standardized contracts, insurance policies, insurance, commercial general liability, CGL policy


This article discredits the conventional view of insurance policies as standardized contracts that do not vary across insurance companies and policyholders. Contrary to this view, there are wide variations in policy language in both the admitted and non-admitted insurance markets. These deviations reduce the perceived benefit of insurance policies as standardized contracts intended to promote predictability and lower transaction costs for policyholders by focusing only on the most salient terms. Nowhere is this deviation more apparent than with Commercial General Liability (CGL) policies defendants are turning to in the current opioid litigation.

The opioid epidemic has been plaguing the United States for the last several years and, in its wake, many state and local government entities have sued those involved in the manufacture, sale, distribution, and prescription of opioid products. Naturally these defendants have looked to their insurance policies for defense expenses and coverage, given the exorbitant potential liability they face. Depending on the specific allegations and complaints, different insurance policies can apply.

The CGL policy is the primary policy that defendants have turned to. The principal coverage disputes between policyholders and insurance companies are whether the complaint alleges “bodily injury,” “property damage,” or “occurrence.” These terms are defined in an insurance policy and many CGL policies utilize standardized language and definitions. Despite the uniformity in language, courts decisions in multiple jurisdictions have been incredibly inconsistent in whether the CGL policy should respond and if insurers have a duty to defend in these opioid lawsuits. As a result, policyholders lose the benefit of predictability and lower transaction costs that legal scholarship has historically assigned to insurance policies as standardized contracts.



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