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The Society of Certified Insurance Counselors a proud member of The National Alliance for Insurance Education & Research

SECTION 1

Commercial General Liability

Duane M. DiPirro, CIC, CPCU, AU Lawley Service, Inc. Lancaster, NY

www.TheNationalAlliance.com © 2016. The National Alliance for Insurance Education & Research. All Rights Reserved. This outline or any part thereof may not be reproduced in any form or by any means or stored in any information retrieval system without the express written consent of the author. This publication includes copyrighted material of Insurance Services Office, Inc., with its permission.

1

1

COMMERCIAL GENERAL LIABILITY

Duane M. DiPirro, CIC, CPCU, AU Lawley Service Insurance Group Buffalo, New York

Copyright © Duane M. DiPirro, CIC, CPCU, AU ALL RIGHTS TO THE FOLLOWING MATERIAL ARE RESERVED. This outline or any part thereof may not be reproduced in any form or by any means or stored in any information retrieval system without express written consent of the author.

All material found in this document in the enclosed border is copyrighted material of Insurance Services Offices, Inc. and is used with their permission. Italics and underlines have been added for emphasis.

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

Page 2

1 LEARNING OBJECTIVES After completing this session the participant will be able to: 1.

Provide specific examples of major loss exposures covered by the Commercial General Liability Coverage Form. (Page 4)

2.

Determine whether a person or organization qualifies as an insured under the “Who is An Insured” provision in the event of a loss situation. (Page 6)

3.

Recognize the two promises the insurer makes in the Insuring Agreement under Coverage A - Bodily Injury And Property Damage Liability and describe the requirements that must be met for coverage to apply. (Page 14)

4.

Understand the concept of legal liability and how claims can arise from negligence, strict liability, absolute liability, intentional torts. (Page 15)

5.

Explain if coverage applies or if a loss is excluded under Coverage A – Bodily Injury And Property Damage Liability. (Page 22)

6.

Understand the issues concerning contractual liability and identify the types of liability assumed in an “insured contract” that are covered under Coverage A – Bodily Injury And Property Damage Liability. (Page 22)

7.

Given a pollution incident, explain under what circumstances coverage is excluded and when the exceptions to the Pollution Exclusion would apply under Coverage A – Bodily Injury And Property Damage Liability. (Page 34)

8.

Understand why the six (6) specified Damage to Property exposures are excluded and under what circumstances the exclusions do not apply. (Page 42)

9.

Given a claim situation, indicate if an offense is included in the definition of “personal and advertising injury” and whether or not coverage applies under Coverage B – Personal and Advertising Liability. (Page 55)

10.

Understand the purpose of Coverage C – Medical Payments and determine under what circumstances coverage would or would not apply. (Page 61)

11.

Identify the Limits Of Insurance and be able to apply them when given a specific loss situation. (Page 65)

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

Page 3

I.

INTRODUCTION TO COMMERCIAL GENERAL LIABILITY

Learning Objective 1: Provide specific examples of major loss exposures covered by the Commercial General Liability Coverage Form. A.

B.

Liability Exposures Covered by the Commercial General Liability (CGL) Coverage Form CG 00 01 04/13 Edition 1.

Premises Liability

2.

Operations Liability

3.

Product Liability

4.

Completed Operations Liability

5.

Contractual Liability

6.

Contingent Liability

7.

Personal Injury Liability

8.

Advertising Injury Liability

Structure of the CGL Policy 1.

Common Policy Declarations

2.

Common Policy Conditions a.

Notice of Cancellation 1) 2)

b.

First Named Insured - the only party who can: 1) 2) 3) 4)

3.

10 days for non-payment of premium 30 days for any other reason

Receive notice of cancellation Cancel the policy Pay the premium Endorse the policy

Commercial General Liability Declarations x

Provides detailed information that personalizes the policy to a particular insured(s).

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

Page 4

1 4.

Commercial General Liability Coverage Form Two versions available CG 00 01 – Occurrence CG 00 02 - Claims made

x x

5. C.

Endorsements

Commercial General Liability Coverage Form (CG 00 01) 1.

Section I – Coverage a.

b.

Coverage A 1)

Bodily Injury and Property Damage Liability

2)

Premises-Operations and Products/Completed Operations

Coverage B x

c.

Coverage C x

d.

e.

Personal Injury and Advertising Injury

Medical Payments

Supplementary Payments 1)

Applies to Coverage A and B

2)

Each coverage has its own Insuring Agreement and Exclusions

Endorsements - usually excludes or modifies coverage.

2.

Section II – Who Is An Insured

3.

Section III – Limits of Insurance

4.

Section IV – CGL Conditions

5.

Section V - Definitions

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

Page 5

II.

WHO IS AN INSURED

Learning Objective 2: Determine whether a person or organization qualifies as an insured under the “Who Is An Insured” provision in the event of a loss situation. A.

Types of “Insured” status: 1.

Named Insureds Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy.

2.

Automatic Insureds The word "insured" means any person or organization qualifying as such under Section II – Who Is An Insured.

3.

Additional Insureds a.

Non automatic

b.

Usually added by endorsement

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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1 B.

Who Is An Insured Provision 1.

If “you” are designated on the Declarations, automatic status includes:

a. If individual, includes spouse b. If partnership or joint venture, includes members, partners and spouses c. Limited liability companies, includes members and managers (only with respect to duties as your manager) d. If corporation, includes executive officers, directors, stockholders e. Trusts, includes trustees

SECTION II – WHO IS AN INSURED 1. If you are designated in the Declarations as: a. An individual, you and your spouse are insureds, but only with respect to the conduct of a business of which you are the sole owner. b. A partnership or joint venture, you are an insured. Your members, your partners, and their spouses are also insureds, but only with respect to the conduct of your business. c. A limited liability company, you are an insured. Your members are also insureds, but only with respect to the conduct of your business. Your managers are insureds, but only with respect to their duties as your managers. d. An organization other than a partnership, joint venture or limited liability company, you are an insured. Your "executive officers" and directors are insureds, but only with respect to their duties as your officers or directors. Your stockholders are also insureds, but only with respect to their liability as stockholders. e. A trust, you are an insured. Your trustees are also insureds, but only with respect to their duties as trustees.

E&O Exposure: Past joint ventures and/or partnerships and new joint ventures and/or partnerships are NOT covered unless named on a schedule. Executive Officer Defined 6. “Executive Officer” means a person holding any of the officer positions created by your charter, constitution, bylaws or any other similar governing document.

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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2.

Others Who Are Insureds 2. Each of the following is also an insured:

a.

Employees: Includes leased employees, excludes temporary employees ¾ Volunteers are insureds ¾ Limitations apply to both employees and volunteers ¾ No BI or PI to partners, members, coemployees, volunteers in the course of employment ¾ No consequential BI ¾ Incidental medical malpractice is covered; professional health care is not covered ¾ PD exclusion: property owned, occupied or rented, or in CCC of named insured or named insured’s employees, volunteers, partners or members

  b. Real estate managers, other than your employee c. Temporary executor with custody of property if the named insured dies: d. Legal representative if the named insured dies. Permanent executor of an estate

a. Your "volunteer workers" only while performing duties related to the conduct of your business, or your "employees", other than either your "executive officers" (if you are an organization other than a partnership, joint venture or limited liability company) or your managers (if you are a limited liability company), but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business. However, none of these "employees" or "volunteer workers" are insureds for: (1) "Bodily injury" or "personal and advertising injury": (a) To you, to your partners or members (if you are a partnership or joint venture), to your members (if you are a limited liability company), to a co-"employee" while in the course of his or her employment or performing duties related to the conduct of your business, or to your other "volunteer workers" while performing duties related to the conduct of your business; (b) To the spouse, child, parent, brother or sister of that co"employee" or "volunteer worker" as a consequence of Paragraph (1)(a) above; (c) For which there is any obligation to share damages with or repay someone else who must pay damages because of the injury described in Paragraph (1)(a) or (b) above; or (d) Arising out of his or her providing or failing to provide professional health care services. (2) "Property damage" to property: (a) Owned, occupied or used by; (b) Rented to, in the care, custody or control of, or over which physical control is being exercised for any purpose by; you, any of your "employees", "volunteer workers", any partner or member (if you are a partnership or joint venture), or any member (if you are a limited liability company). b. Any person (other than your "employee" or "volunteer worker"), or any organization while acting as your real estate manager. c. Any person or organization having proper temporary custody of your property if you die, but only: (1) With respect to liability arising out of the maintenance or use of that property; and (2) Until your legal representative has been appointed. d. Your legal representative if you die, but only with respect to duties as such. That representative will have all your rights and duties under this Coverage Part.

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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1 Definition of Employee 5. “Employee” includes a “leased worker”. “Employee” does not include a “temporary worker”. Definition of Leased Worker 10. “Leased worker” means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. “Leased worker” does not include a “temporary worker”. Definition of Temporary Worker 19. “Temporary worker” means a person who is furnished to you to substitute for a permanent “employee” on leave or to meet seasonal or short-term workload conditions. Definition of Volunteer Worker 20. “Volunteer worker” means a person who is not your “employee” and who donates his or her work and acts at the direction of and within the scope of duties determined by you, and is not paid a fee, salary or other compensation by you or anyone else for their work performed for you.

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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3.

Newly Acquired Entity qualify as named insureds

¾ Does NOT apply to newly acquired or formed partnership, JV or LLC

3. Any organization you newly acquire or form, other than a partnership, joint venture or limited liability company, and over which you maintain ownership or majority interest, will qualify as a Named Insured if there is no other similar insurance available to that organization.

¾ Majority interest  ¾ No other insurance

However:

¾ 90 days or end of policy period whichever is earlier ¾ No BI or PD before acquired ¾ No PI or AI committed before acquired

4.

a. Coverage under this provision is afforded only until the 90th day after you acquire or form the organization or the end of the policy period, whichever is earlier; b. Coverage A does not apply to "bodily injury" or "property damage" that occurred before you acquired or formed the organization; and c. Coverage B does not apply to "personal and advertising injury" arising out of an offense committed before you acquired or formed the organization.

No insured status for current or past partnership, joint venture, or limited liability company that are not SHOWN as a Named Insured in the Declarations

¾ Current or past

partnerships, joint ventures and LLCs must be declared

No person or organization is an insured with respect to the conduct of any current or past partnership, joint venture or limited liability company that is not shown as a Named Insured in the Declarations.

x

E&O Trap

x

Discontinued Operations coverage required.

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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1

Notes

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

Page 11

COMMERCIAL GENERAL LIABILITY “WHO IS AN INSURED” The following named insureds provide automatic coverage for those who are "down line"

INDIVIDUAL

PARTNERSHIP OR JOINT VENTURE

ORGANIZATION

LIMITED LIABILITY COMPANY

NAMED INDIVIDUAL*

NAMED PARTNERSHIP

NAMED ENTITY

NAMED LLC

NAMED TRUST

SPOUSE*

NAMED JOINT VENTURE

EXECUTIVE OFFICERS*

MEMBERS*

TRUSTEES

PARTNERS*

DIRECTORS*

MANAGERS*

MEMBERS*

STOCKHOLDERS *

TRUST

SPOUSES*

AUTOMATIC INSUREDS * as respects the conduct of the business or their duties for the Named Insured

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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1 These are not named on the declaration page. They are insureds due to policy language.

AUTOMATIC INSUREDS

EMPLOYEES*

PERSON OR ORGANIZATION WITH TEMPORARY CUSTODY IF NAMED INSURED DIES

VOLUNTEERS

REAL ESTATE MANAGER

LEGAL REPRESENTATIVE IF NAMED INSURED DIES

NEWLY ACQUIRED OR FORMED ORGANIZATION FOR 90 DAYS OR END OF POLICY PERIOD

Does Not Include Newly Acquired Or Formed Partnership, Joint Venture Or LLC

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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III.

SECTION I - COVERAGES

Learning Objective 3: Recognize the two promises the insurer makes in the Insuring Agreement under Coverage A - Bodily Injury And Property Damage Liability and describe the requirements that must be met for coverage to apply. A.

Coverage A - Bodily Injury and Property Damage Liability 1.

Insuring Agreement

¾ Pay those sums

¾ Legally obligated to pay because of BI or PD ¾ Right and duty to defend insured ¾ Investigate at insurer’s discretion

1. Insuring Agreement a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may at our discretion investigate any "occurrence" and settle any claim or "suit" that may result. But (1) The amount we will pay for damages is limited as described in LIMITS OF INSURANCE (SECTION III); and

¾ Duty ends when limits used up

(2) Our right and duty to defend end when we have used up the applicable limit of insurance in the payment of judgments or settlements under Coverage A or B or medical expense under Coverage C. No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments - Coverages A and B.

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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1 Learning Objective 4: Understand the concept of legal liability and how claims can arise from negligence, strict liability, absolute liability, intentional torts. a.

There must be a legal obligation to pay 1)

What is legal liability? a)

Legal liability is a responsibility or obligation to others which courts recognize and enforce.

b)

It can be triggered by

c) 2)

Direct liability (results from the entity’s conduct)

ii)

Vicarious liability (results from the conduct of others)

Legal liability claims can arise from tort law, statutes or contracts

What is a tort law? x

3)

i)

civil wrong other than breach of contract

Negligence (an unintentional tort) 4 elements must exist to support cause of action a)

Duty owed

b)

Breach of duty

c)

Proximate cause

d)

Damage s

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

Page 15

4)

Strict liability a)

A legal theory primarily used in Products Liability claims in which a manufacturer or food producer is liable for any and all defective or hazardous products which unduly threaten a consumer’s health and safety.

b)

A consumer must only prove the defect and consequent injury or damages to support his or her cause of action. Examples: Design defect, manufacturing defect, marketing defect

c)

5)

6)

This legal concept is imposed even though the manufacturer has exercised all possible care in the production and preparation of the product.

Absolute liability a)

Sometimes called the Dangerous Instrumentality Doctrine

b)

When a client uses something very dangerous such as guns, explosives, animals – the client is held absolutely liable for injury or damage – without regard for negligence.

Intentional tort - civil wrong that is intended to cause injury Examples: Assault and/or battery

7)

Statutes are a rule or law enacted by a legislative body and which supersedes common law. Examples: Dram shop or liquor liability statutes

8)

Contractual liability x

An agreement between two or more parties, which creates an obligation to do or not to do a particular thing and where one party assumes the financial consequences of certain liabilities of another

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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1 Coverage A Insuring Agreement continued b.

Pays for damages 1)

2) c.

¾ Death

a)

Special Damages

b)

General Damages

Punitive or Exemplary Damages

Pays because of “bodily injury” or property damage” 1)

¾ Sickness, disease

Compensatory Damages

“Bodily injury” definition

3. "Bodily injury" means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time. 2)

“Property damage definition

17. "Property damage" means: ¾ Physical injury ¾ Deemed to occur at time of occurrence ¾ Loss of use of property not physically injured  ¾ Computerized or electronically stored data, program or software are not tangible property

a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the "occurrence" that caused it. For the purposes of this insurance, electronic data is not tangible property. As used in this definition, electronic data means information, facts or programs stored as or on, created or used on, or transmitted to or from computer software, including systems and applications software, hard or floppy disks, CD-ROMS, tapes, drives, cells, data processing devices or any other media which are used with electronically controlled equipment.

¾ ¾

Physical Injury to Property Loss of Use - No Physical Injury

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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Coverage A Insuring Agreement continued d.

Only pays damages to which this insurance must apply x

e.

¾ Civil proceeding

¾ Arbitration proceeding ¾ Alternative dispute settlement  ¾ With Insurer’s consent

f.

BI or PD claims are subject to exclusions

Provides the right and duty to defend the insured against any “suit” 1)

No duty to defend if insurance does not apply

2)

Defense ends when applicable limits of insurance are used up in payment of judgments or settlements

18. "Suit"means a civil proceeding in which damages because of "bodily injury", "property damage", "personal injury" or "advertising injury" to which this insurance applies is alleged. "Suit" includes: a. An arbitration proceeding in which such damages are claimed and to which the insured must submit or does submit with our consent; or b. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent.

Coverage applies to BI and PD only if: 1)

Caused by an “occurrence” in the “coverage territory” during the policy period

2)

No coverage applies to injury or damage that was known prior to policy period. to certain insureds

1. Insuring Agreement b. This insurance applies to "bodily injury" and "property damage" only if: (1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory"; (2) The "bodily injury" or "property damage" occurs during the policy period; and (3) Prior to the policy period, no insured listed under Paragraph 1. of Section II – Who Is An Insured and no "employee" authorized by you to give or receive notice of an "occurrence" or claim, knew that the "bodily injury" or "property damage" had occurred, in whole or in part. If such a listed insured or authorized "employee" knew, prior to the policy period, that the "bodily injury" or "property damage" occurred, then any continuation, change or resumption of such "bodily injury" or "property damage" during or after the policy period will be deemed to have been known prior to the policy period.

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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1 a) ¾ Accident ¾ Repeated exposure

13. "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.

b) ¾ USA, Puerto Rico, Canada ¾ International waters and airspace connecting above ¾ All parts of the world ¾ Goods manufactured ¾ Activities of a person away for a short time ¾ Personal/advertising injury for Internet activities ¾ Suits must be brought within coverage territory, or ¾ Settlements by company

Definition of “occurrence”

Definition of “coverage territory”

4. "Coverage territory" means: a. The United States of America (including its territories and possessions), Puerto Rico and Canada; b. International waters or airspace, but only if the injury or damage occurs in the course of travel or transportation between any places included in Paragraph a. above; or c. All other parts of the world if the injury or damage arises out of: (1) Goods or products made or sold by you in the territory described in Paragraph a. above; (2) The activities of a person whose home is in the territory described in Paragraph a. above, but is away for a short time on your business; or (3) "Personal and advertising injury" offenses that take place through the Internet or similar electronic means of communication; provided the insured's responsibility to pay damages is determined in a "suit" on the merits, in the territory described in Paragraph a. above or in a settlement we agree to.

