Friday, October 10, 2008

ACORD Forms : How to Complete a Commercial General Liability Section 126-S

Commercial General Liability Section 126-S

Commercial General Liability is a form of insurance designed to protect owners and operators of businesses from a wide variety of liability exposures. These exposures include liability for accidents resulting from the insured's operations or premises, products sold or operations completed by the insured, and contractual liability.

The Coverage and Limits Section of the ACORD 126 was designed to follow the ISO Policy Simplification Program first initiated in 1986.

The ACORD 126 was designed to be used in conjunction with the Commercial Insurance Application - Applicant Information Section (ACORD 125). Please refer to the chapter on the ACORD 125 for information on that form.


Much of the information for the Identification Section should match that found within the Applicant Information Section of ACORD 125. Even so, it is still important to complete this section. Many companies separate the applications by line of business for rating purposes. Not completing this portion of the application makes it difficult to keep track of the full account.

Month/day/year (MM/DD/YYYY) on which the form is completed.

Agency's name and address.

Phone (A/C, No, Ext)
Producer's telephone number.

Identification code assigned to the agency or brokerage firm by the insurance company receiving this form.

If the agency uses a subcode identification system with the company, enter the appropriate code.

Agency Customer ID
Customer's identification number assigned by the agency.

Applicant (First Named Insured)
First Named Insured as it appears on the ACORD 125.

Effective Date
Month/day/year on which the terms and conditions of the policy will commence.

Expiration Date
Month/day/year on which the terms and conditions of the policy will terminate unless renewed.

Billing Plan
Indicate whether the agency or the company (direct) will bill the insured or other payor for the policy.

Payment Plan
Plan used to pay the company for the policy. Use the company's specific designation for the plan where possible, (e.g., Prepaid, Annual, Semi-annual, Bi-monthly, 40-30-30).

The term for policies that are subject to periodic audit. If the audit period is known, enter the code:

A . . . . . . . . . . . . . . . . . . . . . . . . . . . . annual
S . . . . . . . . . . . . . . . . . . . . . . . . . . . . semi-annual
Q . . . . . . . . . . . . . . . . . . . . . . . . . . . . quarterly
M. . . . . . . . . . . . . . . . . . . . . . . . . . . . monthly
O . . . . . . . . . . . . . . . . . . . . . . . . . . . . other


Commercial General Liability
Indicate if commercial general liability coverage is required.

Claims Made
Check to request that the Commercial General Liability policy be issued on a claims made basis. For Claims Made policies, be sure to complete the Claims Made section of the application.

Check to request the Commercial General Liability policy be issued on an occurrence basis.

Owner's & Contractors Protective
Check only when separate Owner's & Contractors Protective Liability coverage is being requested.

* Use the blank area to request other coverage forms such as Railroad Protective Liability, Liquor Liability, Pollution Liability, or a separate Products/Completed Operations Liability Only policy.

If a deductible is requested, indicate the amount and type of deductible, and whether it is to apply per claim or per occurrence. Use the blank line to indicate options other than Property Damage or Bodily Injury Deductible.

Per Claim
A per claim deductible applies to individual claims even if the claims are all related to the same occurrence or event.

Per Occurrence
A per occurrence deductible applies once to each occurrence no matter how many individual claims result from the occurrence or event.

Other Coverages, Restrictions, and/or Endorsements
Use this area to request any other coverages, endorsements, or special conditions. Examples:
Include the Vendors Endorsement
Exclude Damage To Rented Premises coverage
Exclude Medical Expense coverage
Exclude Personal and Advertising Injury coverage

Enter the policy limits as they are to appear on the policy declarations page. Available limits following the ISO Policy Simplification Program are: (All limits are in whole dollars.)
General Aggregate
Each Occurrence
Products & Completed Operations Aggregate
Damage to Rented Premises (each occurence)
Personal & Advertising Injury
Medical Expense (Any One Person)
Employee Benefits
Not all companies require that the producer rate the policy prior to submission of the application. If you have done so, enter the coverage premiums here.


Location #
For each classification, enter the location number of the risk's location as it appears on the Applicant Information Section of ACORD 125. All classifications should be grouped by location number.

Classify the applicant's liability exposures by location, using the ISO Classification Table or other industry organization rules. Enter the appropriate class description from the table in this field.

Class Code
Provide the general liability class code that corresponds to the class description shown in the previous field.

Premium Basis
Enter the premium basis code followed by the estimated premium basis (exposure) for each class code. This amount should be listed as a whole number (actual basis) and not as the fraction that will be used in rating. (e.g., "S456,500" means that the premium basis is gross sales, the estimated amount of gross sales for the coming policy period is $456,500.) When rated, the rate will be multiplied by 456.5 because gross sales are rated per thousands of estimated sales.

Enter Exposure information as required.

