C111 Chapter 1 Advanced Loss Adjusting





  1. Occurrence- An accident (element of suddenness) and/or continuous or repeated exposure to the same general conditions.
  2. Qualities affect coverage of an occurrence
    1. Suddenness – definite as to time and place; one of the elements (accident) of an occurrence.
    2. Intent – insurance does not apply to losses expected or intended regardless of what the amount of damage is.
    3. Foresee ability – As long as the result was unintended (accidental), it is still insurable, even if the result is foreseeable.
    4. Chance – An occurrence must be fortuitous to be insurable. If an insured has been warned about a process or activity, and continues that practice with a resulting occurrence, the resulting damage did not occur by chance (not fortuitous) and is not insurable.
    5. Criminality – Any criminal act falls under the intentional act exclusion.

  1. How does Vicarious Liability (“The responsibility of the superior for the acts of the subordinate”) for employers apply to sexual abuse claims? – Current Policies exclude sexual misconduct of any kind (abuse or molestation) and also extends to defence obligations.
  2. How does coverage under the CGL policy apply to damage resulting from defective products or faulty workmanship? – It is limited to damage resulting from a defective product or faulty workmanship and does not extend to the faulty workmanship or product itself. i.e. the damages caused by a poorly built wall that collapses (injuries or property damage to neighbours property/persons) would be covered but the damage to the wall itself would not be covered. Coverage is not intended for the insured’s work that does not meet adequate standards....just the damage to others that results from the poor work.
  3. Remember – Duty to defend and indemnify are not necessarily mutually inclusive.
  4. 2 basic policy trigger approaches used in CGL & other liability policies? – Claims made & Occurence.
  5. “Claims made”  - Triggers when a claim is made against the insured during the policy period. The date of the incident does NOT have to fall within the policy term. “Occurrence” – Coverage is triggered when the occurrence takes place and must occur within the policy term.  
  6. Retroactive Date – a cut off date for an incident to qualify for coverage under a “Claims made” policy.
  7. Extended reporting period – an endorsement that extends the time which an claim may be reported after the policy “expires” – this allows for an extended period of time that an occurance can be discovered.


  1. 3 circumstances that might lead to gaps in an insured’s coverage –
    1. When there is a change in insurer
    2. When an occurrence form is substituted for a claims made form
    3. When the wording changes from one policy period to the next.

How coverage is triggered for each of the following theories:

  1. Manifestation – Injury or damage does not occur until the injury or didease becomes apparent (manifests itself).
  2. Exposure – Any policy in place during the time of exposure to harmful conditions will respond.
  3. Continuous or triple trigger theory – 3 events:
    1. During exposure
    2. During latency period – after exposure but before symptoms manifest
    3. When the injury becomes manifest
  4. Injury-in-fact – damage occurs during policy period, not during exposure or latency unless the actual damage occurs at that time..

  1. Canadian courts tend to adopt the Injury-in-fact theory for bodily injury claims and the manifestation theory in property damage cases.
  2. What are the guidelines for an insured with respect to timing of claims reporting? – Prompt notification of any occurrence or action is necessary. Co-operation and supply of any documentation as soon as possible is also required.
  3. Duties of an insured towards insurer?
    1. Immediate notice of liability claim with How, where and when of occurrence as well as any info on injured parties or witnesses.
    2. Immediate notice of any action against insured (in writing).
    3. Provide documentation, Authorization, Cooperate with insurer and enforce rights against a responsible party
    4. Do not assume any obligation or incur expenses except for first aid.
  4. Always watch for additional CGL insuring agreements and endorsements.
  5. Personal Injury: Injury to the character, reputation, and position in the community of the third party caused by Libel or slander.
  6. Intentional acts are covered under personal injury claims when the insured was acting on information believed to be true. i.e. The intentional act of detaining someone is covered if the security officer exercised fair and reasonable judgement when detaining the person. If the security officer did not believe an offense was committed and he/she detained a person anyway, coverage would be denied.
  7. What is the difference b/w libel and slander? – Libel occurs from damaging statements that are published. Slander arises out of damaging spoken words.