Endorsements that amend the “coverage territory” definition x

AMENDMENT OF COVERAGE TERRITORY – WORLDWIDE COVERAGE CG 24 22 Provides coverage anywhere in the world except for countries under trade or other economic sanction or embargo with the United States.

x

AMENDMENT OF COVERAGE TERRITORY – ADDITIONAL SCHEDULED COUNTRIES CG 24 23 Coverage territory is limited to the United States (including its territories and possessions), Puerto Rico, or Canada, and any other country specified in a schedule on the endorsement.

x

AMENDMENT OF COVERAGE TERRITORY – WORLDWIDE COVERAGE WITH SPECIFIED EXCEPTIONS CG 24 24 Coverage territory is anywhere in the world excluding countries specified in the schedule on the endorsement and any country under trade or other economic sanction or embargo with the United States.

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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Coverage A Insuring Agreement continued g.

Unknown BI or PD applicability x

Clarifies application of insurance for continuous injury or damage that occurs during the policy period, but was not known to have occurred prior to the policy period.

1. Insuring Agreement c. "Bodily injury" or "property damage" which occurs during the policy period and was not, prior to the policy period, known to have occurred by any insured listed under Paragraph 1. of Section II – Who Is An Insured or any "employee" authorized by you to give or receive notice of an "occurrence" or claim, includes any continuation, change or resumption of that "bodily injury" or "property damage" after the end of the policy period. .

h.

When does the insured have knowledge of a claim?

1. Insuring Agreement d. "Bodily injury" or "property damage" will be deemed to have been known to have occurred at the earliest time when any insured listed under Paragraph 1. of Section II – Who Is An Insured or any "employee" authorized by you to give or receive notice of an "occurrence" or claim: (1) Reports all, or any part, of the "bodily injury" or "property damage" to us or any other insurer; (2) Receives a written or verbal demand or claim for damages because of the "bodily injury" or "property damage"; or (3) Becomes aware by any other means that "bodily injury" or "property damage" has occurred or has begun to occur.

i.

Coverage applies to loss of services resulting from BI 1. Insuring Agreement

¾ Includes care, loss of

services, or death

e. Damages because of "bodily injury" include damages claimed by any person or organization for care, loss of services or death resulting at any time from the "bodily injury".

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

Page 20

1 j.

Occurrence Version CG 00 01

1. Insuring Agreement b. This insurance applies to "bodily injury" and "property damage" only if:

¾ BI or PD ¾ Caused by an occurrence ¾ Coverage territory

(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory", and

¾ During the policy period

(2) The "bodily injury" or "property damage" occurs during the policy period.

Application of Coverage - four things required x

Bodily Injury or Property Damage

x

Occurrence

x

Coverage Territory

x

During the Policy Period

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

Page 21

Learning Objective 5: Explain if coverage applies or if a loss is excluded under Coverage A – Bodily Injury And Property Damage Liability. 2.

Coverage A – Exclusions 2. Exclusions This insurance does not apply to:

a.

Expected or Intended Injury

¾ Exception. Covers reasonable force to protect persons or property

a. Expected or Intended Injury "Bodily injury" or "property damage" expected or intended from the standpoint of the insured. This exclusion does not apply to "bodily injury" resulting from the use of reasonable force to protect persons or property.

b.

Not really an intentional acts exclusion

Contractual Liability Exclusion

Learning Objective 6: Understand the issues concerning contractual liability and identify the types of liability assumed in an “insured contract” that are covered under Coverage A – Bodily Injury And Property Damage Liability. 1)

First, a discussion on assumption of liability in a contract or agreement a)

What is contractual liability? x

b)

An agreement between two or more parties, which creates an obligation to do or not to do a particular thing and where one party assumes the financial consequences of certain liabilities of another

What is an indemnity (hold harmless) agreement? x

An indemnity agreement is a contract to save one party from the financial consequences as a result of the conduct of the parties or some other parties.

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

Page 22

1 c)

d)

e)

What is the purpose? x

Transfers obligation to pay defense and final judgment

x

Risk management tool - Non-insurance transfer

Parties commonly involved x

Landlord - Tenant

x

General Contractor - Subcontractor

x

Manufacturer - Wholesaler - Vendors

Examples of loss transfers x

f)

Rental Agreements, Bills of Sale, Purchase Orders, Repair Orders, Online Purchasing, Purchase Orders subject to UCC, etc.

Key Definitions to Understand Indemnification Clauses x

Indemnify definition

x

Indemnitor definition

x

Indemnitee definition

x

Implied indemnity

x

Express indemnity

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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g)

Definitions of the Different Types of Contractual Indemnity Clauses x

Comparative Indemnification or Limited Indemnity Clause

x

General Indemnification or Intermediate Indemnity Clause

x

Specific Indemnification or Broad Form Indemnity Clause

Example of Indemnity Agreement Subcontractor (Indemnitor) shall defend, indemnify and hold harmless General Contractor (Indemnitee), including its officers, directors, agents, employees, affiliates, parents, and subsidiaries, and each of them from any and all claims, demands, causes of action, damages, costs, expenses, actual attorney’s fees consultant’s fees, expert fees, losses or liability, in law or in equity, of every kind and nature whatsoever arising out of or in connection with Sub-contractor’s operations to be performed under this agreement for, but not limited to, personal injury including, but not limited to, bodily injury, emotional injury, sickness or disease, or death to persons and/or damage to property of anyone (including loss of use thereof) caused or alleged to be caused by an act or omission of the Subcontractor. h)

Enforceability is based on: x

Court interpretations of the contract

x

State regulations and statutes

x

Anti-indemnification statutes in construction contracts varies by state

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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1 Contractual Liability Exclusion continued 2)

Exclusion wording a)

The contractual liability exclusion precludes coverage for contractually assumed liability EXCEPT for liability assumed in a contract or agreement that is an "insured contract” and only then with respect to injury or damage that occurs after the contract is executed.

b)

The key to what contractual liability is covered is in the policy definition of "insured contract." 2. Exclusions This insurance does not apply to:

¾ Contractual exclusion

¾ Exception covers defined contracts ¾ Defense

b. Contractual Liability "Bodily injury" or "property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages: (1) That the insured would have in the absence of the contract or agreement; or (2) Assumed in a contract or agreement that is an "insured contract" provided the "bodily injury" or "property damage" occurs subsequent to the execution of the contract or agreement. Solely for the purposes of liability assumed in an “insured contract”, reasonable attorney fees and necessary litigation expenses incurred by or for a party other than an insured are deemed to be damages because of “bodily injury” or “property damage”, provided: (a) Liability to such party for, or for the cost of, that party’s defense has also been assumed in the same “insured contract”; (b) Such attorney fees and litigation expenses are for defense of that party against a civil or alternative dispute resolution proceeding in which damages to which this insurance applies are alleged.

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c)

Definition of "Insured Contract" 9. "Insured Contract" means:

¾ Lease of premises ¾ Excluding fire damage to premises ¾ Sidetrack agreement ¾ Easement agreement not within 50 ft. of railroad ¾ Municipal agreement ¾ Elevator maintenance agreements ¾ That part of any other contract pertaining to your business ¾ Must have tort liability assumed ¾ Definition of tort liability assumed ¾ Exclusions in definition ¾ Railroad construction

¾ Architect, engineer or surveyor

¾ Professional for architect, engineer or surveyor

a. A contract for lease of premises. However, that portion of the contract for a lease of premises that indemnifies any person or organization for damage by fire to premises while rented to you or temporarily occupied by you with permission of the owner is not an "insured contract"; b. A sidetrack agreement; c. Any easement or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad; d. An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality; e. An elevator maintenance agreement. f. That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement. Paragraph f. does not include that part of any contract or agreement: (1) That indemnifies a railroad for "bodily injury" or "property damage" arising out of construction or demolition operations, within 50 feet of any railroad property and affecting any railroad bridge or trestle, tracks, road beds, tunnel, underpass or crossing; (2) T that indemnifies an architect, engineer or surveyor for injury or damage arising out of: (a) Preparing, approving or failing to prepare or approve maps, drawings, opinions, reports, surveys, field orders, change orders, or drawings or specifications, or (b) Giving directions or instructions, or failing to give them, if that is the primary cause of the injury or damage; (3) Under which the insured, if an architect, engineer or surveyor, assumes liability for an injury or damage arising out of the insured's rendering or failure to render professional services, including those listed in (2) above and supervisory, inspection, architectural or engineering activities.

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1 WHAT IS AN “INSURED CONTRACT”? REMEMBER L = lease of premises (subject to exception) E = easement/license agreement (subject to exception) A = an obligation as required by ordinance (subject to exception) S = sidetrack agreement with railroad E = elevator maintenance agreement

+ = tort liability assumed by the named insured (subject to exceptions) 3)

Endorsements that impact “Insured Contract” coverages. x

CG 24 26 Amendment of Insured Contract Definition ¾ ¾ ¾

Changes definition of Part f. above. Removes sole negligence of indemnity Must be caused in whole or in part by Named Insured.

x

CG 21 39 Contractual Liability Limitation

x

CG 24 17 Contractual Liability - Railroads

x

CG 00 09 Owners and Contractors Protective Liability Coverage Form

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COMMERCIAL GENERAL LIABILITY CG 24 26 04 13 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

AMENDMENT OF INSURED CONTRACT DEFINITION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART RT The definition of "insured contract" in the Definitions section is replaced by the following: "Insured contract" means: a. A contract for a lease of premises. However, that portion of the contract for a lease of premises that indemnifies any person or organization for damage by fire to premises while rented to you or temporarily occupied by you with permission of the owner is not an "insured contract"; b. A sidetrack agreement; c. Any easement or license agreement, ent, except in connection with construction or demolition operations on orr within 50 feet of a railroad; d. An obligation, as required by ordinance, to indemnify a municipality, except in connection with h work for a municipality; icipalit e. An elevator maintenance agreement; intenance a nt; f. That part of any other co contract or agreement business emen pertaining ning to your bus ss (including cluding an indemnification demnification of a municipality in connection unici nection with work performed rform for a municipality) pality) under which you assume the tort lia liability ty of another party to pay injury" or "property ay for "bodily inj y" o damage" to a third person organization, erson or or provided the "bodily inju injury" or "property damage" is caused, in wh whole or in part, by you or by those e acting on your behalf. However, such part of a contract or agreement shall only be considered an "insured contract" to the extent your assumption of the tort liability is permitted by law. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement. CG 24 26 04 13

Paragraph aph ff. does not include that part of any contract ract or agreement: agreeme ((1) That indemnifies emnifies a railroad for "bodily injury" or "property out roperty damage" arising a of construction operations, o n or demolition op within 50 feet off any railroad property with affecting any railroad bridge or and a trestle, tunnel, stle, tracks, road-beds, r ad underpass rpass or crossing; crossin (2) That indemnifies an architect, engineer 2) T emnifies a or surveyor for injury or damage arising in out of: ((a) Preparing, approving, or failing to prepare or approve, maps, shop drawings, opinions, reports, surveys, d field orders, change orders or drawings and specifications; or (b) Giving directions or instructions, or failing to give them, if that is the primary cause of the injury or damage; or (3) Under which the insured, if an architect, engineer or surveyor, assumes liability for an injury or damage arising out of the insured's rendering or failure to render professional services, including those listed in (2) above and supervisory, inspection, architectural or engineering activities.

© Insurance Services Office, Inc., 2012

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1 4)

Contractual liability defense conditions for indemnitees named in a suit a)

The Supplementary Payments section further discusses defense expenses and clarifies if paid within or outside the limits of the policy.

b)

Those defense expenses meeting all policy conditions - paid as supplemental expense

c)

Those defense expenses not meeting all policy conditions paid within limits

d)

Limits - Errors and Omission (E&O) issue

2. If we defend an insured against a "suit" and an indemnitee of the insured is also named as a party to the "suit", we will defend that indemnitee if all of the following conditions are met: a. The "suit" against the indemnitee seeks damages for which the insured has assumed the liability of the indemnitee in a contract or agreement that is an "insured contract"; b. This insurance applies to such liability assumed by the insured; c. The obligation to defend, or the cost of the defense of, that indemnitee, has also been assumed by the insured in the same "insured contract"; d. The allegations in the "suit" and the information we know about the "occurrence" are such that no conflict appears to exist between the interests of the insured and the interests of the indemnitee; e. The indemnitee and the insured ask us to conduct and control the defense of that indemnitee against such "suit" and agree that we can assign the same counsel to defend the insured and the indemnitee; and f. The indemnitee: (1) Agrees in writing to: (a) Cooperate with us in the investigation, settlement or defense of the "suit"; (b) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the "suit"; (c) Notify any other insurer whose coverage is available to the indemnitee; and (d) Cooperate with us with respect to coordinating other applicable insurance available to the indemnitee; and (2) Provides us with written authorization to: (a) Obtain records and other information related to the "suit"; and (b) Conduct and control the defense of the indemnitee in such "suit". So long as the above conditions are met, attorneys' fees incurred by us in the defense of that indemnitee, necessary litigation expenses incurred by us and necessary litigation expenses incurred by the indemnitee at our request will be paid as Supplementary Payments. Notwithstanding the provisions of Paragraph 2.b.(2) of Section I – Coverage A – Bodily Injury And Property Damage Liability, such payments will not be deemed to be damages for "bodily injury" and "property damage" and will not reduce the limits of insurance. Our obligation to defend an insured's indemnitee and to pay for attorneys' fees and necessary litigation expenses as Supplementary Payments ends when we have used up the applicable limit of insurance in the payment of judgments or settlements or the conditions set forth above, or the terms of the agreement described in Paragraph f. above, are no longer met.

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c.

Liquor Liability Exclusion 1)

Excludes if the insured is in the business of manufacturing, distributing, selling, servicing or furnishing alcoholic beverages c. Liquor Liability "Bodily injury" or "property damage" for which any insured may be held liable by reason of: (1) Causing or contributing to the intoxication of any person; (2) The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or (3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages. This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in: (a) The supervision, hiring, employment, training or monitoring of others by that insured; or (b) Providing or failing to provide transportation with respect to any person that may be under the influence of alcohol; if the "occurrence" which caused the "bodily injury" or "property damage", involved that which is described in Paragraph (1), (2) or (3) above. However, this exclusion applies only if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. For the purposes of this exclusion, permitting a person to bring alcoholic beverages on your premises, for consumption on your premises, whether or not a fee is charged or a license is required for such activity, is not by itself considered the business of selling, serving or furnishing alcoholic beverages.

¾ Liquor Liability Exclusion ¾Provides Insured with Host Liquor Liability Coverage

¾Supervision, hiring, training, monitoring of others ¾Providing or failure to provide transportation

¾BYOB noted as not being “in the business of”

¾

Ways to be liable under liquor liability: Æ Æ Æ Æ

Causing or contributing to intoxication Selling to a minor Supervision, hiring, employment, training, monitoring of others Providing or failure to provide transportation

Exceptions: ¾ Intent is to provide host liquor liability: ¾ Covers BYOB owners who do not serve or furnish alcohol

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1 2)

Endorsements x

Liquor Liability CG 24 08 Removes the liquor liability exclusion

x

Amendment of Liquor Liability Exclusion CG 21 50 The following replaces Exclusion c. under Paragraph 2. Exclusions of Section I – Coverage A – Bodily Injury And Property Damage Liability: 2. Exclusions This insurance does not apply to: c. Liquor Liability "Bodily injury" or "property damage" for which any insured may be held liable by reason of: (1) Causing or contributing to the intoxication of any person, including causing or contributing to the intoxication of any person because alcoholic beverages were permitted to be brought on your premises, for consumption on your premises; (2) The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or (3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages. This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in: (a) The supervision, hiring, employment, training or monitoring of others by that insured; or

¾ Wording revision – Exclusion applies to named insureds if:

(b) Providing or failing to provide transportation with respect to any person that may be under the influence of alcohol; if the "occurrence" which caused the "bodily injury" or "property damage", involved that which is described in Paragraph (1), (2) or (3) above.

¾ Manufacture, sell ¾ Serve or furnish for a charge

This exclusion applies only if you: (1) Manufacture, sell or distribute alcoholic beverages; (2) Serve or furnish alcoholic beverages for a charge whether or not such activity:

¾ Serve or furnish for a without a charge if license required

(a) Requires a license; (b) Is for the purpose of financial gain or livelihood;

¾ BYOB onto insured’s premises for consumption

(3) Serve or furnish alcoholic beverages without a charge, if a license is required for such activity; or (4) Permit any person to bring any alcoholic beverages on your premises, for consumption on your premises. x

Amendment of Liquor Liability Exclusion Exception For Scheduled Premises Or Activities CG 21 51

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d.

Workers' Compensation, etc.

¾ Excludes all statutory benefits under WC ¾ Any similar law

e.

d. Workers Compensation and Similar Laws Any obligation of the insured under a workers compensation, disability benefits or unemployment compensation law or any similar law.

Employers Liability Exclusion 1)

Policy Exclusion e. Employer's Liability "Bodily injury" to:

¾ Employer's liability

(1) An "employee" of the insured arising out of and in the course of: (a) Employment by the insured; or

¾ Consequential bodily injury ¾ Dual capacity ¾ Third party action over ¾ Contractual liability exception for “insured contract”

2)

(b) Performing duties related to the conduct of the insured's business; or (2) The spouse, child, parent, brother or sister of that "employee" as a consequence of Paragraph (1) above. This exclusion applies whether the insured may be liable as an employer or in any other capacity and to any obligation to share damages with or repay someone else who must pay damages because of the injury. This exclusion does not apply to liability assumed by the insured under an "insured contract".

Definition of Employee 5. "Employee" includes a "leased worker". "Employee" does not include a "temporary worker".

3)

Definition of Leased Worker 10. "Leased worker" means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. "Leased worker" does not include a "temporary worker".

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1 4)

Definition of Temporary Worker 19. "Temporary worker" means a person who is furnished to you to substitute for a permanent "employee" on leave or to meet seasonal or short-term work load conditions.