For each discribed exposure, enter the rating territory code based on location from the appropriate state exception page.

Rate - Prem/Ops & Products
If the policy has been rated prior to submitting the application, enter the separate Premises Operations and Products manual rates applicable to each classification.

Premium - Prem/Ops & Products
If the policy has been rated prior to submitting the application, enter the separate Premises Operations and Products premiums applicable to each classification.

CLAIMS MADE (Explain All "Yes " Responses)

If a Claims Made coverage is requested, this section needs to be completed. Use this section to explain the status of previous Claims Made coverage. Because a Claims Made policy uses a different coverage "triggering" mechanism, this additional information is needed to properly process the application.

* It is very important that the information in this section be accurate to ensure uninterrupted general liability coverage for the applicant. Use the Comments area to provide additional information.

1. Proposed Retroactive Date
The Retroactive Date you are requesting for the policy being applied for. This is the proposed earliest date for which an occurrence could "trigger" coverage under a Claims Made policy.

2. Entry date into uninterrupted claims made coverage
The retroactive date shown on the applicant's first Claims Made policy. If this is the first such policy, the date will be the same as the proposed retroactive date shown on the preceding field. If this is a renewal, it is the effective date of the first policy issued in the sequence of uninterrepted Claims Made policies.

3. Has any product, work, accident or location been excluded, uninsured or self-insured from any previous coverage?
For yes responses, describe the situations of the above occurrences in the Comment section.

4. Was tail coverage purchased under any previous policy?
For yes responses, describe terms and limits of tail coverage purchased under any previous policy. Tail coverage extends the reporting period on a Claims Made policy to cover claims arising from occurrences that were not known by the date the policy was cancelled, non-renewed or replaced.


Use this section when Employee Benefits Liability is to be provided, to collect information about deductibles, number of employees, number of employees covered by Employee Benefits plans, and retroactive date, if applicable.


The information requested is for any past or present operations. his is important because the contractor applicant continues to be held responsible for injury or damage that results from completed work done by the contractor, or for it by subcontractors. Use the Remarks area to
provide additional information.

1. Does applicant draw plans, designs, or specifications for others?
If the applicant draws plans, designs or specifications, explain. Indicate whether qualified professionals are employed by the applicant for preparation.

2. Do any operations include blasting or utilize or store explosive material?
Describe any operation that includes any of these activities.

3. Do any operations include evacuation, tunneling, underground work or earth moving?
Describe any operation that requires any of these activities and the safety measures taken.

4. Do your subcontractors carry coverages or limits less than yours?
State the limits of coverages carried by subcontractors if less than the applicant's. Identify the subcontractors and the amount of coverage.

5. Are subcontractors allowed to work without providing you with Certificates of Insurance?
Explain why certificates are not requested from subcontractors.

6. Does applicant lease equipment to others with or without operators?
If applicant leases equipment describe the type of equipment, number of operators, frequency, and lease arrangement.

Remarks/Describe the type of work & percentage subcontracted
Describe in detail the type of work the applicant subcontracts. Also include leased equipment activities. (e.g., An excavation contractor may subcontract the blasting required. This may account for 10% of the contracts it undertakes.) List any other remarks that may be pertinent to the contractors work.

$ Paid to Subcontractors
Show the total annual dollars paid.

% of Work Subcontracted
List the total percentage of work that the contractor subcontracts.

# Full Time Staff
Indicate the total number of full time staff.

# Part Time Staff
Indicate the total number of part time staff.


This section should be completed whenever Products/Completed Operations coverage is being requested by the applicant. While it may seem to be designed with manufacturers in mind, it is also intended to be completed for retail stores, distributors, and contractors.

Use this field to describe the products for which product liability coverage is being requested. The description should be detailed enough so that the underwriter can fully understand the nature of each product. If there are too many products to describe individually, those which share certain characteristics should be grouped under a single generic description and the characteristics of each group should be described. Attach any literature or brochures available. (E.g., All of the furniture manufacturer's office desks can be described as "office desks", because each one is very similar to the other, even though there are several sizes and shapes and they are designed for home or office use. On the other hand, dining tables and medical office patient examination tables should not be grouped as "tables" because they are dissimilar in design and function.)

Annual Gross Sales
Estimated dollar amount the applicant expects to sell in the coming year for each product or product group described. Remember the application is for the next policy year, not the current or past policy year.

An amount should be shown for each product or product group described. This breakdown of sales is primarily needed to figure the premium, especially when there are two or more products and each one is subject to a different rating classification.

# of Units
Number of units the applicant expects to sell and/or manufacture in the coming year. An amount should be shown for each product or product group described. The breakdown of units is primarily needed to estimate the product's claims frequency potential.

Time in Market
Number of years or months that each described product or product group has been sold by the applicant.

