Components of a Commercial Policy

Common Policy Declarations

Common Policy Conditions

• Cancellation by Insured- first named insured shown in declarations may cancel this policy by mailing or delivering to the insurer advanced written notice of cancellation
• Cancellation by Insurer- insurer may cancel by mailing to the insured a written notice of compliance with teh cancellation laws of a given state. THey can also cancel teh policy if the building has been vacant or unoccupied 60 or more consecutive days. Buildings with 65% or more of teh rental units or floor area vacant or unoccupied are considered unoccupied under this provision
• Changes to the policy must be made in writing by the insurer
• Concealment, Misrepresentation, or Fraud- policy is void in any case of fraud by the insured as it relates to the policy at any time. It is also void if the insured or any other insured, at any time, intentially coneals or mis represents a material fact concerning this policy, the covered property, the insured's interest in the covered property or a claim under this policy
• Examination of Books and Records- insurer may examine and audit the insured's books and records as they relate to the policy at any time during the policy period and up to 3 years afterwards
• Inspections and Surveys- the insurer has the right to make inspections and surveys of the insured premises, give the insued reports and make recommendations of changes
• Insurance under 2 or more coverages- if 2 or more of the policy's coverages apply to the same loss or damage, the insurer will not pay more than the actual amount of loss
• Liberalization clause- if insurer adoopts any revisino that would broaden coverage under policy w/o additional premium within 45 days prior to or during policy period, the coverage will immediately apply to policy
• Other insurance- if there is otehr insurance covering the same loss or damage, the insurer will pay only for the amt. of covered loss or damage in excess of the amt. due from that other insurance.
• premium notices- sent to first named insured at their last known address and are responsible for the payment of all premiums.
• Premium audit- some coverages under policy may be subject to premium adjustment based on audit of insured's books and records and final determination will be made
• transfer of rights of recovery against others to the insurer- sometimes call subro clause. used where the insurer has paid a covered claim caused by 3rd party and the insurer seeks reimbursement for the loss
• Assignment and transfer of your rights and duties under this policy- rights under the policy may not be transferred to someone else w/o written consent of the insurer except in teh case of the death of the insured. If insured dies, rights and duties will be transferred to their legal representatives by only while acting within the scop of their duties

Interline Endorsements

One or more Coverage Parts

Commercial General Liability

Commercial General Liability Forms

Occurence Form

and

Claims-Made Form

Occurence Form:

Is most popular form because of the issues that can airse when a claims-made form is non-renewed. This form is triggered by BI or PD that occurs during the policy period

Claims-Made Form:

Commonly written on hospitals for professional liability, on doctors and lawyers for their professional liabilityn and on insurance agents for errors and omissions coverage. Most professional liability policies are insured on a claims-made basis. With claims-made insureance, we are insterested in the fact taht the insurance was in place when the claim occurred.

BI and PD Liability

Personal and Advertising Injury Liability

Personal injury is an injury, other than BIm due to one of the following:

• False arrest
• Malicious Prosecution
  • One of following must occur before there is a MP case:
    • Criminal or Civil suit must have preceeded
    • Suit was started out of malice by one person against another
    • First suit must have been won by the defendant in the case
• Wrongful Eviction
• Defamation of Character
• Invasion of Privacy

Advertising Injury is an injury, other than BI resulting from one of the following:

• Oral or written publication of material that slanders or libels a person or organization or belittles a person or organization's goods, products or services
• Oral or written publication of material that violates a person's right of privacy, misappropriation of advertising ideas or style of doing business, or infringement of copyright, title or slogan

Medical Payments

Coverage C- Medical Payments

Will pay medical expenses, incurred within one year of an accident. The occurrence must occur during the policy period and have:

• Been caused by an accident
• Occurred on premises owned or rented by the insured; or
• Result from the insured's operation

Coverage is considered goodwill coverage. Regardless of who is at fault, coverage will be provided including for professional nursing and funeral services. Negligence does not have to be provided.

Supplementary Payments

Payments for these are in addition to the policy limits:

• Expenses that the insurer incurs for defense and investigation of claims
• Up to $250 of cost of bail bonds required because of accidents or traffic law violations arising out of the use of any vehicle to which the BI liability coverage applies
• Cost of bonds to release attachments (only for bond amts. within the limit of insurance). Insurer does not have to furnish these bonds.
• Reasonable expenses incurred by the insured at the insurer's request including loss of earnings up to $250 per day.
• All costs taxed against the insured in the suit
• Prejudgement interest
• ALl interest on the full amount of any judgement after entry of the judgement and before teh insurer has paid. This could occur if the insurer appeals a verdict made against their insured. During the appeal process, the court will charge interest on the unpaid judgment

Who is an "insured"