5)

Coverage For Injury to Leased Workers CG 04 24

¾ Buyback to eliminate “leased workers” from definition of “employees”

6)

With respect to the Employer's Liability exclusion (SECTION I) only, the definition of "employee" in the DEFINITIONS Section is replaced by the following: "Employee" does not include a "leased worker" or a "temporary worker".

Employment Related Practices Exclusion CG 21 47 Partial copy This insurance does not apply to: "Bodily injury" to:

¾ Course of employment?

(1) A person arising out of any: (a) Refusal to employ that person;

¾ Excludes Bodily Injury and Personal Injury arising out of refusal to employ, termination of employment, employment related practices (coercion, demotion, evaluation, reassignment, discipline, etc.)

(b) Termination of that person's employment; or (c) Employment-related practices, policies, acts or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination or malicious prosecution directed at that person; or (2) The spouse, child, parent, brother or sister of that person as a consequence of "bodily injury" to that person at whom any of the employment-related practices described in Paragraphs (a), (b), or (c) above is directed.

¾ Consequential Bodily Injury

This exclusion applies: (1) Whether the injury-causing event described in Paragraphs (a), (b) or (c) above occurs before employment, during employment or after employment of that person;

¾ Employer's liability, any other capacity, third party action over

(2) Whether the insured may be liable as an employer or in any other capacity; and (3) To any obligation to share damages with or repay someone else who must pay damages because of the injury.

7)

Stop Gap - Employers Liability Endorsements x x x x x

CG 04 40 used for North Dakota CG 04 41 used for Ohio CG 04 42 used for Washington CG 04 44 used for Wyoming CG 04 51 used for Puerto Rico

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Learning Objective 7: Given a pollution incident, explain under what circumstances coverage is excluded and when the exceptions to the Pollution Exclusion would apply under Coverage A – Bodily Injury And Property Damage Liability. f.

Pollution SECTION V – DEFINITIONS 15. "Pollutants" mean 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. 7. "Hostile fire" means one which becomes uncontrollable or breaks out from where it was intended to be.

1)

Exclusion applies to BI or PD arising out of most pollution exposures

¾ BI and PD excluded ¾ At or from any premises which is or was owned or occupied, rented or loaned to any insured

f. Pollution (1) “Bodily injury” or “property damage” arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants; a. At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured. However, this subparagraph does not apply to:

EXCEPTIONS Coverage Applies To: ¾ Bodily Injury if: - Inside building - caused by smoke, fumes, vapor or soot - from heating, cooling, dehumidifying or water heating equipment

(i)

“Bodily injury” if sustained within a building and caused by smoke, fumes, vapor or soot produced by or originating from equipment that is used to heat, cool or dehumidify the building, or equipment that is used to heat water for personal use, by the building’s occupants or their guests;

(ii)

“Bodily injury” or “property damage” for which you may be held liable, if you are a contractor and the owner or lessee of such premises, site or location has been added to your policy as an additional insured with respect to your ongoing operations performed for that additional insured at that premises, site or location and such premises, site or location is not and never was owned or occupied by, or rented to loaned to, any insured other than that additional insured; or

(iii)

“Bodily injury” or “property damage” arising out of heat, smoke or fumes from a “hostile fire.”

¾ BI or PD caused by named insured if named insured has added the owner or lessee of the site as additional insured

¾ Hostile fire now defined in Definitions section

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1 f. Pollution No Coverage For:   ¾ Site or location used for handling, storage, disposal, processing or treatment ¾ Transported, handled, processed as waste by or for Insured ¾ At the job site if any insured is performing operations ¾ If pollutants are brought on to the site, excluded (however, Products and Completed Operations is covered) EXCEPTIONS Coverage Applies To: ¾ Mobile equipment: fluids necessary for operation; exception does not apply for intentional discharge     Coverage Applies To: ¾ Sustained within a building and is caused by release of gases, fumes or vapors from materials brought into the building and is in connection with operations. ¾ BI or PD arising from heat, smoke, fumes from a hostile fire.

(1) “Bodily injury” or “property damage” arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants; b. At or from any premises, site or location which is or was at any time used by or for any insured to others for the handling, storage, disposal, processing or treatment of waste; c. Which are or were at any time transported, handled, stored, treated, disposed of, or processed as waste by or for any insured or any person or organization for whom you may be legally responsible; or d. At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured’s behalf are performing operations if the “pollutants” are brought on or to the premises, site or location in connection with such operations by such insured, contractor or subcontractor. However, this subparagraph does not apply to: (i) “Bodily injury” or “property damage” arising out of the escape of fuels, lubricants or other operating fluids which are needed to perform the normal electrical, hydraulic mechanical functions necessary for the operation of “mobile equipment” or its parts, if such fuels, lubricants or other operating fluids escape from a vehicle part designed to hold, store or receive them. This exception does not apply if the fuels, lubricants or other operating fluids are intentionally discharged, dispersed or released, or if such fuels, lubricants or other operating fluids are brought on or to the premises, site or location with the intent to be discharged, dispersed or released as part of the operations being performed by such insured contractor or subcontractor. (ii) “Bodily injury” or “property damage” sustained within a building a caused by the release of gases, fumes or vapors from materials brought into that building in connection with operations being performed by you or on your behalf by a contractor or subcontractor; or

(iii) “Bodily injury” or “property damage” arising out of heat, smoke or fumes from a hostile fire.

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Pollution Exclusion continued  No Coverage For: ¾ Professional exclusion         ¾ Clean-up cost exclusion: request, demand or order; clean-up; on behalf of governmental authority

EXCEPTION ¾ Clean-up costs are provided to the extent insured would be legally liable for such expenses anyway.

2)

e.

At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured’s behalf are performing operations if the operations are to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants.

(2)

Any loss, cost or expense arising out of any: (a) Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants, or (b) Claim or suit by or on behalf of a government authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or any way responding to, or assessing the effects of pollutants.

However, this paragraph does not apply to liability for damages because of “property damage” that the insured would have in the absence of such request, demand, order, or statutory or regulatory requirement, or such claim or “suit” by or on behalf of a governmental authority.

Pollution Not Covered Except THERE IS POLLUTION LIABILITY COVERAGE FOR: a)

Bodily Injury sustained inside a building and caused by smoke, fumes, vapor or soot from the heating system produced by or originated from equipment that is used to heat, cool or dehumidify, or to heat water for personal use, etc.

b)

Bodily Injury and Property Damage arising out of the insured's operations at a location owned, occupied, rented or loaned to an additional insured, if the location was never owned, occupied, rented or loaned to any other insured Example: ABC Plumbing contractor is engaged to perform work at XYZ Chemical’s manufacturing plant. The contract requires that XYZ Chemical be added as an additional insured to ABC Plumbing’s policy. An employee of ABC accidentally breaks a chemical pipe causing the release of

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1 pollutants. ABC is covered. The release occurred during operations and the named insured did not bring the pollutants to the site. WHY? Because the pollutants were released from a site owned or leased by ANY insured (in this case, the additional insured XYZ) c)

Bodily Injury and Property Damage arising out of the escape of fuels, lubricants and other fluids which are necessary for the operation of mobile equipment and they escape from a vehicle part designed to hold, store or receive them (UNLESS the escape is intentional or they are brought to the job with the intent to release during the operation)

d)

Bodily Injury and Property Damage within a building and caused by the release of gases, fumes or vapors from materials brought into the building to use in connection with operations performed by the insured or on behalf of the insured Example: If the second floor tenants of an office building become ill due to fumes released during varnishing of the first floor by Ace Flooring Contractors, coverage responds.

3)

e)

Bodily Injury and Property Damage arising out of heat, smoke or fumes from a "hostile fire".

f)

Bodily Injury and Property Damage arising from Products/Completed Operations.

g)

CLEAN-UP COVERAGE IF the expense was necessary because of a covered "property damage" loss

Special endorsements impacting exclusion a)

CG 22 64 Pesticide or Herbicide Applicator – Limited Pollution Coverage

b)

CG 21 49 Total Pollution Exclusion Endorsement

c)

CG 21 55 Total Pollution Exclusion with a Hostile Fire Exception

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g.

Auto, Aircraft or Watercraft 1)

Exclusion

¾ Entrustment has been added ¾ Loading & Unloading Exclusion ¾Clarifies that negligent supervision, hiring, training, etc. is excluded

EXCEPTIONS ¾ Covers watercraft while ashore on premises

g. Aircraft, Auto Or Watercraft "Bodily injury" or "property damage" arising out of the ownership, maintenance, use or entrustment to others of any aircraft, "auto" or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and "loading or unloading". This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the "occurrence" which caused the "bodily injury" or "property damage" involved the ownership, maintenance, use or entrustment to others of any aircraft, "auto" or watercraft that is owned or operated by or rented or loaned to any insured. This exclusion does not apply to: (1) A watercraft while ashore on premises you own or rent;

¾ Covers non-owned watercraft: less than 26 feet, not used for hire

(2) A watercraft you do not own that is:

¾ Covers valet parking

(3) Parking an "auto" on, or on the ways next to, premises you own or rent, provided the "auto" is not owned by or rented or loaned to you or the insured;

¾ Covers Aircraft & Watercraft Contractual Liability ¾ Preserves coverage for operation for equipment attached to vehicles that no longer qualify as “mobile equipment”

(a) Less than 26 feet long; and (b) Not being used to carry persons or property for a charge;

(4) Liability assumed under any "insured contract" for the ownership, maintenance or use of aircraft or watercraft; or (5) "Bodily injury" or "property damage" arising out of: (a) The operation of machinery or equipment that is attached to, or part of, a land vehicle that would qualify under the definition of "mobile equipment" if it were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged; or (b) The operation of any of the machinery or equipment listed in Paragraph f.(2) or f.(3) of the definition of "mobile equipment".

Æ Over-the-road exposure falls under the Business Auto Policy Æ Operation of the equipment remains CGL

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1 2)

Definition of “Auto”

¾ Reinforces that vehicles subject to compulsory or financial responsibility laws are considered “autos”

h.

“Auto” means (a) A land motor vehicle, trailer or semitrailer designed for travel on public roads, including any attached machinery or equipment; or (b) Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. However, “auto” does not include “mobile equipment”.

Mobile Equipment 1)

Exclusion h. Mobile Equipment

¾ Transportation of mobile equipment

¾ Mobile equipment racing

"Bodily injury" or "property damage" arising out of: (1) The transportation of "mobile equipment" by an "auto" owned or operated by or rented or loaned to any insured; or (2) The use of "mobile equipment" in, or while in practice for, or while being prepared for, any prearranged racing, speed, demolition, or stunting activity.

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2)

Definition of "Mobile Equipment"

¾ Mobile Equipment

12. "Mobile equipment" means any of the following types of land vehicles, including any attached machinery or equipment:

¾ Bulldozers

a. Bulldozers, farm machinery, forklifts and other vehicles designed for use principally off public roads.

¾ On premises vehicles

b. Vehicles maintained for use solely on or next to premises you own or rent;

¾ Crawler treads ¾ Certain defined units No reference to license ¾ Certain trailers

c. Vehicles that travel on crawler treads; d. Vehicles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted: (1) Power cranes, shovels, loaders, diggers or drills; or (2) Road construction or resurfacing equipment such as graders, scrapers or rollers; e. Vehicles not described in a., b., c., or d. above that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types:

¾ Other than transport of persons or cargo

(1) Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment; or (2) Cherry pickers and similar devices used to raise or lower workers; f. Vehicles not described in a., b., c., or d. above maintained primarily for purposes other than the transportation of persons or cargo.

Æ Note there is no reference to licensed for road use Æ If you are in doubt: 9 Designate as a covered auto under the Business Auto Policy

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1 Definition of "Mobile Equipment" continued However, self-propelled vehicles with the following types of permanently attached equipment are not "mobile equipment" but will be considered "autos": ¾ Following are autos

(1) Equipment designed primarily for: (a) Snow removal; (b) Road maintenance, but not construction or resurfacing;

¾ Snow removal ¾ Road maintenance

(c) Street cleaning; (2) Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and

¾ Street cleaning ¾ Cherry pickers

(3) Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment.

¾ Certain named units ¾ Farm tractors and bulldozers; if vehicle is subject to compulsory insurance laws, it is considered an “auto”

I.

However, “mobile equipment” does not include any land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered “autos”.

War

¾ All war ¾ Warlike actions

I. War “Bodily injury” or “Property damage” ; however caused, arising, directly or indirectly, out of: (1) War, including undeclared or civil war; (2) Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or (3) Insurrection, rebellion, revolution, usurped power or action taken by governmental authority in hindering or defending against any of these.

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Learning Objective 8: Understand why the six (6) specified Damage to Property exposures are excluded and under what circumstances the exclusions do not apply. j.

Damage to Property 1)

Exclusion j. Damage To Property

Excludes Property: ¾ You own, rent, or occupy   ¾ Alienated premises: sell, give away, abandon ¾ Loaned property

"Property damage" to: (1) Property you own, rent, or occupy, including any costs or expenses incurred by you, or any other person, organization or entity, for repair, replacement, enhancement, restoration or maintenance of such property for any reason, including prevention of injury to a person or damage to another's property; (2) Premises you sell, give away or abandon, if the "property damage" arises out of any part of those premises; (3) Property loaned to you;

¾ Personal property in CCC

(4) Personal property in the care, custody or control of the insured;

¾ Particular part of real property arising out of operations

(5) That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the "property damage" arises out of those operations; or

¾ Any property that can be repaired EXCEPTIONS ¾ Covers short term rental, other than fire

¾ Covers Speculative Buildings ¾ Covers Sidetrack Agreements

(6) That particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it. Paragraphs (1), (3) and (4) of this exclusion do not apply to "property damage" (other than damage by fire) to premises, including the contents of such premises, rented to you for a period of seven or fewer consecutive days. A separate limit of insurance applies to Damage To Premises Rented To You as described in Section III – Limits Of Insurance. Paragraph (2) of this exclusion does not apply if the premises are "your work" and were never occupied, rented or held for rental by you. Paragraphs (3), (4), (5) and (6) of this exclusion do not apply to liability assumed under a sidetrack agreement. Paragraph (6) of this exclusion does not apply to "property damage" included in the "products-completed operations hazard".

¾ Covers Products/ Completed Operations

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1 2)

k.

Exceptions a)

Short-term rentals x Rental term up to one week x Damage to premises including personal property x Caused by perils other than fire x Separate limits applies - Damage To Premises Rented To You

b)

Speculative buildings

c)

Sidetrack Agreements

d)

Products/Completed Operations

Damage to “Your Product” 1)

Exclusion

¾ Your product is not covered; resulting BI or PD is covered x

2)

k. Damage to Your Product “Property damage” to “your product” arising out of it or any part of it.

This exclusion applies even if portions of the product are produced by an entity other than the named insured.

Definition of “Your Product” 21. "Your product":

¾ Other than real property ¾ Insured ¾ Others ¾ Acquired organizations ¾ Containers ¾ Warranties

a. Means: (1) Any goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by: (a) You; (b) Others trading under your name; or (c) A person or organization whose business or assets you have acquired; and (2) Containers (other than vehicles), materials, parts or equipment furnished in connection with such goods or products. b. Includes:

¾ Excludes vending machines & rented property

(1) Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your product"; and (2) The providing of or failure to provide warnings or instructions. c. Does not include vending machines or other property rented to or located for the use of others but not sold.

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3)

Definition of Products-Completed Operations Hazard

 ¾ BI and PD occurring away from premises (CG 24 07 redefines to on premises) ¾ Must be relinquished ¾ Work not completed or abandoned Work is completed when: ¾ Contract is completed

16. "Products-completed operations hazard": a. Includes all "bodily injury" and "property damage" occurring away from premises you own or rent and arising out of "your product" or "your work" except: (1) Products that are still in your physical possession; or (2) Work that has not yet been completed or abandoned. However, "your work" will be deemed completed at the earliest of the following times: (a) When all of the work called for in your contract has been completed.

¾ Completed at job site

(b) When all of the work to be done at the job site has been completed if your contract calls for work at more than one job site.

¾ Work is put to intended use

(c) When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project.

¾ Service, maintenance, correction, repair or replacement is completed work Excludes BI & PD arising out of: ¾ Transportation of property

Work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete, will be treated as completed. b. Does not include "bodily injury" or "property damage" arising out of: (1) The transportation of property, unless the injury or damage arises out of a condition in or on a vehicle not owned or operated by you, and that condition was created by the "loading or unloading" of that vehicle by any insured; (2) The existence of tools, uninstalled equipment or abandoned or unused materials; or

¾ Tools, uninstalled equipment, unused materials ¾ Where classification includes productscompleted operations hazard in General Aggregate (“dagger” classes)

(3) Products or operations for which the classification, listed in the Declarations or in a policy Schedule, states that productscompleted operations are subject to the General Aggregate Limit.

CG 24 07 Products-Completed Operations Hazard Redefined for Products Consumed on Premises.

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1

Notes

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l.

Damage to "Your Work" 1)

Exclusion I. Damage to Your Work

¾ Does not apply if arises from subcontractors work

2)

"Property damage" to "your work" arising out of it or any part of it and included in the "products-completed operations hazard". This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.

Definition of “Your Work”

22.

 ¾ Work performed

"Your work":

a. Means:

¾ By insured, subcontractors

(1) Work or operations performed by you or on your behalf; and

¾ For insured

(2) Materials, parts or equipment furnished in connection with such work or operations. b. Includes:

¾ Materials furnished by insured connected with work

(1) Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your work"; and

¾ Warranties included

(2) The providing of or failure to provide warnings or instructions.

¾ Providing or failure to provide warnings or instructions

Note: Work is completed when: Æ

Contract work is completed

Æ

Work at the site is completed

Æ

Work has been put to intended use

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1 3)

Four Situations Where Exception Applies: a)

Damage to insured's work arising from insured’s subcontactor’s work.

b)

Damage to work of subcontractor arising from subcontractor’s work.

c)

Damage to subcontractor's work arising from insured's work.

d)

Damage to subcontractor’s work by another contractor.