  1. Reputation is damaged when the defamation:
    1. Causes a person to be hated and elicits negative opinions from the public
    2. Causes others to avoid the victim
    3. Subjects the victim to ridicule
    4. Implicates the victim in a criminal activity
    5. Damages the business of the victim
    6. Suggests immoral behaviour on the part of the victim
  2. The purpose of a lawsuit for libel or slander is to reinstate the person’s reputation, to compensate for damages, to deter others from such acts.
  3. What can mitigate damages due to libel or slander? – If the libel was published in good faith (the publisher believed the information and acted in good faith); If it did not involve a criminal charge; If there was a misunderstanding of the facts; If a proper retraction is published or broadcast within reasonable time (the speed of an apology shortens the amount of time damages occur).
  4. Defences available for libel or slander
    1. Statement is true
    2. The statement was a fair comment on a situation where the facts of the circumstances are correct (i.e. just an opinion on true facts).
    3. The defence of “Privilege” exists for (1) executive officers performing official duties and (2) When there is a private or public interest in transmitting information.
    4. If statement was given by a plaintiff and consent was implied
  5. 3 medical expenses covered under the CGL medical payment insuring agreement - Reasonable medical expenses such as:
    1. First aid
    2. Necessary medical, surgical or dental services including prosthetic devices
    3. Necessary ambulance, hospital, nursing or funeral services incurred by a third party

Note: Negligence nor any other legal obligation by the insured to the injured need be proven.
  1. Medical payments coverage does not extend to:
    1. the insured
    2. to anyone hired by the insured
    3. a tenant of the insured
    4. an employee of the insured
    5. anyone engaged in athletics
    6. anyone that qualifies for workers compensation
  2. The onus of proving that a policy exists rests with the insured – then the insurer must establish the existence of policy limits or exclusions.
  3. A Sunset clause in a reinsurance contract limits coverage to losses reported within a prescribed period. This limits the reinsurer’s exposure to “long – tail” liability exposures (important for environmental claims.
  4. Pollutant: Any solid, liquid or gaseous, or thermal irritant or contaminant including smoke, odour, vapour, soot, fumes, acids, alkalis, chemicals and waste. Waste includes any material to be recycled, reconditioned or reclaimed.

  1. Two factors that create a demand for a prompt response on an environmental claim:
    1. In order to avoid further contamination
    2. In order for business to continue
  2. Why is nuisance a difficult torte to defend? – Because negligence need not be proven. The claimant only has to prove interference of its right of enjoyment of land. Also, the plaintiff must prove that the contaminant came from the insured’s property. There are 3 defenses:
    1. Reasonableness of interference
    2. Sensitivity of claimant
    3. Statuatory authority
  3. Brownfields: Contaminated or potentially contaminated urban industrial or commercial sites.
  4. Experts to control, stabilize and cleanup a spill as well as experts to provide evidence for subrogation should be used by the adjuster in residential oil spill claims.

Objectives - Part I. Liability Coverage Issues

  • “Accident is not defined Occurrence included an accident as well as continuous or repeated exposure to substantially the same general conditions, was added to expand the scope of coverage.
  • Intentional Acts
    • An insured intentionally causes harm it is not reasonable to expect an insurance policy can cover the losses.
    • CGL-insurance does not apply to losses expected or intended from the standpoint of the insured.
    • Coverage will apply if the insured is required to use reasonable force to protect persons or property.
    • Damages not anticipated by the insured but the damages caused by an intentional act are not insureable.
    • In Devin v. Cooperative Fire and Casualty the court found that there was coverage even though the insured was intentionally driving recklessly when an accident occurred.
    • Exclusion of any future claims if government issues a warning for an insured to stop a certain manufacturing process but the insured continues to practice.
    • Considerable increase of the number of sexual abuse cases:
      • actions framed in negligence, assault, battery and breach of fiduciary duty.
    • Vicarious liability for employers has expanded for sexual abuse claims:
      • when adult has significant authority and exercises it over a child;
      • nature of their employment provides them with broad authority;
      • current policies exclude sexual misconduct of any kind under an abuse or molestation exclusion.


