Los Angeles Claims Adjuster Property and Causality Practice Exam

Which factor does not exclude coverage for alcoholic beverage-related injuries in CGL policies?

1. The insured distributing beverages

2. The insured allowing personal consumption on premises

3. The insured being in the alcohol manufacturing business

4. The insured serving drinks to intoxicated persons

The correct answer is: The insured allowing personal consumption on premises

In General Liability (CGL) insurance policies, certain activities related to the distribution or serving of alcohol can lead to exclusion from coverage, particularly when they pose higher risks associated with alcohol consumption. The correct factor that does not exclude coverage is allowing personal consumption on the premises. This is because simply permitting individuals to consume alcohol on the premises does not inherently impose the same level of liability as actively distributing or serving alcoholic beverages. For instance, if a business owner allows guests to bring their own alcohol, they are not directly facilitating a potentially risky situation as they would be when they actively serve drinks or distribute alcoholic beverages. In contrast, distributing beverages, serving drinks to intoxicated persons, or being in the business of manufacturing alcohol are actions more closely associated with increased liability exposures. These activities can lead to higher risks of injury or property damage caused by intoxication, leading to more definitive exclusions in CGL policies. By allowing personal consumption without active involvement in distribution or service, an insured entity may remain covered under their policy, assuming no other prohibitive conditions are present.