Example: Assume a general contractor builds a warehouse, subcontracting out 50% of the work. One year later the building burns and it is determined that the fire was caused by faulty electrical work. The warehouse owner’s fire insurer then subrogates against the general contractor to recover the amount paid to the owner. If the electrical work was performed by one of its subcontractors, the exclusion will not apply. As a result, the general contractor’s CGL policy will cover the entire loss (subject, or course, to its limit of liability). If, on the other hand, the electrical work was performed by the general contractor, the policy will exclude coverage for the damage to the general contractor’s work.

4)

Two Modifying Exclusionary Endorsements CG 22 94 Exclusion – Damage to Work Performed by Subcontractors On Your Behalf: a blanket endorsement that deletes the subcontractor exception for all exposures. Exclusion I. of Section I – Coverage A – Bodily Injury And Property Damage Liability is replaced by the following: 2. Exclusions This insurance does not apply to: I.

Damage To Your Work “Property damage” to “your work” arising out of it or any part of it and included in the “products-completed operations hazard.”

CG 22 95 Exclusion – Damage to Work Performed by Subcontractors On Your Behalf – Designated Sites or Operations: a schedule endorsement that deletes the subcontractor exception as it relates to a particular subcontractor/s at a specifically listed site or operations.

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m.

Damage to “Impaired Property” or Property Not Physically Injured 1)

Exclusion wording

¾ Damage to impaired or undamaged property ¾ Deficiency or dangerous condition ¾ Failure to perform contract ¾ Covers loss of use of other property after put to intended use

2)

m. Damage To Impaired Property Or Property Not Physically Injured "Property damage" to "impaired property" or property that has not been physically injured, arising out of: (1) A defect, deficiency, inadequacy or dangerous condition in "your product" or "your work"; or (2) A delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms. This exclusion does not apply to the loss of use of other property arising out of sudden and accidental physical injury to "your product" or "your work" after it has been put to its intended use.

Definition of “Impaired Property”

¾ Tangible property ¾ NOT your product or work ¾ Incorporates your product ¾ Failed to fulfill contract ¾ If you can restore

8. “Impaired property” means tangible property, other than “your product” or “your work”, that cannot be used or is less useful because: a. It incorporates “your product” or “your work” that is known or thought to be defective, deficient, inadequate or dangerous; or b. You have failed to fulfill the terms of a contract or agreement. If such property can be restored to use by:

¾ By repair or replacement

a. The repair, replacement, adjustment or removal of “your product” or “your work” or

¾ By fulfilling contract

b. Your fulfilling the terms of the contract or agreement.

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1 Example #1: Assume that Smith Industries manufactures electronic components that are purchased by Jones Electronics for use in stereo equipment manufactured by Jones. Smith delivers to Jones a shipment of defective (non-functioning) components that are installed in Jones’s products. The defect is discovered after the stereo equipment has already been assembled, making it necessary for each piece of equipment to be taken apart so that a new component can be installed in place of the defective one. Jones sues Smith for the cost of replacing the defective components. Smith looks to its CGL policy for coverage of this property damage liability claim. The stereo equipment containing the defective components is “impaired property” within the context of Smith’s CGL. It is property that cannot be used because it incorporates the named insured’s product that is known to be defective. Moreover, the property can be restored to use by replacement of the named insured’s product. The impaired property exclusion would therefore apply to Jones’s claim against Smith.

Example #2: Manufacturer of drywall discovers that a defect in its product is causing the drywall to deteriorate in humid conditions and crack. Owners of houses in which the manufacturer’s product has been used sue the manufacturer, alleging that their houses are less valuable because of the probability that their walls will eventually crack, too. Again, the houses represent “impaired property” from the standpoint of the drywall manufacturer’s general liability insurance. They incorporate the named insured’s product that, in this instance, is thought to be defective (no actual defect has as yet appeared). The suspected defect, while it has not rendered the houses useless, has impaired their usefulness. That usefulness could be restored by replacing the drywall (even though such a step might be prohibitively expensive). Coverage for any suit against the manufacturer alleging loss of use based on the mere presence of the drywall in a house is therefore excluded by the impaired property exclusion.

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n.

Product Recall n.

¾ Sistership exclusion ¾ Withdrawal, Recall, Inspection, Repair, etc.

(1) “Your product”,

¾ Your product

(2) “Your work”; or

¾ Your work

(3) “Impaired property”,

¾ Impaired property

If such product, work, or property is withdrawn or recalled from the market or from use by any person or organization because of a known or suspected defect, deficiency, inadequacy or dangerous condition in it.

¾ Due to defect

o.

Æ

Coverage is generally viewed as a First Party Loss rather than Third Party Loss.

Æ

Exclusion applies to the actual cost of the recall and the cost incurred due to the loss of use of the product. x

Coverage available through excess-surplus lines market.

x

CG 04 36 10/01 – Limited Product Withdrawal Expense - Includes separate aggregate limit - Covers reasonable and necessary product recall expenses

Personal and Advertising Injury

¾ Draws distinctive line between Coverage A and Coverage B

p.

Recall of Products, Work or Impaired Property Damages claimed for any loss, cost or expense incurred by you or others for the loss of use, withdrawal, recall, inspection, repair, replacement, adjustment, removal or disposal of:

o.

This insurance does not apply to “bodily injury” arising out of “personal and advertising injury.”

Electronic Data p. Damages arising out of the loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate electronic data. However, this exclusion does not apply to liability for damages because of “bodily injury”. As used in this exclusion, electronic data means information, facts or programs stored as or on, created or used on, or transmitted to or from computer software, including systems and applications software, hard or floppy disks, CD-ROMS, tapes, drives, cells, data processing devices or any other media which are used with electronically controlled equipment.

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1 x

Eliminates coverage for: x Direct and indirect loss x Corruption of software x Inability to access, use or manipulate data

x

Makes exception for bodily injury

x

ISO Mandatory Endorsement CG 21 06 05 14 Exclusion – Access or Disclosure of Confidential or Personal Information and Data-Related Liability – With Limited Bodily Injury Exception x

Modifies electronic data exclusion in Coverage Part A. Bodily Injury and Property Damage

x

Clarification regarding breadth of exclusion regarding damages arising from: Access or Disclosure of Confidential Information Notification Costs Credit Monitoring Expenses Forensic Expenses Public Relations Any Other Loss, Cost or Expense

A. Exclusion 2.p. of Section I – Coverage A –Bodily Injury And Property Damage Liability is replaced by the following: 2. Exclusions This insurance does not apply to: p. Access Or Disclosure Of Confidential Or Personal Information And Data-related Liability Damages arising out of: (1) Any access to or disclosure of any person's or organization's confidential or personal information, including patents, trade secrets, processing methods, customer lists, financial information, credit card information, health information or any other type of nonpublic information; or (2) The loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate electronic data. This exclusion applies even if damages are claimed for notification costs, credit monitoring expenses, forensic expenses, public relations expenses or any other loss, cost or expense incurred by you or others arising out of that which is described in Paragraph (1) or (2) above. However, unless Paragraph (1) above applies, this exclusion does not apply to damages because of "bodily injury".

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Other Endorsements and Coverage Forms x

CG 00 65 Electronic Data Liability Coverage Form (Claims Made coverage trigger) x

q.

Covers “electronic data incident” causing “loss of electronic data”

x

CG 04 37 Electronic Data Liability Endorsement (limited)

x

E-Commerce Policy (company specific)

Recording and Distribution of Material or Information in Violation of Law

Excludes BI and PD under Coverage A and Personal and Advertising Injury under Coverage B arising from acts or omissions that violate: - TCPA - CAN-SPAM Act of 2003 - Other statutes or

Bodily injury or “property damage” arising directly or indirectly out of any action or omission that violates or is alleged to violate: (1) The Telephone Consumer Protection Act (TCPA), including any amendment of or addition to such law, The CAN-SPAM Act of 2003, including any amendment of or addition to such law; The Fair Credit Reporting Act *(FCRA), and any amendment of or addition to such law including the Fair and Accurate Credit Transactions Act (FACTA); or Any and federal, state or local statute, ordinance or regulation, other than the TCPA, CAN-SPAM Act of 2003 or FCRA and their amendments and additions,, that addresses, prohibits, or limits the printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information. Exclusions c. through n. do not apply to damage by fire to premises while rented to you or temporarily occupied by you with permission of the owner. A separate limit of insurance applies to this coverage as described in Section III – Limits of Insurance.

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1 r.

Exceptions to Exclusions c through n (Fire Damage Legal Coverage)

¾ Exception to exclusions c through n

Exclusions c. through n. do not apply to damage by fire to premises while rented to you or temporarily occupied by you with the permission of the owner. A separate limit of insurance applies to this coverage as described in LIMITS OF INSURANCE (SECTION III).

1)

Can be viewed as subrogation insurance

2)

Covers damage to real property only

3)

Exception applies only to peril of fire caused by negligence

4)

Separate limit applies under “Damages to Premises Rented To You”

Exhibit - Damage to Premises Rented To You (Named Insured) Cause of Damage

Property

7 days or less

More than 7 days

Fire, if negligent

Premises only while rented to OR temporarily occupied by the named insured

Covered

Covered

Other than fire

Premises & contents rented to the named insured

Covered

Not covered

5)

Other alternatives to damage to premises rented to the named insured: x

CP 00 40 Legal Liability Coverage Form

x

A Commercial Property Policy designed to cover as many causes of loss for which the insured is contractually obligated for.

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3.

Common CGL Endorsements Used to Modify Coverage A CG 21 00

Exclusion - All hazards in connection with designated premises

CG 21 01

Exclusion - Athletic or Sports Participants

CG 21 04

Exclusion - Products-Completed Operations

CG 21 16

Exclusion - Designated Professional Services

CG 21 33

Exclusion - Designated Products

CG 21 34

Exclusion - Designated Work

CG 21 39

Exclusion - Contractual Liability Limitation

CG 21 41

Exclusion - Intercompany Products Suits

CG 21 42

Exclusion - Explosion, collapse and underground property damage (specified operations)

CG 21 43

Exclusion - Explosion, collapse and underground property damage (specified operations excepted)

CG 21 44

Exclusion - Limitation Coverage to Designated Premises or Projects

CG 21 45

Exclusion – Damage To Premises Rented To You

CG 21 46

Exclusion - Abuse and Molestation Exclusion

CG 21 97

Exclusion – Abuse or Molestation – Specified Professional Services

CG 22 94

Exclusion – Damage to Work Performed by Subcontractors on Your Behalf

CG 22 95

Exclusion – Damage to Work Performed by Subcontracts on Your Behalf – Designated Sites or Operations

CG 22 98

Exclusion – Internet Service Providers and Internet Access Providers Errors and Omissions

CG 22 99

Professional Liability Exclusion – Web Site Designer

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1 Learning Objective 9: Given a claim situation, indicate if an offense is included in the definition of “personal and advertising injury” and whether or not coverage applies under Coverage B – Personal and Advertising Liability. B.

Coverage B - Personal Injury and Advertising Injury 1.

Insuring Agreement

    ¾ Legally obligated to pay damages

COVERAGE B – PERSONAL AND ADVERTISING INJURY LIABILITY 1. Insuring Agreement a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "personal and advertising injury" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "personal and advertising injury" to which this insurance does not apply. We may, at our discretion, investigate any offense and settle any claim or "suit" that may result. But:

¾ “Personal Injury” or “Advertising injury” ¾ No duty to defend if coverage does not apply ¾ Subjected to limits

(1) The amount we will pay for damages is limited as described in Section III – Limits Of Insurance; and

¾ Duty to defend ends when limits are used up

(2) Our right and duty to defend end when we have used up the applicable limit of insurance in the payment of judgments or settlements under Coverages A or B or medical expenses under Coverage C. No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments – Coverages A and B.

¾ Offense arising out of your business must occur during policy period and in coverage territory

a.

b. This insurance applies to "personal and advertising injury" caused by an offense arising out of your business but only if the offense was committed in the "coverage territory" during the policy period.

Key definitions 1)

“Advertisement”

1. "Advertisement" means a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters. For the purposes of this definition: a. Notices that are published include material placed on the Internet or on similar electronic means of communication; and b. Regarding web sites, only that part of a web site that is about your goods, products or services for the purposes of attracting customers or supporters is considered an advertisement.

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2)

“Personal and Advertising Injury” x

Named intentional torts

14. "Personal and advertising injury" means injury, including consequential "bodily injury", arising out of one or more of the following offenses: ¾ False arrest

a. False arrest, detention or imprisonment;

¾ Malicious prosecution

b. Malicious prosecution;

¾ Wrongful eviction or entry

c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;

¾ Slander or libel ¾ Invasion of right of privacy  ¾ Use of another’s advertising ideas in your ads ¾ Infringement of copyright, trade dress or slogan

d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; e. Oral or written publication, in any manner, of material that violates a person's right of privacy; f. The use of another's advertising idea in your "advertisement"; or g. Infringing upon another's copyright, trade dress or slogan in your "advertisement".

x

A Trademark is a badge of origin or authenticity that indicates the source of products that bear the registered trademark. The CGL Policy is intended to cover the Insured’s infringement in its “advertisement” of ideas, copyrights, trade dress and slogans of others, but not trademarks. Trademark (as opposed to trade dress) is not a covered offense

x

Trade Dress: a general term for the total and distinctive appearance of a product which may include its size, texture, shape, color, graphics and scent/fragrance, and particular advertising and marketing techniques used to promote its sale. (Black’s Law Dictionary) Employment practices not a covered offense

x

Definition names the causes of loss which trigger coverage

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1 2.

Exclusions For Coverage B: Personal Injury and Advertising Injury

Excludes:

2. Exclusions This insurance does not apply to: a. Knowing Violation Of Rights Of Another

¾ Knowledge of violation of rights

¾ Knowledge of falsity

"Personal and advertising injury" caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict "personal and advertising injury". b. Material Published With Knowledge Of Falsity "Personal and advertising injury" arising out of oral or written publication, in any manner, of material, if done by or at the direction of the insured with knowledge of its falsity.

   ¾ First publication took place before policy’s purchase

c. Material Published Prior To Policy Period

¾ Criminal acts

d. Criminal Acts

"Personal and advertising injury" arising out of oral or written publication, in any manner, of material whose first publication took place before the beginning of the policy period.

"Personal and advertising injury" arising out of a criminal act committed by or at the direction of the insured. ¾ Contractual liability

¾ Reinforces that CGL does not cover breach of contract

¾ No hype guarantees

e. Contractual Liability "Personal and advertising injury" for which the insured has assumed liability in a contract or agreement. This exclusion does not apply to liability for damages that the insured would have in the absence of the contract or agreement. f. Breach Of Contract "Personal and advertising injury" arising out of a breach of contract, except an implied contract to use another's advertising idea in your "advertisement". g. Quality Or Performance Of Goods – Failure To Conform To Statements "Personal and advertising injury" arising out of the failure of goods, products or services to conform with any statement of quality or performance made in your "advertisement".

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Excludes: ¾ Mistakes, i.e. wrong price

h. Wrong Description Of Prices "Personal and advertising injury" arising out of the wrong description of the price of goods, products or services stated in your "advertisement".

¾ Coverage is limited to copyright infringement, trade dress or slogan in insured’s advertising

¾ Gives back named coverage for your advertisement

i. Infringement Of Copyright, Patent, Trademark Or Trade Secret "Personal and advertising injury" arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. Under this exclusion, such other intellectual property rights do not include the use of another's advertising idea in your "advertisement". However, this exclusion does not apply to infringement, in your "advertisement", of copyright, trade dress or slogan. j. Insureds In Media And Internet Type Businesses

¾ Media type business exclusion (Professional Liability)

"Personal and advertising injury" committed by an insured whose business is: (1) Advertising, broadcasting, publishing or telecasting; (2) Designing or determining content of web sites for others; or (3) An Internet search, access, content or service provider.

¾Coverage is given back for infringement for insureds that post ads or links on web-sites or on Internet, but who are not in the advertising business.

¾ Precludes coverage for injury arising from one who hosts, owns or controls. Injury arising from participation is covered.  ¾ Excludes coverage for Internet tactics designed to mislead/divert another’s customers away from a web-site.

However, this exclusion does not apply to Paragraphs 14.a., b. and c. of "personal and advertising injury" under the Definitions section. For the purposes of this exclusion, the placing of frames, borders or links, or advertising, for you or others anywhere on the Internet, is not by itself, considered the business of advertising, broadcasting, publishing or telecasting. k. Electronic Chatrooms Or Bulletin Boards "Personal and advertising injury" arising out of an electronic chatroom or bulletin board the insured hosts, owns, or over which the insured exercises control. l. Unauthorized Use Of Another's Name Or Product "Personal and advertising injury" arising out of the unauthorized use of another's name or product in your email address, domain name or metatag, or any other similar tactics to mislead another's potential customers.

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1 Excludes: ¾ Pollution liability

¾ Pollution cleanup

m. Pollution "Personal and advertising injury" arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants" at any time. n. Pollution-related Any loss, cost or expense arising out of any: (1) Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, "pollutants"; or (2) Claim or suit by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of, "pollutants".

¾ War

o. War "Personal and advertising injury", however caused, arising, directly or indirectly, out of: (1) War, including undeclared or civil war; (2) Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or (3) Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.

¾ Recording or Distribution of Material in Violation of Law

p. Recording And Distribution Of Material Or Information In Violation Of Law "Personal and advertising injury" arising directly or indirectly out of any action or omission that violates or is alleged to violate: (1) The Telephone Consumer Protection Act (TCPA), including any amendment of or addition to such law; (2) The CAN-SPAM Act of 2003, including any amendment of or addition to such law; (3) The Fair Credit Reporting Act (FCRA), and any amendment of or addition to such law, including the Fair and Accurate Credit Transactions Act (FACTA); or (4) Any federal, state or local statute, ordinance or regulation, other than the TCPA, CAN-SPAM Act of 2003 or FCRA and their amendments and additions, that addresses, prohibits, or limits the printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information.

