Los Angeles Claims Adjuster Property and Causality Practice Exam

In what case does the "Employer's Liability" exclusion not apply under CGL coverage?

1. When the employer fails to provide safety training

2. When the insured assumes liability under a contract

3. When the injury happens outside of work hours

4. When the employee started at a new position

The correct answer is: When the insured assumes liability under a contract

The correct answer highlights a crucial aspect of Commercial General Liability (CGL) coverage regarding the "Employer's Liability" exclusion. Under CGL policies, the exclusion is designed to prevent coverage for injuries or damages that arise out of an employer-employee relationship. However, when the insured assumes liability under a contract, this can lead to a scenario where the exclusion does not apply. This is because when an insured party enters into a contractual agreement that explicitly assumes liability for injuries to employees, they may be held responsible irrespective of the exclusion. Such contractual liabilities can create a different legal obligation that is recognized by the insurance policy, allowing coverage for claims that otherwise would be excluded. Therefore, if the insured has taken on specific responsibilities through a contract, they may find that CGL coverage applies, as it acknowledges the contractual assumption of liability. In contrast, situations like a failure to provide safety training, injuries occurring outside of work hours, or when an employee starts at a new position do not directly shift the liability from the employer in a way that would negate the exclusion under standard CGL coverage. These scenarios typically continue to fall within the parameters of employer liability as defined by the policy.