CGL coverage applies to the following, depending on the type of business organization designated in the declarations:

• If an individual or sole proprietor, the named insured and spouse, are "insureds" only with respect to their conduct regarding the business of which the named insured is the sole owner.
• If a partnership or joint venture, the named insured and all members and managers are "insureds" only with respect to their conduct within the insured business
• If a limited liability company, the named insured and all members and managers are "insureds" only with respect to the insured business and their related duties
• If an organization other than a partnership, joint venture, or limited liability company, the named insured, all officers and directors, and all schockholders are "insureds" but only with respect to their duties as officers and directors or their liability as stockholders
• Employees are "insureds" but only for acts that fall within the scope fo their employment
• Any person (other than employee) or organization is an "insured" while acting as a real estate manager for the named insured.
• Appointed legal representatives, upon the death of the named insured, are "insureds" but only with respect to the insured property
• Operators of the insured's mobile equipment along a public highway with the insured's permission, are "insureds"
• Volunteer workers while performing duties related to the conduct of the named insured's business are "insureds"

Limits of Liability

General Aggregate limit

and

Products-Completed Operations Aggregate Limit

General Aggregate Limit:

Most that will be paid for all claims ins the policy year, for the sum of Coverages A, B and C, except for damages arising out of the products-completed operations hazard.

Products-Completed Operations Aggregate Limit:

Represents the most that will be paid in the policy year because of injury or damage arising out of the products-completed operations hazard

Per Occurrence limit

Personal and Advertising Injury limits

Medical Payments Limit

Damage to Premises Rented to you

Conditions

• Bankruptcy- if insured becomes bankrupt or insolvent, insurer cannot refuse to play claims that may be covered under policy
• Duties of the insured- in the event of Occurrence, Claim or suit:
  • Must give prompt notice of a claim, including names and addresses of injured people or witnesses
  • Must send notices od suits to the insurer
  • Must give insurer authorization to obtain records and other info
  • Must cooperate with the insurance company in any manner
  • Must assist the company in teh enforcement of any subro rights
  • The insured may not make any voluntary claim payment, unless at his own expense, except first aid, without the insurer's permission
• Legal Action Against Us- insured cannot sue the insurance company unless all conditions of policy have been met, nor, bring company into suit later than one year.
• Other Insurance- if insured has more than one CGL policy, insurance company can respond to a claim  by:
  • Primary Insurance- policy will repsond to a loss until the limits of insurance have been exhausted unless more than one policy is in effect, then the company will pay its portion of the loss
  • Excess Insurance- policy will respond after other policies have exhausted their limits of insurance
• Premium Audit- CGL premiums for Coverage A are considered a deposit premium only. The insurer shall compute an earned premium at the end of each period by making an audit of teh exposure base. If actual exposure is different than that originally estimated, premiums will be adjusted upward or downward accodingly
• Separation of Insureds- CGL coverage applies as if each named insured were the only named insured, and applies separately to each insured against which a claim is made. Thus, each insured named in a suit can expect to receive its own claim defense and investigation. This does not increase the limts of liability under the policy.

Definitions

• Auto- a land motor vehicle, trailer or semi-trailer designed for travel on public roads, including any attached machinery or equipment . Does not include mobile equipment
• Mobile Equipment- any of the following types of land vehicles including attached machinery or equipment
  • Bulldozers, farm machinery, forklifts, and otehr vehicles designed for use principally off public roads
  • Vehicles maintained for use solely on or next to premises the insured owns or rents
  • Vehicles that travel on crawler treads
  • Vehicles, self-propelled or not, maintained primarily to provided mobility to permanently mounted power cranes, shovels, loaders, diggers or drills, or road construction or resurfacing equipment
  • Vehicles that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment
  • Any vehicle that does not fit any of the above descriptions and is maintained primarily for purposes other than the transportation of persons or cargo
• Insured's Product- any goods or products, other than real property, that are manufactured , sold, handled, distributed, or disposed of by the insured, others trading under teh insured's name, or a person whose business asses the insured has acquired
• Insured's Work- Work or operations performed by or on behalf of the insured, and materials, parts or equipment furnished in connection with such work or operations. Also includes warranties or representations made at any time with respect to the firness, durability or performance of the insured's work and the providing of or failure to provide warnings or instructions
• Impaired Property- tangible property other than the insured's products or the insured's work that cannot be used or is less usefull because it incorporates the insured's product or wirh that is know or thought to be defective, deficient, inadaquate, or dangerous, or the insured failed to fulfill the terms of a contract or agreement. It is only impaired if able to be restored to use by repair, replacement, adjustment, or removal of the isured product or work, or by the insured fulfilling the terms of the contract or agreement
• Loading or Unloading- Handling of property:
  • After it is accepted for movement into or onto an aircraft, watercraft or auto
  • While it is in or on an aircraft, watercraft, or auto
  • While it is being moved from an aircraft, watercraft, or auto to the place wher it is finally delivered
  • Does not include the movement of property by a mechanical device, other than a hand truck, that is not attached to the aircraft, watercraft or auto.
• Pollutants- Any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled reconditioned or reclaimed.
• Leased Worker- A person leased to the named insured by a labor leaseing firm under an agreement between the insured and labor leasing firm to perform duties related to the conduct of the insured's business
• Temporary Worker- person who is furnished to the insured to substitute for a permanent employee on leave, or to meet seasonal or short-term workload conditions.
• Volunteer Worker- person not an employee, who donates his or her time and who is not paid by the insured or anyone esle for work performed. A volunteer worker acts at the direction of the insured to perform duties determined by the insured