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3.

Endorsements ƒ

CG 22 74 Limited Contractual Liability Coverage for Personal and Advertising Injury: Provides contractual liability for false arrest, detention, imprisonment

ƒ

CG 22 98 Exclusion – Internet Service Providers and Internet Access Providers Errors and Omissions: Excludes coverage for injury or damage arising out of professional liability concerning Internet access or service, or the failure of any insured to adequately provide Internet service or access.

ƒ

CG 22 99 Professional Liability Exclusion – Web-Site Designers: Excludes coverage for injury or damage arising out of any act, error, or omission with respect to Web-designer or consultant services rendered by the insured that the insured is responsible for or that the insured assumed in a contract.

ƒ

CG 21 06 Exclusion – Access or Disclosure of Confidential or Personal Information and Data-Related Liability – With Limited Bodily Injury Exception Excludes coverage for damages arising out of any access or disclosure of any person’s or organization’s confidential or personal information.

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1 Learning Objective 10: Understand the purpose of Coverage C – Medical Payments and determine under what circumstances coverage would or would not C.

Coverage C - Medical Payments 1.

2.

Purposes of Medical Payments Coverage a.

Goodwill

b.

Reduction of lawsuits

Insuring Agreement

  ¾ Pays for medical expenses caused by an accident

Accident Must Occur: ¾ On premises insured owns or rents ¾ Ways next to premises insured owns or rents ¾ Because of operations

Provided that: ¾takes place within coverage territory and during policy period ¾ expenses incurred and reported within one year of accident ¾ may require examination by physician of insurer’s choice

Covers ¾ Regardless of fault, no liability required ¾ First aid at time of accident ¾ Necessary medical, surgical, x-ray, dental, prosthetic devices ¾ Necessary services

COVERAGE C – MEDICAL PAYMENTS 1. Insuring Agreement a. We will pay medical expenses as described below for "bodily injury" caused by an accident: (1) On premises you own or rent; (2) On ways next to premises you own or rent; or (3) Because of your operations; provided that: (a) The accident takes place in the "coverage territory" and during the policy period; (b) The expenses are incurred and reported to us within one year of the date of the accident; and (c) The injured person submits to examination, at our expense, by physicians of our choice as often as we reasonably require.

b. We will make these payments regardless of fault. These payments will not exceed the applicable limit of insurance. We will pay reasonable expenses for: (1) First aid administered at the time of an accident; (2) Necessary medical, surgical, X-ray and dental services, including prosthetic devices; and (3) Necessary ambulance, hospital, professional nursing and funeral services.

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3.

Coverage C - Exclusions 2. Exclusions We will not pay expenses for "bodily injury":

¾ To any insured

a. Any Insured To any insured, except "volunteer workers".

¾ Hired to do work for or on behalf of insured or tenant

b. Hired Person To a person hired to do work for or on behalf of any insured or a tenant of any insured.

¾ Premises insured owns or rents that a person normally occupies

c. Injury On Normally Occupied Premises To a person injured on that part of premises you own or rent that the person normally occupies.

¾ Workers' Compensation or Statutory Disability Benefits Law

d. Workers' Compensation And Similar Laws To a person, whether or not an "employee" of any insured, if benefits for the "bodily injury" are payable or must be provided under a workers' compensation or disability benefits law or a similar law.

¾ Practicing, instructing, physical exercise, games, sports, athletic contests ¾ Products-Completed Operations

f. Products-Completed Operations Hazard Included within the "products-completed operations hazard". g. Coverage A Exclusions Excluded under Coverage A.

¾ Same as excluded under Coverage A

4.

e. Athletics Activities To a person injured while practicing, instructing or participating in any physical exercises or games, sports, or athletic contests.

Endorsements for Coverage C ¾Additional

¾ Allows medical payments for officers and members

Insured Church Members and Officers CG 20 22

A. Paragraph 2.a., Exclusions of Section I – Coverage C – Medical Payments is replaced by the following: We will not pay expenses for :”bodily Injury”: a. To any insured, except church members who are not paid a fee, salary or other compensation. B. Section II – Who Is An Insured is amended to include the following as insureds: 1. Any of your church members, but only with respect to their liability for your activities or activities they perform on your behalf. 2. Any: a. Trustee, official or member of the board of governors of the church; or b. Members of the clergy But only with respect to their duties as such.

¾Exclusion

– Coverage C - Medical Payments Endorsement CG 21 35. This endorsement excludes the no-fault medical coverage but retains first aid coverage.

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1 D

Supplementary Payments (Coverages A and B) 1. We will pay, with respect to any claim we investigate or settle, or any “suit” against an insured we defend:

¾ All expenses incurred

a. All expenses we incur.

¾ Bail bonds up to $250 from using a vehicle where BI coverage applies

b. Up to $250 for cost of bail bonds required because of accidents or traffic law violations arising out of the use of any vehicle to which the Bodily Injury Liability Coverage applies. We do not have to furnish these bonds.

¾ Release of attachment bonds ¾ Insured’s expenses to assist insurer up to $250 per day ¾ Court costs not related to plaintiff’s attorney costs

c. The cost of bonds to release attachments, but only for bond amounts within the applicable limit of insurance. We do not have to furnish these bonds. d. All reasonable expenses incurred by the insured at our request to assist us in the investigation or defense of the claim or “suit”, including actual loss of earnings up to $250 a day because of time off from work.

¾ Prejudgment interest

e. All court costs taxed against the insured in the “suit”. However, these payments do not include attorneys’ fees or attorney’s expenses taxed against the insured.

¾ Post judgment interest

f. Prejudgment interest awarded against the insured on that part of the judgment we pay. If we make an offer to pay the applicable limit of insurance, we will not pay any prejudgment interest based on that period of time after the offer. g. All interest on the full amount of any judgment that accrues after the entry of the judgment and before we have paid, offered to pay, or deposited in court the part of the judgment that is within the applicable limit of insurance.

¾ In addition to limits

These payments will not reduce the limits of insurance. ;

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- continued   ¾ Contractual defense ¾ Insured has hold harmless agreement

2. If we defend an insured against a "suit" and an indemnitee of the insured is also named as a party to the "suit", we will defend that indemnitee if all of the following conditions are met: a. The "suit" against the indemnitee seeks damages for which the insured has assumed the liability of the indemnitee in a contract or agreement that is an "insured contract";

¾ This insurance is applicable

b. This insurance applies to such liability assumed by the insured;

¾ Insured has obligation to defend

c. The obligation to defend, or the cost of the defense of, that indemnitee, has also been assumed by the insured in the same "insured contract";

¾ No conflict of interest       ¾ Indemnitee must agree to:

d. The allegations in the "suit" and the information we know about the "occurrence" are such that no conflict appears to exist between the interests of the insured and the interests of the indemnitee; e. The indemnitee and the insured ask us to conduct and control the defense of that indemnitee against such "suit" and agree that we can assign the same counsel to defend the insured and the indemnitee; and f. The indemnitee: (1) Agrees in writing to:

¾Cooperate with the insurance company

(a) Cooperate with us in the investigation, settlement or defense of the "suit";

¾ Send all relevant paperwork

(b) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the "suit";

¾ Notify if any other insurance is available to indemnitee ¾ Cooperate

(c) Notify any other insurer whose coverage is available to the indemnitee; and (d) Cooperate with us with respect to coordinating other applicable insurance available to the indemnitee; and (2) Provides us with written authorization to: (a) Obtain records and other information related to the "suit"; and (b) Conduct and control the defense of the indemnitee in such "suit".

¾ So long as the conditions are met, attorneys' fees will be paid as Supplementary Payments.

¾ Defense may be in addition to limits

So long as the above conditions are met, attorneys' fees incurred by us in the defense of that indemnitee, necessary litigation expenses incurred by us and necessary litigation expenses incurred by the indemnitee at our request will be paid as Supplementary Payments. Notwithstanding the provisions of Paragraph 2.b.(2) of Section I – Coverage A – Bodily Injury And Property Damage Liability, such payments will not be deemed to be damages for "bodily injury" and "property damage" and will not reduce the limits of insurance. Our obligation to defend an insured's indemnitee and to pay for attorneys' fees and necessary litigation expenses as Supplementary Payments ends when we have used up the applicable limit of insurance in the payment of judgments or settlements or the conditions set forth above, or the terms of the agreement described in Paragraph f. above, are no longer met.

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1 Learning Objective 11: Identify the Limits Of Insurance and be able to apply them when given a specific loss situation. E.

Limits of Insurance 1.

There are SIX LIMITS: Two Aggregates, Two Occurrence Limits, and Two Sub-Limits These limits are the most to be paid regardless of

2.

a.

Insureds

b.

Claims made or suits brought

c.

Persons or organizations making claims or bringing suits

There is a separate General Aggregate Limit and a separate Products-Completed Operations Aggregate Limit a.

The aggregate limit can be equal to the per occurrence limit, but it can also be a multiple of (2 times or 3 times) the occurrence limit.

b.

If the claim arises from a product or completed operations exposure, then it is paid from the Products-Completed Operations Aggregate subject to the each occurrence limit. All other covered claims are paid from the General Aggregate subject to the occurrence limit.

c.

All paid claims reduce the aggregate total by the dollar amount paid for each claim.

d.

The aggregate amount may fall below the stated occurrence limit because of the payment of multiple claims. If that is the case, the occurrence limit would be the remaining aggregate limit.

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3.

A separate Each Occurrence Limit (per occurrence) for Coverage A (BI & PD) and Coverage C (Medical Payments) is the most that will be paid for any one occurrence x

4.

A separate Personal and Advertising Injury Limit for Coverage B is the most that will be paid for any one person or organization for personal injury and advertising injury claims x

5.

Subject to the General Aggregate Limit).

A separate Medical Expense Limit for Coverage C is the most that will be paid for all medical expenses sustained by any one person x

6.

Subject to the General Aggregate Limit or ProductsCompleted Operations Aggregate Limit].

Subject to the Each Occurrence and General Aggregate Limit.

A separate Damage to Premises Rented to You Limit for Coverage A is the most that will be paid for covered property damage x

Subject to the Each Occurrence and General Aggregate Limits.

x

Basic limit is $100,000

x

Frequently not high enough

7.

Other Endorsements: a.

CG 25 02 Amendment of Limits of Insurance - replaces limits in declarations with those shown on endorsement.

b.

CG 25 03 Designated Construction Projects General Aggregate Limit - applies the general aggregate limit separately to each project.

c.

CG 25 04 Designated Locations General Aggregate Limit – applies the general aggregate limit separately to each location owned or rented to the insured.

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1 LIMITS OF INSURANCE

General Aggregate Limit

Personal & Advertising Injury Limit

Products-Completed Operations Aggregate Limit

Each Occurrence Limit

Damages To Premises Rented To You Limit

Medical Expense Limit

BI & PD From Covered Premises/ Operations

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

BI & PD From Products/Completed Operations

Page 67

COMMERCIAL GENERAL LIABILITY LIMIT EXAMPLES Policy has the following limits:

General Aggregate Prods – Comp Ops Aggregate Each Occurrence Fire Damage Liability Medical Payments (Per Person)

$1,000,000 $1,000,000 $ 500,000 $ 100,000 $ 10,000

Example 1 Date of Accident and Type of Claim 2/10 Property Damage from Operations 3/17 BI Liability from Operations 6/6 BI Liability from Premises

Amount of Loss

Amount Paid

General Aggregate After Payment

$250,000

$250,000

$750,000

$500,000

$500,000

$250,000

$350,000

$250,000

0

Example 2 Applying all the limits and claims paid in Example 1. How much would be paid below? Date of Accident and Type of Claim 7/15 Products Claim

Amount of Loss $100,000

Amount Paid $100,000

HINT: What type of claim and which aggregate applies? Example 3 Use same limits as Example 1. Ignore previous claims in example 1 and 2. Date of Accident and Type of Claims

Amount of Loss

Amount Paid

8/1 Medical Payments Party 1 - $10,000 Party 2 - $5,000

$15,000

$15,000

8/1 Bodily Injury

$500,000

$485,000

Rev 4 CGL 05/2014 Duane M. DiPirro, CIC, CPCU, AU

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1 E.

Conditions - Commercial General Liability Policy 1.

Bankruptcy

¾ Will not relieve us of our obligations under this Coverage Part

2.

1. Bankruptcy Bankruptcy or insolvency of the insured or of the insured's estate will not relieve us of our obligations under this Coverage Part. Æ

Bankrupt client no longer legally liable

Æ

Added for social reasons

Duties in the Event of Claim

¾ Prompt notice of occurrence ¾ Details needed: 1) How, when where? 2) Names of injured parties and witnesses 3) Nature and location of any injury ¾ If a claim or suit is brought, you must: 1) Give prompt notice of claim 2) Receive and record claim ¾ Receive written notice as soon as practicable

2. Duties in the Event of Occurrence, Claim or Suit a. You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. To the extent possible, notice should include: (1) How, when and where the "occurrence" or offense took place; (2) The names and addresses of any injured persons and witnesses; and (3) The nature and location of any injury or damage arising out of the "occurrence" or offense. b. If a claim is made or "suit" is brought against any insured, you must: (1) Immediately record the specifics of the claim or "suit" and the date received; and (2) Notify us as soon as practicable. You must see to it that we receive written notice of the claim or "suit" as soon as practicable.

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Duties in the Event of Claim - (continued) c. You and any other involved insured must: ¾ Send copies of papers received

(1) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or "suit", (2) Authorize us to obtain records and other information;

¾ Cooperate (3) Cooperate with us in the investigation or settlement of the claim or defense against the "suit", and

¾ Assist company

¾ Make no settlement or assume obligation, except first aid, without insurer’s consent

3.

(4) Assist us, upon our request, in the enforcement of any right against any person or organization which may be liable to the insured because of injury or damage to which this insurance may also apply. d. No insured will, except at that insured's own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than first aid, without our consent.

Legal Action Against Us Condition 3. Legal Action Against Us

¾ None unless after trial or company agrees to settle

No person or organization has the right under this Coverage Part: a. To join us as a party or otherwise bring us into a “suit” asking for damages from an insured; or b. To sue us on this Coverage Part unless all of its terms have been fully complied with.

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1 4.

Other Insurance 4.Other Insurance

¾ Primary, contribution

by equal shares

If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows: a. Primary Insurance

¾ Contributions by limits if shares not allowed

This insurance is primary except when Paragraph b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in Paragraph c. below. b. Excess Insurance

¾ Excess over fire, builders risk  ¾ Fire insurance on rented premises  ¾ Excess over tenant’s insurance   ¾ Maintenance of use of aircraft, watercraft ¾ Clarifies that other policies naming Insured as an “additional insured” are primary ¾ Other insurer to defend, but if not, we will

(1) This insurance is excess over: (a) Any of the other insurance, whether primary, excess, contingent or on any other basis: (i) That is Fire, Extended Coverage, Builder's Risk, Installation Risk or similar coverage for "your work"; (ii) That is Fire insurance for premises rented to you or temporarily occupied by you with permission of the owner; (iii) That is insurance purchased by you to cover your liability as a tenant for "property damage" to premises rented to you or temporarily occupied by you with permission of the owner; or (iv) If the loss arises out of the maintenance or use of aircraft, "autos" or watercraft to the extent not subject to Exclusion g. of Section I – Coverage A – Bodily Injury And Property Damage Liability. (b) Any other primary insurance available to you covering liability for damages arising out of the premises or operations, or the products and completed operations, for which you have been added as an additional insured. (2) When this insurance is excess, we will have no duty under Coverages A or B to defend the insured against any "suit" if any other insurer has a duty to defend the insured against that "suit". If no other insurer defends, we will undertake to do so, but we will be entitled to the insured's rights against all those other insurers. (3) When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of:

¾ Pay only excess over:

(a) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and

Other company

(b) The total of all deductible and self-insured amounts under all that other insurance.

Plus deductible

(4) We will share the remaining loss, if any, with any other insurance that is not described in this Excess Insurance provision and was not bought specifically to apply in excess of the Limits of Insurance shown in the Declarations of this Coverage Part. x

Endorsement: CG 20 01 Primary and Non-Contributory – Other Insurance Condition

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Method of Sharing

x

¾ Engages when primacy cannot be established

c.

¾ Insurers contribute equally until their policy limit is exhausted ¾ Allows alternate to contribute by limits

Method of Sharing If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first. If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurer’s share is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance of all insurers.

Assumptions 9 9 9

Four policies with different limits covering same exposure Total of all limits is $3,600,000 Total loss is $2,000,000 Contribution by Equal Shares Policy

Insurer’s Liability

$ 100,000 policy

$100,000

$ 500,000 policy

$100,000

$400,000

$1,000,000 policy

$100,000

$400,000

$200,000

$ 700,000

$2,000,000 policy

$100,000

$400,000

$200,000

$ 700,000

$400,000

$1,200,000

$400,000

$2,000,000

$ 100,000 $ 500,000

Contribution by Limits Policy

Portion of Total Limits

Insurer’s Liability

$ 100,000 policy

1/36

$ 55,556

500,000 policy

5/36

$277,778

1,000,000 policy

10/36

$555,556

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1 5.

Premium Audit Condition a.

We will compute all premiums for this Coverage Part in accordance with our rules and rates.

b.

Premium shown in this Coverage Part as advance premium is a deposit premium only. At the close of each audit period we will compute the earned premium for that period. Audit premiums are due and payable on notice to the first Named Insured. If the sum of the advance and audit premiums paid for the policy term is greater than the earned premium, we will return the excess to the first Named Insured.

c.

6.

The first Named Insured must keep records of the information we need for premium computation and send us copies at such times as we may request.

Representations

¾ Was concept under common contract law

6. Representations By accepting this policy, you agree:

¾ Basis for recession of Contract

a. The statements in the Declarations are accurate and complete; b. Those statements are based upon representations you made to us; and c. We have issued this policy in reliance upon your representations.

7.

