Final Answer:
Supplementary payments on a Commercial General Liability (CGL) policy cover defense costs, first-aid expenses, and legal expenses for bail bonds, but not contractual liability coverage. This coverage is distinct and addresses liabilities assumed under contracts, not falling under supplementary payments. Thus the correct option is option (4).
Step-by-step explanation:
Supplementary payments on a Commercial General Liability (CGL) policy typically cover various expenses incurred in addition to the policy's limits. These payments are designed to provide additional financial support to the insured. However, contractual liability coverage is not included in these supplementary payments.
The purpose of supplementary payments is to assist the insured in managing certain costs that may arise in the event of a covered claim. These payments often include defense costs, first-aid expenses, and legal expenses for bail bonds. Defense costs involve expenses related to hiring attorneys and other legal professionals to defend the insured against a claim. First-aid expenses cover immediate medical care provided to others due to an accident on the insured's premises. Legal expenses for bail bonds help the insured with costs associated with obtaining a bond.
Contractual liability coverage, on the other hand, is a distinct component of a CGL policy. It addresses liabilities that the insured assumes under contracts, agreements, or warranties. It is not categorized as a supplementary payment but is a fundamental aspect of liability coverage.
In conclusion, while defense costs, first-aid expenses, and legal expenses for bail bonds are part of supplementary payments on a CGL, contractual liability coverage is not. Understanding these distinctions is crucial for businesses seeking comprehensive liability protection. Thus the correct option is option (4).