Los Angeles Claims Adjuster Property and Causality Practice Exam

How does the CGL policy handle claims involving intoxication?

1. It excludes all claims related to intoxication

2. It covers all businesses regardless of involvement in alcohol sales

3. It covers liability related to providing liquor but may exclude certain claims

4. It only provides coverage for legal fees related to intoxication claims

The correct answer is: It covers liability related to providing liquor but may exclude certain claims

The CGL (Commercial General Liability) policy is designed to protect businesses from various liabilities, including those that may arise from incidents involving intoxication. The correct response highlights that a CGL policy does indeed provide coverage for liability related to providing liquor under certain conditions. This means that if a business is involved in the sale of alcohol and is held liable for incidents resulting from its service, the policy can cover damages arising from such claims. However, it's important to note that this coverage is not absolute; certain claims may be excluded, particularly if the business does not comply with relevant laws or regulations governing alcohol service. For instance, if a business serves alcohol to an obviously intoxicated individual or a minor, there could be exclusions that affect coverage. This nuanced approach ensures that while businesses have some protection, they are still incentivized to operate responsibly concerning alcohol service. Thus, the understanding of how intoxication claims are handled under a CGL policy is pivotal for businesses that serve alcohol, as it informs them of their liability and the circumstances under which they may or may not be covered.