Separation of Insureds 7. Separation of Insureds

¾ Separate limits do not Apply

Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in the Coverage Part to the first Named Insured, this insurance applies:

¾ One named insured can sue another

a. As if each Named Insured were the only Named Insured’ and b. Separately to each insured against whom claim is made or “suit“ is brought.

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Page 73

NOTE: This condition makes it unnecessary to seek a cross liability endorsement (one insured against another or additional insured against a named insured). x

Exclusion - Intercompany Products Suits CG 21 41 Endorsement can be used to eliminate intercompany products suits between insurers. NOTE: This provision will also cause the policy to cover the employee of one insured for a suit brought by the employee of another insured since they are not fellow employees.

8.

Subrogation

8. Transfer Of Rights Of Recovery Against Others To Us ¾ Insured transfers legal right to recover to insurer

If the insured has rights to recover all or part of any payment we have made under this Coverage Part, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring "suit" or transfer those rights to us and help us enforce them.

CG 24 04 - Waiver of Transfer of Rights of Recovery Against Others 9.

When We Do Not Renew

9. When We Do Not Renew ¾ Applies to CGL only ¾ 30 days notice

If we decide not to renew this Coverage Part, we will mail or deliver to the first Named Insured shown in the Declarations written notice of the non-renewal not less than 30 days before the expiration date. If notice is mailed, proof of mailing will be sufficient proof of notice.

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1 SUMMARY OF LEARNING OBJECTIVES 1.

Provide specific examples of major loss exposures covered by the Commercial General Liability Coverage Form. (Page 4)

2.

Determine whether a person or organization qualifies as an insured under the “Who is An Insured” provision in the event of a loss situation. (Page 6)

3.

Recognize the two promises the insurer makes in the Insuring Agreement under Coverage A - Bodily Injury And Property Damage Liability and describe the requirements that must be met for coverage to apply. (Page 14)

4.

Understand the concept of legal liability and how claims can arise from negligence, strict liability, absolute liability, intentional torts. (Page 15)

5.

Explain if coverage applies or if a loss is excluded under Coverage A – Bodily Injury And Property Damage Liability. (Page 22)

6.

Understand the issues concerning contractual liability and identify the types of liability assumed in an “insured contract” that are covered under Coverage A – Bodily Injury And Property Damage Liability. (Page 22)

7.

Given a pollution incident, explain under what circumstances coverage is excluded and when the exceptions to the Pollution Exclusion would apply under Coverage A – Bodily Injury And Property Damage Liability. (Page 34)

8.

Understand why the six (6) specified Damage to Property exposures are excluded and under what circumstances the exclusions do not apply. (Page 42)

9.

Given a claim situation, indicate if an offense is included in the definition of “personal and advertising injury” and whether or not coverage applies under Coverage B – Personal and Advertising Liability. (Page 55)

10.

Understand the purpose of Coverage C – Medical Payments and determine under what circumstances coverage would or would not apply. (Page 61)

11.

Identify the Limits Of Insurance and be able to apply them when given a specific loss situation. (Page 65)

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Forms Index Form Number IL DS 00

Form Name Common Policy Declarations

IL 00 17

Common Policy Conditions

CG DS 01

Commercial General Liability Declarations

CG 00 01

Commercial General Liability Coverage Form

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1

POLICY NUMBER: IL DS 00 09 08

COMMON POLICY DECLARATIONS COMPANY NAME AREA

PRODUCER NAME AREA

NAMED INSURED: MAILING ADDRESS: POLICY PERIOD: FROM TO TIME AT YOUR MAILING ADDRESS SHOWN ABOVE

AT 12:01 A.M. STANDARD

BUSINESS DESCRIPTION IN RETURN FOR THE PAYMENT OF THE PREMIUM, UM, AND SU SUBJECT ECT T TO ALL THE TERM TERMS OF THIS POLICY, WE AGREE WITH YOU TO PROVIDE THE INSURANCE RANCE AS STATED STA D IN THIS POLICY. POLIC OLLO G COVERAG S FOR W THIS POLICY CONSISTS OF THE FOLLOWING COVERAGE PARTS WHICH A PREMIUM IS EMIUM MAY BE SUBJ JU INDICATED. THIS PREMIUM SUBJECT TO ADJUSTMENT. PREMIUM CAPITAL ASSETS PROGRAM (OUTPUT PUT POLICY) POLIC COVERAGE OVER PART $ COMMERCIAL AUTOMOBILE MOBILE COVERAGE PART $ COMMERCIAL GENERAL RAL LIABILITY COVERAGE PART PAR $ COMMERCIAL INLAND MARINE ARINE COVERAGE PART $ COMMERCIAL AL LIA LIABILITY UMBRELLA MBRELLA $ COMMERCIAL L PROPER PROPERTY COVERAGE VERAGE PART $ CRIME AND FIDELITY DELITY COVE COVERAGE E PART PAR $ EMPLOYMENT-RELATED PLOY RELATED PRACT PRACTICES S LIABILITY LIA COVERAGE PART $ EQUIPMENT QUIP BREAKDOWN AKDOWN COVERAGE COVERAG PART $ FARM ARM COVERAGE PART $ LIQUOR QUOR LIABILITY COVERAGE VER PART $ MEDICAL CAL PROFESSIO PROFESSIONAL AL LIABILITY L COVERAGE PART $ POLLUTION LIABILITY TY COVERAGE OV PART $ $ TOTAL: $ Premium shown is payable: $ at inception. $

Page 77 IL DS 00 09 08

© ISO Properties, Inc., 2007

Page 1 of 2

†

FORMS APPLICABLE TO ALL COVERAGE PARTS (SHOW NUMBERS):

Countersigned:

By: (Date)

(Authorized orized R Representative)

NOTE OFFICERS' FACSIMILE SIGNATURES MAY BE E INSERTED HERE, H E, ON THE POLICY PO CY COVER OR ELSEWHERE AT THE COMPANY'S OPTION.

Page 78 Page 2 of 2

© ISO Properties, Inc., 2007

IL DS 00 09 08

†

1

IL 00 17 11 98

COMMON POLICY CONDITIONS All Coverage Parts included in this policy are subject to the following conditions. A. Cancellation 1. The first Named Insured shown in the Declarations may cancel this policy by mailing or delivering to us advance written notice of cancellation. 2. We may cancel this policy by mailing or delivering to the first Named Insured written notice of cancellation at least: a. 10 days before the effective date of cancellation if we cancel for nonpayment of premium; or b. 30 days before the effective date of cancellation if we cancel for any other reason. 3. We will mail or deliver our notice to the first Named Insured's last mailing address known n to us. 4. Notice of cancellation will state the e effective effect date of cancellation. The policy period d will end on that date. 5. If this policy is cancelled, we will send the first Named Insured any premium mium refund due. If we w cancel, the refund will be e pro rata. If the first Named Insured cancels, the refund may be less than pro rata. The cancellation ellation will be effective even if we ha have not made de or offered a refund. 6. If notice is mailed, will be sufd, proof of mailing ma ficient proo proof of notice. ce. B. Changes es This policy olic contains all the he agreements between bet you and afforded. nd us concerning the he insurance in The firstt Named Insured shown hown in the Declarations is authorized thorized to make changes hang in the terms of this policy with our consent. nsen This policy's terms can be amended or waived by endorsement ed only o issued by us and made a part of this policy. C. Examination Of Your Books And Records ur Book We may examine and audit your books and records as they relate to this policy at any time during the policy period and up to three years afterward. D. Inspections And Surveys 1. We have the right to: a. Make inspections and surveys at any time;

b. Give you reports on the conditions we find; and c. Recommend changes. 2. We are not obligated to make any inspections, ot o surveys, s, reports repo or recommendations and any such actions action we do undertake relate only to insurability bility and the premiums to be charged. We do nott make safety inspections. We do not unin dertake to perform tthe duty of any person or organization for the health or safety on to provide pro of workers orr the public. And p d we w do not warrant that conditions: tha a. Are safe or healthful; althful; or b. Comply with law laws, codes or s regulations, r standards. andard 3.. P Paragraphs hs 1. and 2. of this condition apply not n only to us, but bu also to any rating, advisory, rate service or similar organization which makes insurance inspections, surveys, reports or recommendations. 4. Paragraph 2. of this condition does not apply Para to any an inspections, surveys, reports or recommendations we may make relative to certification, under state or municipal statutes, ordinances or regulations, of boilers, pressure vessels or elevators. E. Premiums The first Named Insured shown in the Declarations: 1. Is responsible for the payment of all premiums; and 2. Will be the payee for any return premiums we pay. F. Transfer Of Your Rights And Duties Under This Policy Your rights and duties under this policy may not be transferred without our written consent except in the case of death of an individual named insured. If you die, your rights and duties will be transferred to your legal representative but only while acting within the scope of duties as your legal representative. Until your legal representative is appointed, anyone having proper temporary custody of your property will have your rights and duties but only with respect to that property.

Page 79 IL 00 17 11 98

Copyright, Insurance Services Office, Inc., 1998

Page 1 of 1

†

POLICY NUMBER:

COMMERCIAL GENERAL LIABILITY CG DS 01 10 01

COMMERCIAL GENERAL LIABILITY DECLARATIONS

COMPANY NAME AREA

PRODUCER NAME AREA

NAMED INSURED: MAILING ADDRESS: POLICY PERIOD: FROM YOUR MAILING ADDRESS SHOWN ABOVE

TO

AT 12:01 A.M. TIME AT

IN RETURN FOR THE PAYMENT OF THE PREMIUM, IUM, AND SUB SUBJECT CT TO ALL THE TERMS ERM OF THIS POLICY, WE AGREE WITH YOU TO PROVIDE THE HE INSURANCE AS STATED IN THIS THI POLICY. LIMITS OF INSURANCE INSURANC EACH OCCURRENCE LIMIT $ DAMAGE TO PREMISES RENTED TO YOU LIMIT T $ MEDICAL EXPENSE LIMIT IMIT $ PERSONAL & ADVERTISING INJURY JURY LIMIT $ GENERAL AGGREGATE ATE LIMIT PRODUCTS/COMPLETED ETED OP OPERATIONS NS AGGREGATE LIMIT

Any one premises Any one person Any one person or organization $ $

RETROACTIVE DATE (CG 00 02 ONLY) RETROACT THIS INSURANCE URA DOES NOT OT APPLY TO "BO "BODILY INJURY", "PROPERTY DAMAGE" OR "PERSONAL AND ADVERTISING WHICH OCCURS BEFORE THE RETROACTIVE DATE, IF ANY, SHOWN BELOW. SING INJURY" W CH O RETROACTIVE TIVE DATE: (ENTER NTE DAT DATE OR "NONE" IF NO RETROACTIVE DATE APPLIES) DESCRIPTION OF BUSINESS FORM OF BUSINESS:  INDIVIDUAL

 PARTNERSHIP

 LIMITED LIABILITY COMPANY

 JOINT VENTURE

 TRUST

 ORGANIZATION, INCLUDING A CORPORATION (BUT NOT INCLUDING A PARTNERSHIP, JOINT VENTURE OR LIMITED LIABILITY COMPANY)

BUSINESS DESCRIPTION:

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1 ALL PREMISES YOU OWN, RENT OR OCCUPY ADDRESS OF ALL PREMISES YOU OWN, RENT OR OCCUPY

LOCATION NUMBER

LOCATION NUMBER

CLASSIFICATION

CLASSIFICATION AND PREMIUM CODE PREMIUM RATE ATE ADVANCE PREMIUM NO. BASE Prem/ Prod/Comp Pro Prem/ Prod/Comp Ops Ops Ops Ops $ $ $ $ $

STATE TAX OR OTHE OTHER (if applicable) ble) TOTAL AL PREMIUM (SUBJECT SUBJE TO AUDIT) DIT) PREMIUM SHOWN IS PAYABLE:

AUDIT PERIOD (IF APPLICABLE) LE)

$ $

A AT INCEPTION CEPT $ AT EACH E ANNIVER ANNIVERSARY $ (IF POLICY POL PERIOD PERIO IS MORE THAN ONE YEAR AND PREPAID IN AN ANNUAL INSTALLMENTS) MIUM IS P  ANNUALLY UALL

S SEMIANNUALLY ANNUA

 QUARTERLY

 MONTHLY

ENDORSEMENTS NDORSE ENDORSEMENTS ATTACHED TACHED TO T THIS POLICY: POLIC

THESE DECLARATIONS, RATIONS, TOGETHER TOGE HER WITH THE COMMON POLICY CONDITIONS AND COVERAGE FORM(S) AND ANY ENDORSEMENT(S), COMPLETE THE ABOVE NUMBERED POLICY. SEM NT Countersigned:

By: (Date)

(Authorized Representative)

NOTE OFFICERS' FACSIMILE SIGNATURES MAY BE INSERTED HERE, ON THE POLICY COVER OR ELSEWHERE AT THE COMPANY'S OPTION.

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COMMERCIAL GENERAL LIABILITY CG 00 01 04 13

COMMERCIAL GENERAL LIABILITY COVERAGE FORM Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered. Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy. The words "we", "us" and "our" refer to the company providing this insurance. The word "insured" means any person or organization qualifying as such under Section II – Who Is An Insured. Other words and phrases that appear in quotation marks have special meaning. Refer to Section V – Definitions. SECTION I – COVERAGES COVERAGE A – BODILY INJURY AND PROPERTY OP Y DAMAGE LIABILITY 1. Insuring Agreement a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury"" or "property damage" damage to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. mages. However, we will have no duty to defend nd the insured against any "suit" it" seeking damages es for "bodily injury" or "property erty damage" damage to which this insurance does not apply. We may, at our o discretion, etion, investigate ate any "occurrence" "occurre " and an settle claim or "suit" le any cl uit" that may result. But: B (1) The amount we will is ill pay for damages damag limited III – Limits imite as described in Section S Off Insurance; and (2) Our right ght and duty to defend d fend ends when we have used up the limit of he applicable pp insurance in the payment of judgments or aym settlements under Co Coverages A or B or medical expenses Coverage C. nses under un No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments – Coverages A and B. b. This insurance applies to "bodily injury" and "property damage" only if:

(2) The "bodily injury" or "property damage" occurs during the policy period; and (3) Prior to the policy period, no insured listed under Paragraph 1. of Section II – Who Is An Insured ure and no "employee" authorized by you to give or receive notice of an "occurrence" or claim, knew that the "bodily ccurre injury" njury" or "property damage" had occurred, in whole or in pa part. If such a listed insured or authorized "employee" knew, prior to the uthorized "em policy period, that the "bodily injury" or "property occurred, then any y damage" dam continuation, change or res resumption of such n, cha "bodily injury"" or "property damage" during b or after the policy a cy period will be deemed to have been know known prio prior to the policy period. c. "B y injury" or "property "p "Bodily damage" which o uring the policy p occurs during period and was not, p he policy pol prior to the period, known to have occurred by any insured listed under Paragraph 1. of Section II – Who Is An Insured or any "employee" authorized by you to give or receive notice of an "occurrence" or claim, rece includes any continuation, change or nclud resumption of that "bodily injury" or "property damage" after the end of the policy period. d. "Bodily injury" or "property damage" will be deemed to have been known to have occurred at the earliest time when any insured listed under Paragraph 1. of Section II – Who Is An Insured or any "employee" authorized by you to give or receive notice of an "occurrence" or claim: (1) Reports all, or any part, of the "bodily injury" or "property damage" to us or any other insurer; (2) Receives a written or verbal demand or claim for damages because of the "bodily injury" or "property damage"; or (3) Becomes aware by any other means that "bodily injury" or "property damage" has occurred or has begun to occur. e. Damages because of "bodily injury" include damages claimed by any person or organization for care, loss of services or death resulting at any time from the "bodily injury".

(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory";

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1 This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in:

2. Exclusions This insurance does not apply to: a. Expected Or Intended Injury "Bodily injury" or "property damage" expected or intended from the standpoint of the insured. This exclusion does not apply to "bodily injury" resulting from the use of reasonable force to protect persons or property. b. Contractual Liability "Bodily injury" or "property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages: (1) That the insured would have in the absence of the contract or agreement; or (2) Assumed in a contract or agreement that is an "insured contract", provided the "bodily ly injury" or "property damage" occurs curs subsequent to the execution of the contract ract or agreement. Solely for the purposes of p liability assumed in an "insured contract", contr reasonable attorneys' fees and necessa necessary litigation expenses incurred by or for or a party other than an insured are deemed d to be damages because of "bodily injury" or "property damage", provided: rovided: (a) Liability to such party rty for, or for the cost of, that party's defense nse has also been assumed in the same "insured nsured contract"; and (b) Such attorneys' and torneys' fees fee d litigation litig expenses are for defense defens of that hat party pa against a civil or alternative agai alternativ dispute disput resolution proceeding resol ceeding in which damages da age to t which this insurance applies are alleged. c. Liquor or Liability "Bodily injury" or "property for which "proper damage" dam any insured may be held by reason of: eld liable li le b (1) Causing or contributing uting to the intoxication of any person;

(a) The supervision, hiring, employment, training or monitoring of others by that insured; or (b) Providing or failing to provide transportation with respect to any person that may be under the influence of alcohol; alco if the "occur "occurrence" which caused the "bodily injury" y" or "property damage", involved that which described h is d d in i Paragraph (1), (2) or (3) above. However, this exclusion applies only if you are exclu in the business manufacturing, distributing, ess of manufactu selling, serving furnishing alcoholic se ing or furnis beverages. For the beve he purposes of this exclusion, permitting a person permitt rson to bring alcoholic beverages for consumption verages on your premises, rem on your or not a fee is o our premises, whether w is required for such ccharged or a license licen activity, is not by ititself considered the business a of selling, ser serving or furnishing alcoholic o beverages. Compensation And Similar Laws d. Workers' W Any obligation of the insured under a workers' compensation, disability benefits or omp unemployment compensation law or any similar law. e. Employer's Liability "Bodily injury" to: (1) An "employee" of the insured arising out of and in the course of: (a) Employment by the insured; or (b) Performing duties related to the conduct of the insured's business; or (2) The spouse, child, parent, brother or sister of that "employee" as a consequence of Paragraph (1) above.

