The CGL Claim and the Broker's Error
Dan is a broker who has insured a landscaping company, GreenScape, for eight years. GreenScape has a commercial general liability policy with a $5 million limit and a standard 'your work' exclusion. In November, a retaining wall GreenScape built two years ago collapses and damages a neighbour's pool house, causing $250,000 in damage. GreenScape's owner, Leo, calls Dan and asks him to 'put the claim through last year's policy' because the current policy renewed in January with a higher deductible and a new exclusion for retaining walls. Dan realizes he forgot to recommend the endorsements that would have covered the loss, and he is also owed $9,000 in unpaid commissions by Leo. Leo says, 'You owe me - just backdate the certificate of insurance so the claim is covered.'
1. Explain why Leo's request to report the claim under last year's policy is improper and what Dan must do.
Read the worked answer
A CGL policy is occurrence-based: the policy in force on the date of the occurrence responds, not the policy in force when the claim is reported. The retaining wall collapsed in November, so the current policy - with the higher deductible and the new retaining-wall exclusion - is the one that applies. Asking Dan to 'put the claim through last year's policy' or to backdate a certificate is insurance fraud and a misrepresentation to the insurer.
Dan must refuse, explain why, and not alter any document. He should report the claim promptly and accurately to the current insurer, with the correct loss date. If he backdates a certificate, he risks licence revocation, criminal charges, and personal liability; the insurer could also rescind the policy.
2. Identify Dan's professional and ethical obligations, including any conflict of interest and E&O considerations.
Read the worked answer
Dan owes GreenScape competence, honesty, and disclosure. He must tell Leo that he cannot backdate the claim, that the current policy applies, and that the new exclusion may bar coverage. Dan must disclose his own possible error - failing to recommend the endorsements - to Leo and to his E&O insurer promptly. He must not let the $9,000 owed to him influence his advice; that is a conflict of interest, and he should disclose it and recommend that Leo obtain independent advice if the conflict cannot be managed.
He should document all communications. If he admits liability to Leo, he should be careful because admissions can affect E&O coverage; notice to the E&O insurer is the priority. He may also have a duty to report his own conduct to RIBO if it constitutes misconduct.
3. What coverage issues arise under the CGL policy for the retaining wall loss?
Read the worked answer
Occurrence and property damage. The collapse is an 'occurrence' causing property damage to a third party's pool house. Your work exclusion. The standard CGL 'your work' exclusion bars damage to the insured's own work and, in many wordings, damage to other property arising out of the insured's work if the work was defective or not completed. The pool house is other property, so the insurer will argue the exclusion applies because the damage arose out of GreenScape's retaining wall. Completed operations. If the policy includes completed-operations coverage, the analysis shifts; the exclusion may still apply to the defective work itself. New endorsement. The current policy's retaining-wall exclusion may bar the claim entirely if it is worded broadly. Dan should not prejudge coverage; he should report the claim and let the insurer respond, while advising Leo of the dispute.