Commercial General Liability protects the insured against bodily injury, property damage. But it is essential to understand who is an insured under this Commercial General Liability policy. Persons or Organizations can qualify as insureds. Who can qualify as an insured under a specific condition is stated below.

Sole Proprietorships:

In the case of an individual, he and his spouse are insured. But they become the insureds only with respect to the conduct of a business of which the person is the sole owner.

Read More: What is a Commercial General Liability Insurance?

If the person dies:

  • Persons or organizations having proper temporary custody of the property are insureds. Here, they are insureds only with respect to the maintenance or use of such property and only for acts until the person’s (death person) legal representative has been appointed.
  • If the legal representative is previously appointed, the legal representatives are insureds. They become the insureds only with respect to their duties as person’s legal representatives.

Partnerships, Joint Ventures or Unincorporated Organizations:

You become the insured if:

  • You are a partnership established in accordance with the laws prevailing in India.
  • You are a joint venture established in accordance with the laws prevailing in India.
  • You are an unincorporated organization, including but not limited to an association of persons or a private trust functioning in accordance with the laws prevailing in India.

Also, the insureds, in this case, will be:

  • Your partners and their spouses in the case of a partnership.
  • Your partners and their spouses in the case of joint ventures.
  • Principal office bearers and their spouses in the case of an unincorporated organization are insureds.

All the above-listed entities are insureds only with respect to the conduct of your business.

Other Organizations:

In case you are an organization other than a partnership, joint venture or unincorporated organization, then you are an insured.

  • The other organization’s directors and officers are also insureds, only with respect to their duties as the directors or officers.
  • Also, stockholders and their spouses are insureds with respect to their liability as your stockholders.

Employees:

Your employees are insureds for:

  • Acts within the scope of their employment by you.
  • Performing duties related to the conduct of your business.

Subsidiary or Newly Acquired or Formed Organizations:

Below listed Organizations qualify as named insureds:

  1. If the first named insureds hold an India incorporated or registered subsidiary Organization. At the beginning of the policy period and at the time of loss, such first named insured should control more than 50 percent right to vote in the election of the governing body of such Organization.

 

  1. An India incorporated or registered subsidiary Organization of the first named insured wherein the first named insured acquires or forms such organization during the policy period. Also, the first named insured should control more than 50 percent right to vote in the election of the governing body of such Organization.

 

Case

Rajiv, residing in Sikkim was a successful construction contractor. He had managed to complete many huge projects. Since his business was of construction projects he had taken a Commercial General Liability Insurance policy to protect himself against losses.

He had recently constructed a new residence for Mr. Shukla. The residential property was also adjoined with a garage catering to Mr. Shukla’s demand.

Read More: What is not covered under Commercial Liability Insurance?

The home was completed and the homeowner, Mr. Shukla, and his family moved in. One day while parking the car in the garage, the roof on the garage collapsed because of faulty construction.

The collapsed roof damaged Mr. Shukla’s vehicle. He filed a case against Rajiv for damage to his property.

Rajiv had obtained the Commercial General Liability Insurance policy and he being the sole owner of his business, was the insured in this policy under the definition of ‘Sole Proprietorships’.  The Commercial General Liability policy provided coverage for the repairs of Mr. Shukla’s vehicle.

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