  • Insured’s defective work - Under the CGL policy coverage is limited to damage resulting from a defective product or faulty workmanship – Not the product or workmanship itself. Policies generally exclude the particular part of property on which a contract is working. Coverage is not intended for the insured's work that does not meet adequate standards.
  • Duty to defend and duty to indemnify –
    • Cost of defence can be so great that triggering the defence obligation can initiate serious settlement negotiations.
    • Duty to defend an insured is completely independent of the duty to indemnify.
    • Conflict of interest would probably arise if one lawyer handled both the policy coverage issue and the defence of the claim.
    • Possibility of allocating defence and indemnity costs may arise:
      • costs can be shared between the insurer and the insured, and, among multiple insurers;
      • if courts have held there is no reasonable way to allocate costs between an insured and an insurer, the insurer will pay.
    • If a claim seemed likely to exceed policy limits an insured would be notified immediately.
    • Certain excess policies may cover defence costs when claims exceed primary policy limits.
    • When many insurers are involved a formal defence-sharing agreement may result in order to outline tactical decisions should be made and how defence costs will be shared.
  • Claims made and occurrence based trigger approaches –
    • Most are written on an occurrence basis....   ” occurrence must take place in the coverage territory..."
    • Claims made wording - Triggers coverage when a claim is made against the insured during the policy period. Date of incident does not have to fall within the policy term. Claims-made often include a retroactive date (a cut off date for an incident to qualify for coverage).
  • 4 Coverage trigger theories:
Manifestation Theory - Holds that injury or damage does not occur until the injury or disease becomes apparent  
Exposure Theory - Any policy in place during the time that the claimant was exposed to the harmful conditions causing deterioration should respond.
Continuous or Triple Trigger Theory - Identifies three events that trigger coverage:

    • During the exposure to the offending product.
    • During the latency period when the disease is progressing but there is not necessarily any further exposure to the damaging substance and symptoms of the disease do not yet exist.
    • When the injury becomes manifest.
Injury-in-fact Theory

    • Holds that a policy will respond if damage actually occurred during the policy period, whether or not anyone was or could have been aware of it, and regardless of when the negligent act or omission took place.
The Canadian courts trend is to adopt the injury-in-fact theory in bodily injury cases and the manifestation theory in property damage cases.

  • Types of claims that can be advanced under the additional insuring agreements in a CGL Policy - Additional coverages such as Personal Injury, Medical Payments, and Tenant's Legal Liability are standard fare in CGL. The Non-Owned Automobile Policy is often added by endorsement.
    • Personal Injury means injury to the character, reputation, and position in the community of the third party caused by libel or slander. Defamatory words and acts on part of the insured are covered. Policy excludes intentional acts, false statements, and wrongful arrest also.
      • Reputation is injured when the defamation:
        • causes a person to be hated and elicits negative opinions;
        • causes others to avoid victim;
        • subjects the victim to ridicule;
        • implicates the victim in a criminal activity;
        • damages the business of the victim;
        • suggest immoral behavior on the part of the victim.
      • When a lawsuit in libel or slander is brought, the claimant's intention is presumably to reinstate the person's reputation, to compensate them from damages, and to deter others from such acts.
      • Several defenses are available against a claim of libel or slander.
        • justified because it was proven to be true;
        • fair comment on a situation where the facts of the circumstances are correct;
        • the defense of "privilege" exists;
        • statement was provided by a plaintiff and consent was implied.
    • Medical Payments - Covers reasonable medical expenses such as first aid, necessary medical, surgical, X-ray, and dental services. Including prosthetic devices; and necessary ambulance, hospital, and professional nursing or funeral services.
      • Incurred by a third party accidentally injured on the premises or as a result of the insured's operations.
      • Negligence nor any other legal obligation on the part of the insured to the injured party must be proven.
      • Does not extend to the insured, or to anyone hired by the insured or a tenant of the insured to do work, employee, or anyone in athletics or who qualifies under worker's comp.
    • Tenant's Legal Liability - Tenant's legal liability covers the resulting property damage if it occurs during the policy period. Damage caused by fire, smoke, explosion and leakage to rented premises.