(2) The furnishing of a alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or

This exclusion applies whether the insured may be liable as an employer or in any other capacity and to any obligation to share damages with or repay someone else who must pay damages because of the injury.

(3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages.

This exclusion does not apply to liability assumed by the insured under an "insured contract".

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f. Pollution (1) "Bodily injury" or "property damage" arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants": (a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured. However, this subparagraph does not apply to: (i) "Bodily injury" if sustained within a building and caused by smoke, fumes, vapor or soot produced by or originating from equipment that is used to heat, cool or dehumidify the building, or equipment that is used to heat water for personal use, by the building's occupants or their guests; (ii) "Bodily injury" or "property damage" e for which you may be held liable, e, if you are a contractor and the owner wner or lessee of such premises, site or location has been added d to your policy as an additional insured sured with w respect to your ongoing operations perations performed for that additional insured at that premises, site or location on and such premises,, site or location is not no and never wass owned or occupied by, or rented or loaned to, any insured, other than an that additional insured; ed; or (iii) "Bodily y injury" or o "property rty damage" arising out of heat, smoke or fumes fu from a "hostile hostile fire"; (b) b) At or from any y premises, site or llocation atio which is or was w s at any time used by or for any insured for the d or others fo handling, stor storage,, dis disposal, processing or treatment of waste; wa te; (c) Which are or were w re at any time transported, handled, stored, treated, ndle disposed of, orr pro processed as waste by or for: (i) Any insured; red or (ii) Any person or organization for whom you may be legally responsible; or

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(d) At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured's behalf are performing operations if the "pollutants" are brought on or to the premises, site or location in connection with such operations by such insured, contractor or subcontractor. However, this subparagraph does not apply to: (i)) "Bodily injury" or "property damage" "Bo arising out of the escape of fuels, ar lubricants or other operating fluids which are needed to perform the normal electrical, hydraulic or e mechanical mechanic functions necessary for the equipment" e operation of "mobile "m or itss parts, if such fuels, lubricants or other fluids escape from er operating flu a vehicle part designed to hold, store des or receive them. hem This exception does not apply if the "bodily injury" or "property damage" arises out of the d intentional discharge, dispersal or intention release eas of the fuels, lubricants or other operating fluids, or if such fuels, lubricants or other operating fluids are brought on or to the premises, site or location with the intent that they be discharged, dispersed or released as part of the operations being performed by such insured, contractor or subcontractor; (ii) "Bodily injury" or "property damage" sustained within a building and caused by the release of gases, fumes or vapors from materials brought into that building in connection with operations being performed by you or on your behalf by a contractor or subcontractor; or (iii) "Bodily injury" or "property damage" arising out of heat, smoke or fumes from a "hostile fire". (e) At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured's behalf are performing operations if the operations are to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, "pollutants".

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1 (2) Any loss, cost or expense arising out of any:

(5) "Bodily injury" or "property damage" arising out of:

(a) Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, "pollutants"; or

(a) The operation of machinery or equipment that is attached to, or part of, a land vehicle that would qualify under the definition of "mobile equipment" if it were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed nse or principally garaged; or

(b) Claim or suit by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of, "pollutants". However, this paragraph does not apply to liability for damages because of "property damage" that the insured would have in the absence of such request, demand, order or statutory or regulatory requirement, or such uch claim or "suit" by or on behalf off a governmental authority. g. Aircraft, Auto Or Watercraft "Bodily injury" or "property damage" arising out o of the ownership, maintenance, use or entrustment to others of any aircraft, "auto" auto" or watercraft owned or operated ated by or rented or loaned to any insured. Use includes operation and "loading or unloading". ". This exclusion applies even en if the claims against any insured ured allege negligence gligence or other wrongdoing in n the supervision, sion, hiring, employment, training of others ning or monitoring mon othe by that insured, if the "occurrence" which e "occurrence h caused cau the "bodily injury" bodi y" or "property damage" amage involved lved the ownership, ship, maintenance, use e or o entrustment to others of any aircraft, "aut "auto" or rustm watercraft that is owned ercr ned or operated by or rented ed or loaned to any a insured. nsure This exclusion xclusion does not apply a ply to: to (1) A watercraft while ashore ash e on o premises you own or rent; (2) A watercraft you do not own that is: (a) Less than 26 fee feet long; and (b) Not being used to carry persons or property for a charge; (3) Parking an "auto" on, or on the ways next to, premises you own or rent, provided the "auto" is not owned by or rented or loaned to you or the insured; (4) Liability assumed under any "insured contract" for the ownership, maintenance or use of aircraft or watercraft; or

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(b) The op operation of any of the machinery listed in Paragraph f.(2) or or equipment eq f.(3) of the definition of "mobile f.(3 equipment". h. Mobile Equipment "Bodily injury" damage" arising out y" or "property " of: of The transportation (1) Th ation of "mobile "mob equipment" by "auto" owned or operated by or rented or an "a ope loaned insured; oaned to any ins ed or (2) The use of "mobile (2 "mobi equipment" in, or while in practice ctice for, or while being prepared for, any prearranged racing, speed, demolition, arran or stunting activity. i. War W "Bodily "Bod injury" or "property damage", however caused, arising, directly or indirectly, out of: caus (1) War, including undeclared or civil war; (2) Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or (3) Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these. j. Damage To Property "Property damage" to: (1) Property you own, rent, or occupy, including any costs or expenses incurred by you, or any other person, organization or entity, for repair, replacement, enhancement, restoration or maintenance of such property for any reason, including prevention of injury to a person or damage to another's property; (2) Premises you sell, give away or abandon, if the "property damage" arises out of any part of those premises; (3) Property loaned to you;

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(4) Personal property in the care, custody or control of the insured; (5) That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the "property damage" arises out of those operations; or (6) That particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it. Paragraphs (1), (3) and (4) of this exclusion do not apply to "property damage" (other than damage by fire) to premises, including the contents of such premises, rented to you for a period of seven or fewer consecutive days. A separate limit of insurance applies to Damage To Premises Rented To You as described in Section III – Limits Of Insurance. Paragraph (2) of this exclusion does not apply pply if the premises are "your work" and were never ver occupied, rented or held for rental by you. Paragraphs (3), (4), (5) and (6)) of this th exclusion do not apply to liability assumed under a sidetrack agreement. Paragraph (6) of this exclusion lusion does not apply app to "property damage" included "productsluded in the "products completed operations hazard". ard". k. Damage To Your Product "Property damage" product" ge" to "your " uct" arising out of it or any part of it. l. Damage To Your Work "Property to "your work" arising of perty damage" da aris out o it orr any part "productspar of it and included in the "prod completed operations hazard". mple Thiss exclusion does not apply app if the damaged work or the work out off which the damage wh arises was performed on o your you behalf by a subcontractor. m. Damage To Impaired Property Or Property Pro Not Physically Injured njured "Property damage" e" to "impaired property" or property that has not been physically injured, arising out of:

This exclusion does not apply to the loss of use of other property arising out of sudden and accidental physical injury to "your product" or "your work" after it has been put to its intended use. n. Recall Of Products, Work Or Impaired Property Damages claimed for any loss, cost or expense incurred by you or others for the loss of use, withd withdrawal, recall, inspection, repair, replacement, ement, adjustment, removal or disposal of: (1) "Your Your product"; (2) "Your ur work"; or (3) "Impaired ed property"; prop if such product, ct, work, or property prope is withdrawn or recalled from the market or from use by any re person or organization of a known or ation because beca suspected inadequacy or specte defect, deficiency, deficie dangerous d erous condition iin it. o.. Personal Injury P al And Advertising Adve "Bodily injury" out of "personal and "B ury" arising a advertising injury". p. Electronic Data Damages arising out of the loss of, loss of use Dam of, da damage to, corruption of, inability to access, or inability to manipulate electronic data. i However, this exclusion does not apply to liability for damages because of "bodily injury". As used in this exclusion, electronic data means information, facts or programs stored as or on, created or used on, or transmitted to or from computer software, including systems and applications software, hard or floppy disks, CDROMs, tapes, drives, cells, data processing devices or any other media which are used with electronically controlled equipment. q. Recording And Distribution Of Material Or Information In Violation Of Law "Bodily injury" or "property damage" arising directly or indirectly out of any action or omission that violates or is alleged to violate: (1) The Telephone Consumer Protection Act (TCPA), including any amendment of or addition to such law;

(1) A defect, deficiency, inadequacy or dangerous condition in "your product" or "your work"; or

(2) The CAN-SPAM Act of 2003, including any amendment of or addition to such law;

(2) A delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms.

(3) The Fair Credit Reporting Act (FCRA), and any amendment of or addition to such law, including the Fair and Accurate Credit Transactions Act (FACTA); or

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1 (4) Any federal, state or local statute, ordinance or regulation, other than the TCPA, CAN-SPAM Act of 2003 or FCRA and their amendments and additions, that addresses, prohibits, or limits the printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information. Exclusions c. through n. do not apply to damage by fire to premises while rented to you or temporarily occupied by you with permission of the owner. A separate limit of insurance applies to this coverage as described in Section III – Limits Of Insurance. COVERAGE B – PERSONAL AND ADVERTISING INJURY LIABILITY 1. Insuring Agreement a. We will pay those sums that the insured d becomes legally obligated to pay as damages ges because of "personal and advertising injury" y" to which this insurance applies. We will have the he right and duty to defend the insured against ed ag any "suit" seeking those damages. Howev However, we will have no duty to defend the e insured against any "suit" seeking damages ges for "personal and advertising injury" to which ch this insurance does not apply. ply. We may, at our ou discretion, investigate any ny offense and settle any claim or "suit" that may y result. But: (1) The amount we will pay for damages is limited as described escribe in Section ion III – Limits Of Insurance; e; and (2) Our right and duty to defend end when we have used up ve u p the applicable applicabl limit mit of o insurance judgments nsuranc in the payment of judgm ts or o settlements under Coverage Coverages A or B or settle medical expenses under C. med nder Coverage Co C No other obligation or liability ability to pay sums or perform services is covered unless m acts or service explicitly provided for or under u der Supplementary Payments – Coverages s A and d B. b. This insurance applies pplies to "personal and advertising injury"" caused by an offense arising out of your business ss but b only if the offense was committed in the "coverage territory" during the policy period.

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2. Exclusions This insurance does not apply to: a. Knowing Violation Of Rights Of Another "Personal and advertising injury" caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict "personal and advertising injury". b. Material Pub Published With Knowledge Of Falsity "Personal and advertising injury" arising out of sonal a oral or written publication, in any manner, of w material, ial, if done by or at the direction of the insured with knowledge knowled of its falsity. c. Material Published ublish Prior To Policy Period "Personal and advertising injur injury" arising out of "P oral or written publication, ublication, in any manner, of material took place materia whose first rst publication publ before ore the beginning of the th policy period. d. Criminal C nal Acts Ac "Personal advertising injury" arising out of "P and adv a criminal act committed by or at the direction ct co of the insured. e. C Contractual Liability "Personal and advertising injury" for which the "Pers insured has assumed liability in a contract or nsur agreement. This exclusion does not apply to liability for damages that the insured would have in the absence of the contract or agreement. f. Breach Of Contract "Personal and advertising injury" arising out of a breach of contract, except an implied contract to use another's advertising idea in your "advertisement". g. Quality Or Performance Of Goods – Failure To Conform To Statements "Personal and advertising injury" arising out of the failure of goods, products or services to conform with any statement of quality or performance made in your "advertisement". h. Wrong Description Of Prices "Personal and advertising injury" arising out of the wrong description of the price of goods, products or services stated in your "advertisement".

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i. Infringement Of Copyright, Patent, Trademark Or Trade Secret "Personal and advertising injury" arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. Under this exclusion, such other intellectual property rights do not include the use of another's advertising idea in your "advertisement". However, this exclusion does not apply to infringement, in your "advertisement", of copyright, trade dress or slogan. j. Insureds In Media And Internet Type Businesses "Personal and advertising injury" committed by an insured whose business is: (1) Advertising, broadcasting, publishing or telecasting; (2) Designing or determining content of web sites for others; or (3) An Internet search, access, content or service provider. However, this exclusion does not apply to t Paragraphs 14.a., b. and c. of "personal onal and advertising injury" under the Definitions finitions section. For the purposes of this exclusion, the placing of frames, borders or links, s, or advertising, for you or others anywhere on the Internet, is not by itself, considered the business of onside advertising, broadcasting, publishing broadcast ublishing or telecasting. k. Electronic Chatrooms Bulletin Boards ooms Or Bullet ards "Personal and advertising sonal a rtising injury" arising arisin out of o an elect electronic chatroom om or bulletin board the insured ured hosts, owns, orr over which the insured in exercises rcise control. l. Unauthorized thorized Use Of Another's A othe Name Or Product "Personal and advertising ing injury" arising out of the unauthorized use e of another's name or product in your e-mail address, domain name ad or metatag, or any o other similar tactics to mislead another's potential customers. m. Pollution "Personal and advertising injury" arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants" at any time.

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n. Pollution-related Any loss, cost or expense arising out of any: (1) Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, "pollutants"; or (2) Claim or suit by or on behalf of a governmental authority for damages rnme because cause of testing for, monitoring, cleaning removing, containing, treating, up, detoxifying neutralizing, or in any way etoxifying or n responding ponding to, or assessing the effects of, "pollutants". tants". o. War "Personal and advertising injury", however "Pe in caused, arising, directly out of: cause irectly or indirectly, ind (1) War, including undeclared or civil war; decla (2) Warlike (2 arlike action by a military force, including action n in hindering hinderin or defending against an actual or e expected attack, by any government, ent sovereign or other authority using military personnel or other agents; or (3) Insurrection, rebellion, revolution, usurped power, or action taken by governmental p authority in hindering or defending against a any of these. p. Recording And Distribution Of Material Or Information In Violation Of Law "Personal and advertising injury" arising directly or indirectly out of any action or omission that violates or is alleged to violate: (1) The Telephone Consumer Protection Act (TCPA), including any amendment of or addition to such law; (2) The CAN-SPAM Act of 2003, including any amendment of or addition to such law; (3) The Fair Credit Reporting Act (FCRA), and any amendment of or addition to such law, including the Fair and Accurate Credit Transactions Act (FACTA); or (4) Any federal, state or local statute, ordinance or regulation, other than the TCPA, CAN-SPAM Act of 2003 or FCRA and their amendments and additions, that addresses, prohibits, or limits the printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information.

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1 COVERAGE C – MEDICAL PAYMENTS 1. Insuring Agreement a. We will pay medical expenses as described below for "bodily injury" caused by an accident: (1) On premises you own or rent; (2) On ways next to premises you own or rent; or (3) Because of your operations; provided that:

d. Workers' Compensation And Similar Laws To a person, whether or not an "employee" of any insured, if benefits for the "bodily injury" are payable or must be provided under a workers' compensation or disability benefits law or a similar law. e. Athletics Activities To a person injured while practicing, instructing or participating in any physical exercises or games, sports sports, or athletic contests.

(a) The accident takes place in the "coverage territory" and during the policy period;

f. Products-Completed Operations Hazard ucts-C

(b) The expenses are incurred and reported to us within one year of the date of the accident; and

g. Coverage e A Exclusions Exclus

(c) The injured person submits to examination, at our expense, by y physicians of our choice as often as we reasonably require. b. We will make these payments regardless of fault. These payments will not exceed xceed the pa applicable limit of insurance. We will pay reasonable expenses for: (1) First aid administered at the time of an accident; (2) Necessary medical, surgical, X-ray and ncluding dental services, including prosthetic devices; and (3) Necessary ambulance, hospital, am an funeral al services. serv professional nursing and 2. Exclusions We will not pay expenses es for "bodily injury": injur a. Any Insured y Insur To any insured, except "volunteer workers". worker b. Hired d Person To a person work rson hired to do w rk for or on behalf of any insured or a tenant insured. nt of any y in c. Injury On Normally Occupied Premises ccu To a person injured ured on tthat part of premises you own or rentt that the person normally occupies.

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Included uded within the operations tions hazard".

"products-completed

Excluded under Coverage A.. der Co SUPPLEMENTARY PAYMENTS A PPLEM AYMENTS – COVERAGES CO AND AN B 1. We will pay, with respect pa spect to any claim we investigate or any "suit" against an inve ate or settle, o insured nsur we defend: a. All incur. A expenses es we in b. Up to $250 for cost of bail bonds required because of accidents or traffic law violations arising out of the use of any vehicle to which ar the B Bodily Injury Liability Coverage applies. We do not have to furnish these bonds. o no c. The cost of bonds to release attachments, but only for bond amounts within the applicable limit of insurance. We do not have to furnish these bonds. d. All reasonable expenses incurred by the insured at our request to assist us in the investigation or defense of the claim or "suit", including actual loss of earnings up to $250 a day because of time off from work. e. All court costs taxed against the insured in the "suit". However, these payments do not include attorneys' fees or attorneys' expenses taxed against the insured. f. Prejudgment interest awarded against the insured on that part of the judgment we pay. If we make an offer to pay the applicable limit of insurance, we will not pay any prejudgment interest based on that period of time after the offer.

