Supplementary Payments
Bonus Coverage - Doesn't Eat Into Policy Limits!
Think of supplementary payments as bonus coverage that doesn't reduce your policy limits. If your policy has a $1 million limit, supplementary payments are paid on top of that. You don't lose policy money to legal/admin costs.
Applies To:
Important Limitation
Although supplementary payments are provided in addition to policy limits, the insurer's duties will cease when the total of all claims paid reaches the aggregate limit.
What's Included in Supplementary Payments
Insurer's Own Expenses
Any expense incurred by the insurer for investigation and defense costs.
Example: Hiring investigators, expert witnesses, attorneys
Bail Bonds & Release Attachments
Up to $250Cost of bail bonds and bonds to release attachments.
Insured's Expenses (Lost Income)
Up to $250/dayReasonable expenses incurred by the insured, including loss of income for time spent assisting with the claim.
Court Costs
Court costs taxed against the insured.
Does NOT include attorney's fees or expenses!
Prejudgment Interest
Interest that accrues before a judgment is entered.
Interest on Judgment
Interest that accrues on any judgment after it's entered.
Quick Reference Chart
| Payment Type | Limit |
|---|---|
| Insurer's expenses (investigation, defense) | No cap |
| Bail bonds | $250 |
| Lost wages (insured) | $250/day |
| Court costs | No cap (but no attorney fees) |
| Prejudgment interest | Covered |
| Interest on judgment | Covered |
Who Is an Insured
The answer depends on the business structure!
The CGL policy defines who is insured based on the legal entity type of the business.
Sole Proprietor
Who's Covered:
- The individual insured
- Their spouse
But only with respect to the conduct of a business in which the insured is the sole owner.
Partnership or Joint Venture
A legal entity in which 2 or more persons agree to share the profits and losses of the business.
Who's Covered:
- The named insured
- Members
- Partners
- Their spouses
But only with respect to the conduct of the business.
Limited Liability Company (LLC)
Who's Covered:
- Named insured
- Members (for business activities)
- Managers (for their duties as managers)
Organization (Other than Partnership, JV, or LLC)
Includes corporations and other formal organizations.
Who's Covered:
- Named insured
- Executive officers
- Directors
- Stockholders
But only for their duties or liabilities as such.
Trust
Who's Covered:
- Named insured
- Trustees (for their duties as trustees)
Additional Insureds (Regardless of Business Type)
Universal Coverage
Regardless of the legal entity type, the following are ALSO considered insured under the policy:
Employees & Volunteers
The insured's employees and volunteers for acts within the scope of their employment.
Real Estate Agents
Any person or agent while acting as the insured's real estate agent.
Exception: Does NOT include employees and volunteers (they're covered separately)
Temporary Property Custodians
Any person or organization, or legal representative, having temporary custody of the insured's property if the insured dies.
Newly Acquired/Formed Organizations
90 DaysNewly acquired or formed organization (other than a partnership, joint venture, or LLC) for which no other insurance applies.
Coverage Duration:
Up to 90 days after ownership is acquired OR the policy expiration, whichever is earlier.
Exam Trap Alerts
$250 limits: Bail bonds = $250 cap. Lost wages = $250/day cap. Memorize these numbers!
Court costs vs Attorney fees: Court costs ARE covered. Attorney fees are NOT covered as supplementary payments.
90 days for new organizations: Newly acquired entities only get automatic coverage for 90 days.
Spouses: Only specifically mentioned for sole proprietors and partnerships - NOT for LLCs, corporations, or trusts.
LLC Managers: Managers are covered for their duties as managers, but this is separate from member coverage.