The Restaurant, the Romaine, and the Broken Jaw
Ridgeline Grill carries a commercial general liability policy on an occurrence basis: $1,000,000 each occurrence, $2,000,000 general aggregate, $2,000,000 products-completed operations aggregate, $50,000 fire legal, $5,000 medical expense. Two endorsements apply: an absolute liquor liability exclusion (the restaurant buys separate liquor coverage from another carrier) and an assault-and-battery exclusion. Four events in one policy year: (1) in June, 40 customers contract food poisoning from contaminated romaine supplied by a produce vendor; claims total $700,000; (2) in August, 12 guests at a single banquet become ill from the same shipment; claims total $400,000; (3) in July, a customer slips on grease tracked into the dining room and sues for $1,200,000; (4) in September, an after-hours altercation ends with a bartender breaking a patron's jaw; the patron sues for $200,000, alleging only battery.
1. Allocate the two food-poisoning events to the correct coverage parts and limits, and explain the occurrence counting.
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Coverage part: these are products-completed operations claims. The injury arises from the restaurant's product away from the premises (or after the product left its control). That matters because the products-completed operations aggregate is a separate $2,000,000 bucket and payment of these claims does not erode the general aggregate.
Occurrence counting: all bodily injury arising from the same product in the same shipment is treated as one occurrence, regardless of the number of claimants. The June outbreak is one occurrence, not forty; the August banquet is a second occurrence only if it can be tied to a different lot or shipment. If the same shipment caused both, a carrier can argue a single occurrence - which raises the available limit but reduces deductible and per-occurrence applications.
Payment: June $700,000 and August $400,000 total $1,100,000 - comfortably within both the $1,000,000 per-occurrence cap (each event stands alone) and the $2,000,000 products aggregate.
Defense: the vendor of the contaminated produce may owe indemnity; preserve subrogation and tender to the vendor's carrier.
2. Handle the slip-and-fall claim. What is paid, and what happens to the aggregate?
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Coverage: ordinary premises liability - an occurrence, bodily injury, no applicable exclusion. The $5,000 medical expense limit may pay the claimant's initial treatment without a liability determination, but that payment does not admit liability and does not resolve the suit.
Payment: the claim is $1,200,000 against a $1,000,000 each-occurrence limit. The policy pays $1,000,000 and the insured retains $200,000 of exposure, subject to the outcome of the suit.
Aggregate: the general aggregate ($2,000,000) does not apply to products-completed operations, so all $1,000,000 erodes the general aggregate, leaving $1,000,000 for the rest of the policy period for premises and other non-products claims.
Defense costs: under the standard CGL, defense costs are paid in addition to the limits and do not erode the aggregate or the occurrence limit. That is a material difference from a defense-within-limits endorsement - confirm which applies before estimating the insured's total exposure.
Practice point: the insured should be notified in writing that the $200,000 excess layer is uninsured and that personal or umbrella counsel may be appropriate.
3. The assault claim alleges battery only. Does the carrier owe a defense? Analyze the exclusion and the liquor exclusion together.
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Defense: no, on these allegations. The duty to defend is broader than the duty to indemnify - it attaches if the complaint alleges any facts potentially within coverage. A complaint pleading battery only, with no negligence theory, triggers the assault-and-battery exclusion on its face, and the carrier owes neither defense nor indemnity.
Watch the pleading. If plaintiff amends to allege negligent hiring, training, or supervision of the bartender, a duty to defend likely attaches because those theories are independent of the intentional act. The carrier should monitor the pleadings and reserve rights rather than close the file; many jurisdictions require a defense if covered and uncovered theories are mixed.
Liquor exclusion: if the altercation arose from serving the patron alcohol, the absolute liquor exclusion independently bars coverage. The exclusion contains no host-liquor exception and applies regardless of whether the insured was serving for profit.
Where the loss lands: the insured's separate liquor liability carrier, which should be tendered immediately. If that policy also excludes assault and battery - common in liquor forms - the exposure is uninsured entirely, and the insured should be told so in writing.