Expected Life
Average length of time, (days, weeks, months, or years) that the applicant expects each described product or group of products to last until it is worn out, used up, or consumed. This may be the shelf life for products consumed or useful life for other products.

Intended Use
Describe the use or uses of each product or product group contemplated by the applicant. The following information should be provided:
What the product is designed to be or do
How the product is designed to work or function
How, when and where the product is designed to be used or consumed

Example: If the product is food, its use is apparent. If it is a chemical or a machine part, there may be a variety of uses. In these instances, the specific use becomes an important consideration for both coverage and pricing.

This information is necessary for the underwriter to identify and evaluate the hazards associated with the use or potential misuse of a product.

Principal Components
Major components of the product. If additional space is needed to complete the information required for a particular product, attach a separate sheet. Use the Remarks section or a separate sheet of paper to explain any "Yes" responses to the following questions, for any past or present operation or product.

1. Does applicant install, service or demonstrate products?
The explanation of a "Yes" response to this question should include:
What, how and where it is done
Who does it, employees or independent contractors
Whether a maintenance or repair service is sold

When the work is done by independent contractors, the explanation should also include information on the cost of the work done for the applicant by the independent contractors.

2. Foreign products sold, distributed, or used as components?
Each foreign-made product or product group bought, sold or distributed by the applicant should be described. In addition, the following information should be provided on each described product or group of products:
Intended use
Expected use life
Time in the market
Principal components
Estimated annual gross sales
Major source, such as U.S.-based importer or foreign-based exporter or manufacturer
Relationship with manufacturer or exporter

The explanation should also indicate, for each major source, whether or not that source has U.S. products liability insurance, the limits of that insurance, and the name of the domestic insurer. Indicate whether the applicant markets products abroad.

3. Research and development conducted or new products planned?
Describe the nature and extent of R&D work. Example: Indicate if it is solely directed at the development of new products or if some effort is directed to improving or changing existing products.

Describe any new products to be marketed within the next 12 months and the potential market. Provide an estimate of anticipated sales.

4. Guarantees, warranties, hold harmless agreements?
A guarantee is a promise made by the seller that the product can be returned for repair, replacement or a refund if the buyer is unsatisfied with it for some reason. A warranty is a positive statement that the product is as represented or will be as promised by the seller. If the applicant issues written guarantees or warranties with its products, copies should be
attached. Indicate whether they have been reviewed by an attorney.

The presence of a Hold Harmless agreement means that the applicant has assumed certain obligations or liabilities of another person or firm. Remember, the contractual liability coverage contained in the Commercial General Liability coverage form applies only to covered bodily injury and property damage for which the indemnitee (the person or firm
being held harmless) is liable in tort. Coverage does not apply to any other obligation or liability that the applicant may have assumed in the Hold Harmless agreement. Attach copies of any Hold Harmless agreements the applicant may have signed.

5. Products related to aircraft/space industry?
Describe any aircraft or space industry products sold or installed by the applicant and explain how and by whom they are used. Many insurers have underwriting restrictions on aerospace related products. (e.g., electronic equipment, aircraft frames, guided missile systems.)

6. Products recalled, discontinued, changed?
The applicant's current products liability exposure includes products that are still in use but may not have been found and fixed by a recall, products no longer made, and products made prior to a product change. These exposures must be separately underwritten when such products are known to exist.

A product recall usually indicates that the products subject to the recall were considered to be unreasonably dangerous. Consequently, any product recall should be fully explained. The explanation provided for recalled products should include the following:
A description of the products including their intended use and expected life
The reason for the recall, including a description of the product defects, if any,
which made the recall necessary
Who initiated the recall, the applicant or a government agency
The purpose of the recall, modification, repair or replacement of the defective products, and the effectiveness of the recall
A description of the recall method
The total number of the defective products subject to the recall
The result of the recall, including the percentage of recalled products found

The explanation provided for discontinued products should indicate when and why manufacturing ended and how many items are estimated to be in current use.

A changed product may forecast a start of or increase in claims or suits from the products made before the change. The explanation should indicate when the change was made and the reason for the change.

7. Products of others sold or repackaged under applicant's label?

When the applicant sells products under its name or label that are made by someone else, the applicant should be considered as the manufacturer of those products. Indicate whether products are repackaged, modified, or further processed by applicant. The explanation should include information on who supplies the products and the contractual relationship between the applicant and the actual manufacturer.

8. Products under label of others?
When the applicant makes products that are sold with someone else's name or label on them, the explanation should provide the following information:
Who has contracted for the products and who is selling them?
Are the products processed further by others before reaching the ultimate consumer?

9. Vendor's coverage required?
The explanation should identify the vendor, explain why the vendor wants to be included as an additional insured, and indicate the extent of coverage required by the vendor. Provide the gross sales to each vendor.