Exclusions

Coverage A Exclusions:

• Expected or intentional acts on the part of the insured
• Work-related activities
• Automobile, aircraft, watercraft accidents
• Dram shop (liquor liability): only applies if the insured is selling or serving alcoholic beverages
• Personal property of others in the insured's care, custody and control
• Discharge of pollutants
• War
• Assumption od liability by contract(other than an "insured" contract)
• The transportation of mobile equipment
• PD to the insured's product or work
• PD to "impaired property"

Coverage B Exclusions:

• Insured knew the oral or written publication was false
• Material that is published before the inception of the policy
• Willful violation of the law
• Assumption of another's liability in contract or agreement
• Breach of contract
• Failure of goods to conform to advertised quality
• Giving wrong description of price of goods, products, or services
• Any claim, if insured's business is advertising, broadcasting, publishing, or telecasting

Coverage C Exclusions:

• Insureds
• Person hired to work for the insured or a tenant of an insured
• Person entiteld to workers compensation
• Persons involved in an athletic contest
• Person injured resulting from the products-completed operations
• Persons Excluded under Coverage A
• War

Claims Made Features

• Trigger- insured's policy has a given retroactive date. claims made policy that is in effect at the time the claim is made would be triggered if after the retroactive date of policy
• Retroactive Date- the date after which an occurrence must have happened in order for coverage to apply- and then, only if a claim for that occurrence is first made durnig the policy period. No coverage for occurrences that happened before the date shown on the Declarations. To avoid coverage gaps when replacing one claims-made form w/ another the retroactive date of the replacement policy should be the same as the policy being replaced.
• Extended reporting period-- basic vs. supplemental- Extensions of coverage provided within the claims-made form itself. Basic automatically provided w/o additional charge, and covers occurrences reported by the insured to the insurer within 60 days after the policy expires as long as a claim is made by a third party aginst the insured within 5 years. these claims are subject to the regular policy aggregate limit even if it has been reduced by previous claims. Supplemental is for an additional premium, and if requested within 60 days after the end of the policy period. This provides an extended reporting period of unlimited duration to file claims for the occurrence which occurred after the retroactive date and prior to the policy's original expiration date, with separate aggregate limits of insurane. This period starts when the basic extende reporting period ends.
• Claim information-

Premises and Operations

Operations hazard deals with operations occurring away from the insured's principal place of business, while the operations are being performed

Premises hazard includes claims arising from:

• Premises designated in Declarations
• Premises alienated by Named insured
• Newly acquired property of the insurer is notified within 30 days of acquisition
• Ways immediately adjoining the insured premises

Products and Completed Operations

Products Coverage:

Protects the insured for BI and PD occurring away from premises owned or rented to the insured and arising out of products made or sold by the insured. Product must have been relinquished to teh third party to qualify as a products claim. A person can sue manufacturers, wholesalers and retailers, alleging fault and legal responsibility based on:

• Breach of warranty
• Strict Liability
• Negligence

Completed Operations:

Similar to products. Involves liability for "work" that has been completed. Operations are completed ate the earliest of the following:

• All operations to be performed under a contract or at a given site have been completed
• A portion of the work has eben put to its intended use.

Insured Contracts

Pollution Liability

Pollution Liability Coverage Form and Pollution Liability Limited Coverage Form:

Covers certain pollution losses excluded under the standard form. Each covers pollution incidents, which are emissions of pollutants into or on land, the atmosphere or water that cause environmental damage. Only difference is the Pollution Liability Coverage Extension Endorsement does not cover clean-up costs, and teh Pollution Liability forms does. Both only writetn on a claims-made basis.

Pollution Liability Coverage Extension Endorsement

Overrides the Coverage A exclusion for BI and PD claims arising out of pollution losses. It does not, however, provide coverage for clean-up costs associated with pollution losses.