on crawler treads; or
• Used to provide mobility for certain permanently mounted equipment.

Examples of mobile equipment include bulldozers, farm machinery, forklifts, and vehicles with permanently mounted power cranes, shovels, diggers, drills, graders, scrapers, or rollers. Mobile equipment also includes vehicles that are not self-propelled but are used to provide mobility for permanently attached equipment, such as air compressors, pumps, generators, and devices used to raise or lower workers.

Employees and Workers

A leased worker is a person provided to the insured by a labor-leasing firm to perform duties related to the insured’s business. Under the CGL policy, leased workers are included within the definition of employee. This means they are treated as employees for purposes of applying the policy’s coverages, exclusions, and conditions.

A temporary worker is a person whose services are provided to the insured for a limited purpose. This may include substituting for a permanent employee who is on leave or helping the insured meet seasonal or short-term workload needs. Under the CGL policy, temporary workers are not considered leased workers or employees.

Volunteer workers are individuals who donate their time to the insured and act under the insured’s direction. They do not receive compensation for their work. Under the CGL policy, volunteer workers are not considered employees.

Your Product and Your Work

In the CGL policy, your product refers to goods or products that are manufactured, sold, handled, distributed, or disposed of by:

• The named insured;
• Others trading under the named insured’s name; or
• A person or organization whose business or assets the named insured has acquired.

The term also includes containers, other than vehicles, as well as materials, parts, or equipment furnished in connection with those goods or products. In addition, your product includes representations made about the product’s quality or performance, along with any warnings or instructions provided with the product.

The term your product does not include vending machines or similar property, even if they are made available for use by others. Real property, such as buildings and land, is also not considered a product under the CGL policy.

In the CGL policy, your work refers to work or operations performed by the named insured or on the named insured’s behalf. This includes materials, parts, or equipment furnished in connection with that work or those operations. Similar to your product, your work also includes representations made about the quality or performance of the work, as well as any warnings or instructions provided in connection with the work.

Impaired property is tangible property that is not the insured’s product or work, but that contains or incorporates the insured’s product or work. The property is considered impaired when it cannot be used, or is less useful, because the insured’s product or work is known or suspected to be defective, deficient, inadequate, or dangerous.

Insured Contracts

Insured contracts are certain types of contracts that qualify for coverage under a CGL policy. When the insured assumes liability under an insured contract, the policy may cover that liability according to the terms, conditions, and limitations of the policy. This means the insured’s contractual liability is not automatically excluded when the contract meets the policy’s definition of an insured contract.

Six types of agreements are automatically included within the CGL policy’s definition of insured contract. These agreements can be remembered by the acronym LEASE+.

Letter	Agreement	Description
L	Lease of Premises	Liability assumed under a lease of premises. It does not include that portion of the contract that indemnifies any person or organization for fire damage to premises rented or temporarily occupied with the owner’s permission.
E	Easement Agreement	Liability assumed under the right to use someone’s land or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad.
A	Agreement to Indemnify the Municipality	If a business wants to display a sign on city property to advertise a special event, the city municipality may require a hold harmless agreement from the business to indemnify the city municipality for any liability that may arise in the event the sign fell and caused any damage or injury to anyone.
S	Sidetrack Agreement	Contract between a railroad and a business the railroad may service. This is a type of hold harmless agreement: the business holds the railroad harmless if an accident occurs while the railroad is using the sidetrack to deliver goods to the business.
E	Elevator Maintenance Agreement	A contract agreement wherein the insured business assumes the liability pertaining to the operation of the elevator on business property, rather than the elevator maintenance company.
+	Other Tort Liability Contracts	In addition to these five contracts, any other contract or agreement pertaining to the insured’s business under which one assumes the tort liability of another party to pay for bodily injury or property damage to a third person or organization.

An insured contract does not include every contract or agreement. The CGL policy excludes certain railroad-related indemnity agreements from the definition of insured contract. Specifically, an insured contract does not include a contract or agreement that indemnifies a railroad for bodily injury or property damage arising out of construction or demolition operations that affect a railroad bridge, tunnel, or crossing.