Objectives - Part II. Environmental Claims

  • Environmental claims and coverage analysis - claims may arise from the release of toxic fumes or substances or the dumping or escape of toxic wastes which result in either bodily injury or property damage.
    • Policy obligations of both the insurer and insured are assessed for environmental claims. Insured must prove policy exists.
    • Adjuster would try to establish when the actual "event" precipitating the leakage occurred.
    • Estoppel is always a concern-insurers ask that an insured sign a non-waiver agreement or send a reservation of rights letter to the insured.
    • Sunset clause in a reinsurance contract limits coverage to losses reported within a prescribed period.
    • Pollution Exclusions - Certain exceptions to the exclusion provided limited coverage for certain events. In current CGL wording, coverage was excluded for any "pollution condition." Defined as discharge, emission, dispersal, seepage, leakage, pollutant, existence of pollutants. Regardless of premises, site or location, whether or not owned by an insured.
  • How does strict liability apply to environmental claims? - ???
  • The role of experts in environmental claims - Positive identification of the source and cause of the pollution is essential; proper reporting and documentation by experts will be important. Also, experts will be required to control, stabilize and cleanup a spill as well as experts to provide evidence for subrogation (assess the impact on liability and the amount of damages).
  • Adjuster’s role in conducting an investigation of an environmental claim – Adjuster's role is to assess the exposure faced by the insurer and recommend a reserve
    • Coverage issue may demand a prompt response; a full investigation must still be undertaken regardless of coverage, in case adjuster needs to defend against claim of unjust denial.
    • Tort of trespass, or tort of private nuisance is possible and must be considered during investigation. Nuisance is very difficult tort to defend against because negligence need not be proven to succeed. Defenses to nuisance claims:
      • complaints about the ordinary levels of noise from surrounding factories in an industrial area; will not be taken seriously;
      • complaint of power line interference from the welding equipment of a neighboring business is not reasonable;
      • Legislation imposes a duty that inevitably results in nuisance, then the nuisance is deemed to be authorized.


    • Exposure assessment should include the following:
      • overall estimate of entire loss or cleanup costs;
      • estimate of the insured's liability;
      • consideration of the allocation theory;
      • identification of insurance policies available;
      • identification of policies of this insurer that are involved;
      • defenses costs for the insured;
      • consideration of a defense sharing agreement, if other insurers are at risk;
      • estimated costs of defending coverage issues.
  • Examine how legislation affects the liability analysis for environmental claims.
    • Discharges of certain pollutants are authorized by government through a licensing process; Compliance with regulations and permissible discharges may be a defense;
    • Polluter pay principle in legislation; Imposes absolute liability on polluters (Canadian Environmental Protection Act - 1988) even if the polluter was compliant in the past. Past or present owner or occupier could be held liable; negligence need not be proven.
    • Brownfields' legislation have granted exemption from liability, thus softening the absolute liability.
    • CGL policies have territorial exclusions as well.
  • Environmental claims may contain direct damage that is difficult to separate from liability exposures Explain with respect to residential oil spills – Because many 3rd party contractors or suppliers may be involved in a direct damage claim, the adjuster must determine who/what is responsible for the damage and assign how much responsibility can be subrogated. Experts can be hired to determine if:
    • a tank was installed properly;
    • oil was delivered negligently;
    • furnace was inspected and cleaned appropriately;
    • delivery oil company had a responsibility to inform the owner of any defective or deteriorating tanks, fuel lines, or delivery conduits.