10. Does any named insured sell to any other named insured?
Provide the product(s) name. All sales of products between multiple named insureds must be included when determining the total gross sales used for premium computations.

Please attach literature, brochures, labels, warnings, etc.

Use this space to comment on any of the above questions. Make sure the items listed in the caption are attached to help the underwriter analyze the risk.


Use this section for information on any additional interests, employees who should be listed as additional insureds, and others who require Certificates of Insurance on the general liability portion of this policy. For additional names attach an ACORD 45, and check the box in the title line of this section.

Indicate all appropriate options for the individual named.

Primarily used for Mortgagees - indicate the ranking such as 1st, 2nd or 3rd mortgagee.

Name and Address
List the additional interests name and address.

Reference #
Indicate the additional interests reference number for this applicant such as the loan or mortgage number.

Certificate Required
If a Certificate of Insurance is required check this box.

Interest in Item Number
List the item number corresponding with the application for the item of interest for this additional insured.

Item Description
If needed, further clarify the item of interest in this field. For a vehicle list the make, model and VIN number. For a scheduled item list the description, such as 3 carat diamond in six point setting.


Use the Remarks section to provide additional information for any questions answered with a "Yes" response. The overview below lists the expected information that should be added to the Remarks section for "Yes" responses.

1. Any medical facilities provided or medical professionals employed or contracted?
Describe the medical or first aid facilities provided on the premises. Indicate if any physicians or other health care personnel are employed or contracted.

2. Any exposure to radioactive/nuclear materials?
Indicate if the applicant's operating/manufacturing process involves the use of or deals with these materials. Is a Nuclear Regulatory (Atomic Energy) Commission license required?

3. Do operations involve storing, treating, discharging, applying, disposing or transporting hazardous material?
Indicate whether the applicant's operations involve any discharge of fumes, acids, caustics, or wastes. List any harmful by-products generated and how they are controlled, stored or disposed of. Indicate whether the applicant owns or operates any landfills or fuel tanks.

4. Any listed operations sold, acquired, or discontinued in the last five years?
Explain and describe all such operations.

5. Is any machinery or equipment loaned or rented to others?
Describe the types of equipment the applicant loans, rents, or leases to others.

6. Any watercraft, docks, floats owned, hired, or leased?
Describe any watercraft or waterfront exposures. Indicate if the facilities are for private use or available to the public.

7. Any parking facilities owned/ rented?
Describe if the facilities are for the use of employees, customers, visitors, etc. Give the area in square feet.

8. Is a fee charged for parking?
If a fee is charged for parking, indicate whether the parking is available to the public or used primarily by employees. List the number of locations involved, and how many parking facilities are at each location.

9. Are any recreational facilities provided?
Describe any recreational facilities provided for both employees or non-employees. This should include gymnasiums, grandstands, bleachers, parks, playgrounds, exercise rooms, or swimming pools owned or maintained by the applicant.

10. Is there a swimming pool on the premises?
State size, maximum depth, and whether or not the pool is equipped with a diving board or water slide. Also note if a lifeguard is on duty when the pool is open.

11. Any sporting or social events sponsored?
Describe the nature of such events and include the location and number of spectators and participants. If the applicant sponsors athletic teams, indicate whether the teams are composed of employees or others, such as Little League.

12. Any structural alterations contemplated?
List any anticipated new construction for any locations included in the insurance being requested. Explain who will do the work: employees or subcontractors. Provide the payroll of employees or the cost of the work if subcontracted.

13. Any demolition exposure contemplated?
Describe any demolition work contemplated by the applicant. Identify the structure and who will be performing the work.

14. Has applicant been active in or is currently active in joint ventures?
List venture's name and address along with the role of the applicant.

15. Do you lease employees to or from others?
List the companies involved, whether you are the lessor or lessee and attach a copy of the lease agreement.

16. Is there a labor interchange with any other business or subsidiaries?
List the companies involved and outline the agreement.

17. Are daycare facilities operated or controlled?
Indicate if facilities are for employees children only or open to the public. List number of children watched on a daily basis. If off premises give location of operation.

18. Have any crimes occurred or been attempted on your premises within the last three years?
Describe any crimes or attempted crimes (e.g., burglaries, robberies, etc.).

19. Is there a formal, written safety and security policy in effect?
If yes, provide a copy of the written safety or security policy in cases where your company requires this information. Indicate if these policies are practiced on a regular basis. Describe activities and precautions that are taken with respect to safety and security, including use of outside security firms.

20. Does the businesses' promotional literature make any representations about the safety or security of the premises?
If yes, provide copes of such literature.


Use this section to provide any additional information required for underwriting or rating. Also indicate if any attachments such as Hold Harmless agreements, literature, brochures, labels, warnings or product surveys are being sent.

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