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g. All interest on the full amount of any judgment that accrues after entry of the judgment and before we have paid, offered to pay, or deposited in court the part of the judgment that is within the applicable limit of insurance. These payments will not reduce the limits of insurance. 2. If we defend an insured against a "suit" and an indemnitee of the insured is also named as a party to the "suit", we will defend that indemnitee if all of the following conditions are met: a. The "suit" against the indemnitee seeks damages for which the insured has assumed the liability of the indemnitee in a contract or agreement that is an "insured contract"; b. This insurance applies assumed by the insured;

to

such

liability

c. The obligation to defend, or the cost of the en defense of, that indemnitee, has also been ured assumed by the insured in the same "insured contract"; nform d. The allegations in the "suit" and the information t we know about the "occurrence" are such that ween the no conflict appears to exist between ts of the interests of the insured and the interests indemnitee; e insured ask us to t e. The indemnitee and the he defense of that conduct and control the indemnitee against such "suit" suit" and agree that we can assign the same counsel nsel to defend the insured and the indemnitee; and indem d f. The indemnitee: (1) Agrees in writing to: ng to (a)) Cooperate with us in the investigation, Coop inve gation settlement or defense of the "suit"; settle (b) of any b) Immediately send nd us copies o demands, no notices,, summonses or legal su con papers received in connection with the "suit"; suit"; (c) Notify any other insu insurerr w whose coverage he indemnitee; in is available to the and (d) Cooperate e with us with respect to g oth coordinating other applicable insurance available to the indemnitee; and

So long as the above conditions are met, attorneys' fees incurred by us in the defense of that indemnitee, necessary litigation expenses incurred by us and necessary litigation expenses incurred by the indemnitee at our request will be paid as Supplementary Payments. Notwithstanding the provisions of Paragraph 2.b.(2) of Section I – Coverage A – Bodily Injury And Property Damage Liability, such payments will not be deemed to be damages for "bodily injury" and "property and will not reduce the rty damage" da limits of insurance. suranc Our obligation igatio to defend an insured's indemnitee and to pay for attorn attorneys' fees and necessary litigation expenses as Supplementary Payments ends when we have used us up the applicable limit of insurance in the payment o of judgments or ins settlements or the settle e conditions set forth above, or the terms of the e te e agreement agreemen described in Paragraph agraph f. above, are re no longer long met. SECTION II – WHO IS AN INSURED SECTI NSU 1. Iff you are designated in tthe Declarations as: An individual, you and your spouse are a. A dual, yo iinsureds, butt only on with respect to the conduct of a business of which you are the sole owner. b. A partnership or joint venture, you are an insured. Your members, your partners, and insu their heir spouses are also insureds, but only with respect to the conduct of your business. c. A limited liability company, you are an insured. Your members are also insureds, but only with respect to the conduct of your business. Your managers are insureds, but only with respect to their duties as your managers. d. An organization other than a partnership, joint venture or limited liability company, you are an insured. Your "executive officers" and directors are insureds, but only with respect to their duties as your officers or directors. Your stockholders are also insureds, but only with respect to their liability as stockholders. e. A trust, you are an insured. Your trustees are also insureds, but only with respect to their duties as trustees.

(2) Provides us with written authorization to: (a) Obtain records and other information related to the "suit"; and (b) Conduct and control the defense of the indemnitee in such "suit".

CG 00 01 04 13

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1 2. Each of the following is also an insured: a. Your "volunteer workers" only while performing duties related to the conduct of your business, or your "employees", other than either your "executive officers" (if you are an organization other than a partnership, joint venture or limited liability company) or your managers (if you are a limited liability company), but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business. However, none of these "employees" or "volunteer workers" are insureds for: (1) "Bodily injury" or "personal and advertising injury": (a) To you, to your partners or members (if you are a partnership or joint venture), to your members (if you are a limited liability company), to a co-"employee" while in the course of his or her employment or performing duties related ated to the conduct of your business, or to your other "volunteer workers" ers" while e performing duties related to the he conduct cond of your business;

c. Any person or organization having proper temporary custody of your property if you die, but only: (1) With respect to liability arising out of the maintenance or use of that property; and (2) Until your legal representative has been appointed. d. Your legal representative if you die, but only with respect to duties as such. That representative ntative will have all your rights and duties under this Coverage Part. 3. Any organization you newly acquire or form, other aniza than a partnership, artnership, joint venture or limited liability company, and over whic which you maintain ownership or majority interest, will qualify as a Named o Insured if there Ins re is no other similar insurance available to that organization. However: availa rganization. How a. Cove Coverage under this his provision provisio is afforded only until ntil the 90th day after fter you acquire or form the organization anization or the end nd of the policy period, whichever w ever is earlier; Coverage A does n not apply to "bodily injury" or b. C that occurred before you ""property damage" amag acquired or formed the organization; and

(b) To the spouse, child, parent, brother other or sister of that co-"employee" e" or "volunteer worker"" as a consequence of o Paragraph (1)(a) above;

Coverage B does not apply to "personal and c. C advertising injury" arising out of an offense adv committed before you acquired or formed the comm organization. ga

(c) For which there is any obligation to share damages with orr repay someone a else who o must pay p damages ges because of the injury y described in Paragraph agraph (1)(a) a) or (b) above; ve; or

No or organization is an insured with respect o person pe to the h conduct of any current or past partnership, joint venture or limited liability company that is not shown as a Named Insured in the Declarations.

(d) Aris Arising out of his or her providing p ding or o failing to provide ovide professional health ealt ccare services. (2) "Pro "Property damage" to property: o prop (a)) Owned, occupied orr used use by; (b) Rented the car care, custody or ented to, in th control of, or over er which w ch physical control is being exercised for any purpose by; ed fo you, any of your "employees", "volunteer "em workers", any partner partne or member (if you are a partnership or joint venture), or any member (if you are a limited liability company). b. Any person (other than your "employee" or "volunteer worker"), or any organization while acting as your real estate manager.

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SECTION III – LIMITS OF INSURANCE 1. The Limits of Insurance shown in the Declarations and the rules below fix the most we will pay regardless of the number of: a. Insureds; b. Claims made or "suits" brought; or c. Persons or organizations making claims or bringing "suits". 2. The General Aggregate Limit is the most we will pay for the sum of: a. Medical expenses under Coverage C; b. Damages under Coverage A, except damages because of "bodily injury" or "property damage" included in the "products-completed operations hazard"; and c. Damages under Coverage B.

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3. The Products-Completed Operations Aggregate Limit is the most we will pay under Coverage A for damages because of "bodily injury" and "property damage" included in the "products-completed operations hazard". 4. Subject to Paragraph 2. above, the Personal And Advertising Injury Limit is the most we will pay under Coverage B for the sum of all damages because of all "personal and advertising injury" sustained by any one person or organization. 5. Subject to Paragraph 2. or 3. above, whichever applies, the Each Occurrence Limit is the most we will pay for the sum of: a. Damages under Coverage A; and b. Medical expenses under Coverage C because of all "bodily injury" and "property damage" arising out of any one "occurrence". 6. Subject to Paragraph 5. above, the Damage To o Premises Rented To You Limit is the most we will pay under Coverage A for damages because e of "property damage" to any one premises, while hile rented to you, or in the case of damage ge by fire, while rented to you or temporarily occupied ied by you y with permission of the owner. 7. Subject to Paragraph 5. above, the Medical Expense Limit is the most we will pay under Coverage C for all medical expenses because o of "bodily injury" sustained by any one person. pers The Limits of Insurance of this Coverage overage Part apply separately to each consecutive annual nse ual period and to any remaining period of less tthan 12 months, starting with the beginning of the policy period shown hown in the Declarations, unless the is extended e policy period peri exten after issuance for an additional 12 tional period of less than 1 months. In that ccase, the e additional period will ill be b deemed part purposes art of the last preceding eding period for purp of determining ning the Limits of Insurance. surance.

(3) The nature and location of any injury or damage arising out of the "occurrence" or offense. b. If a claim is made or "suit" is brought against any insured, you must: (1) Immediately record the specifics of the claim or "suit" and the date received; and (2) Notify us as soon as practicable. You must ssee to it that we receive written notice of the claim or "suit" as soon as practicable. cable. c. You and a any other involved insured must: mediat sen (1) Immediately send us copies of any nds, notic demands, notices, summonses or legal papers receiv received in connection with the uit"; claim or "suit"; (2) A re Authorize us to obtain records and other info information; (3 u in the investigation or (3) Cooperate with us tlement of the claim or defense against settlement uit"; and the "suit"; (4 (4) Assist us, upon our request, in the enforcement of any right against any person or organization which may be liable to the insured because of injury or damage to which this insurance may also apply. d d. No insured will, except at that insured's own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our consent. 3. Legal Action Against Us No person or organization has a right under this Coverage Part: a. To join us as a party or otherwise bring us into a "suit" asking for damages from an insured; or

SECTION IV – COMMERC COMMERCIAL GEN GENERAL LIABILITY CONDITIONS S

b. To sue us on this Coverage Part unless all of its terms have been fully complied with.

1. Bankruptcy

A person or organization may sue us to recover on an agreed settlement or on a final judgment against an insured; but we will not be liable for damages that are not payable under the terms of this Coverage Part or that are in excess of the applicable limit of insurance. An agreed settlement means a settlement and release of liability signed by us, the insured and the claimant or the claimant's legal representative.

Bankruptcy or insolvency of the insured or of the t insured's estate will not relieve us of our obligations under this Coverage Part. s Covera 2. Duties In The Event Of Occurrence, Offense, Claim Or Suit a. You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. To the extent possible, notice should include: (1) How, when and where the "occurrence" or offense took place; (2) The names and addresses of any injured persons and witnesses; and

CG 00 01 04 13

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1 4. Other Insurance If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows: a. Primary Insurance This insurance is primary except when Paragraph b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in Paragraph c. below. b. Excess Insurance (1) This insurance is excess over: (a) Any of the other insurance, whether primary, excess, contingent or on any other basis: (i) That is Fire, Extended Coverage, age, Builder's Risk, Installation Riskk or similar coverage for "your work"; (ii) That is Fire insurance forr premises prem rented to you or temporarily emporari occupied by you with permission ission of the owner; (iii) That is insurance nce purchased by you yo to cover your liability iability as a tenant for "property damage" age" to premises rented to you or temporarily occupied pied by you with h permission of the owner; wner; or (iv) If the loss aris arises outt of the maintenance aircraft, ance or use of aircra "autos" or watercraft to the extent a ent not no subject to Exclusion g. of Section I– Sect Coverage A – Bodily Injury And Property Damage age Liability. L (b) Any other primary available to primar insurance nsur you liability ou covering lia ility for damages arising out of the e premises or operations, or the products and t completed operations, for which you peratio have been added as an additional en adde insured. (2) When this insurance is excess, we will have no duty under Coverages A or B to defend the insured against any "suit" if any other insurer has a duty to defend the insured against that "suit". If no other insurer defends, we will undertake to do so, but we will be entitled to the insured's rights against all those other insurers.

Page 12 of 16

(3) When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of: (a) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and (b) The total of all deductible and selfinsured amounts under all that other insurance. uran (4) We the remaining loss, if any, e will share s other insurance that is not with any a described escribed in this Excess Insurance provision vision and was not bought specifically to apply in excess of the Limits of Insurance shown in n the Declarations of this Coverage Part. c. Meth Method Of Sharing ing If all of tthe other insurance urance permits contribution by equal shares, we w will w follow this method also. Under this approach each insurer a contributes until it has paid its c es equal amounts a applicable limit a imit of insurance or none of the loss remains, whichever comes first. h If any of the other insurance does not permit contribution by equal shares, we will contribute co by lilimits. Under this method, each insurer's share hare is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance of all insurers. 5. Premium Audit a. We will compute all premiums for this Coverage Part in accordance with our rules and rates. b. Premium shown in this Coverage Part as advance premium is a deposit premium only. At the close of each audit period we will compute the earned premium for that period and send notice to the first Named Insured. The due date for audit and retrospective premiums is the date shown as the due date on the bill. If the sum of the advance and audit premiums paid for the policy period is greater than the earned premium, we will return the excess to the first Named Insured. c. The first Named Insured must keep records of the information we need for premium computation, and send us copies at such times as we may request. 6. Representations By accepting this policy, you agree: a. The statements in the accurate and complete;

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are

CG 00 01 04 13

b. Those statements are based representations you made to us; and

upon

c. We have issued this policy in reliance upon your representations. 7. Separation Of Insureds Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Coverage Part to the first Named Insured, this insurance applies: a. As if each Named Insured were the only Named Insured; and b. Separately to each insured against whom claim is made or "suit" is brought.

However, "auto" equipment".

does

not

include

"mobile

3. "Bodily injury" means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time. 4. "Coverage territory" means: a. The United States of America (including its territories and possessions), Puerto Rico and Canada; b. International waters or airspace, but only if the ional w injury or damage occurs in the course of travel dam or transportation between any places included anspo in Paragraph ragrap a. above; bov or

8. Transfer Of Rights Of Recovery Against Others To Us

c. All otherr parts of the world if the injury or t damage arises out of: rises ou

If the insured has rights to recover all or part of any payment we have made under this Coverage he Part, those rights are transferred to us. The em. insured must do nothing after loss to impair them. At our request, the insured will bring "suit"" or ce transfer those rights to us and help us enforce them.

(1) Goods or products made or o sold by you in the territory described in Paragraph a. above; ab

9. When We Do Not Renew If we decide not to renew this Coverage Part, we nsured will mail or deliver to the first Named Insured th shown in the Declarations written notice of the nonrenewal not less than 30 days before the expiration date. g will be sufficient If notice is mailed, proof of mailing proof of notice. TIONS SECTION V – DEFINITIONS 1. "Advertisement" means ns a notice that th is broadcast roadc or published shed to the general public or o specific pecif market segments products segmen aboutt your goods, produ s or services es for fo the purpose of attracting customers custome or supporters. ters For the purposes es of this definition: definitio a. Notices ces that are published pub hed include material placed on the Internet or electronic o on similar s means of communication; tion; and nd b. Regarding web sites, only that part of a web site that is about your goods, products or services for the purposes of attracting he pur customers or supporters is considered an advertisement. 2. "Auto" means: a. A land motor vehicle, trailer or semitrailer designed for travel on public roads, including any attached machinery or equipment; or b. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged.

CG 00 01 04 13

whose home is in ((2) The activities of a person per the described in Paragraph a. e territory des above, away for a short time on your e, but is awa business; ss; or ((3) "Personal and advertising injury" offenses that take place through the Internet or similar electronic means of communication; provided the insured's responsibility to pay provi damages is determined in a "suit" on the am merits, in the territory described in Paragraph a. above or in a settlement we agree to. 5. "Employee" "Employee" worker".

includes does not

a "leased worker". include a "temporary

6. "Executive officer" means a person holding any of the officer positions created by your charter, constitution, bylaws or any other similar governing document. 7. "Hostile fire" means one which becomes uncontrollable or breaks out from where it was intended to be. 8. "Impaired property" means tangible property, other than "your product" or "your work", that cannot be used or is less useful because: a. It incorporates "your product" or "your work" that is known or thought to be defective, deficient, inadequate or dangerous; or b. You have failed to fulfill the terms of a contract or agreement; if such property can be restored to use by the repair, replacement, adjustment or removal of "your product" or "your work" or your fulfilling the terms of the contract or agreement.

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1 9. "Insured contract" means: a. A contract for a lease of premises. However, that portion of the contract for a lease of premises that indemnifies any person or organization for damage by fire to premises while rented to you or temporarily occupied by you with permission of the owner is not an "insured contract"; b. A sidetrack agreement;

10. "Leased worker" means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. "Leased worker" does not include a "temporary worker". 11. "Loading or unloading" means the handling of property: a. After it is moved from the place where it is accepted for movement into or onto an aircraft, watercraftt or ""auto";

c. Any easement or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad;

b. While it is in or on an aircraft, watercraft or "auto"; o"; or

d. An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality;

c. While e it is being moved from an aircraft, watercraft aft or "auto" to the place where it is finally delivered; vered;

e. An elevator maintenance agreement;

but "loading or unloading" does not include the movement of property movem erty by means of a mechanical device, that is not vice, other than a hand truck, tr attached or "auto". at hed to the aircraft, watercraft waterc

f. That part of any other contract or agreement pertaining to your business (including an n indemnification of a municipality in connection ion with work performed for a municipality) under nder which you assume the tort liability of another her party to pay for "bodily injury" or "pro "property damage" to a third person or organization. Tort ation. T liability means a liability that would be e imposed by law in the absence of any contract ntract or agreement. Paragraph f. does not include any clude that part of an contract or agreement: (1) That indemnifies a railroad ad for "bodily injury" or "propertyy damage" arising out of construction or demolition operations, dem erations, within 50 feet of any railr railroad property roperty and affecting any railroad bridge trestle, bri or tre tracks,, road-beds, eds, tunnel, underpass un pass or o crossing; rossing (2) That indemnifies an architect, engine engineer or surveyor for injury orr damage arising out of: surv (a)) Preparing, approving, app ving, or failing to prepare or approve, app ove, maps, shop drawings, opinions, surveys, nions reports, rep field orders, change ange orders or drawings and specifications; ons; or o (b) Giving directions rections or instructions, or failing to give them, if that is the primary t cause of the injury or damage; or (3) Under which the insured, if an architect, engineer or surveyor, assumes liability for an injury or damage arising out of the insured's rendering or failure to render professional services, including those listed in (2) above and supervisory, inspection, architectural or engineering activities.

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12. "Mobile equipment" means any of the following "Mo me types ypes of land and vehicles, including any attached machinery or equipment: mach equipme a. Bulldozers, farm B arm machinery, forklifts and other vehicles designed for use principally off public roads; ro b. Vehicles maintained for use solely on or next to Vehi premises you own or rent; prem c. Vehicles that travel on crawler treads; d. d Vehicles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted: (1) Power cranes, shovels, loaders, diggers or drills; or (2) Road construction or resurfacing equipment such as graders, scrapers or rollers; e. Vehicles not described in Paragraph a., b., c. or d. above that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types: (1) Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment; or (2) Cherry pickers and similar devices used to raise or lower workers; f. Vehicles not described in Paragraph a., b., c. or d. above maintained primarily for purposes other than the transportation of persons or cargo.

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However, self-propelled vehicles with the following types of permanently attached equipment are not "mobile equipment" but will be considered "autos": (1) Equipment designed primarily for: (a) Snow removal; (b) Road maintenance, but not construction or resurfacing; or (c) Street cleaning; (2) Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and (3) Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment. However, "mobile equipment" does not include ry any land vehicles that are subject to a compulsory otor or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. Land vehicles subject to a w or other o compulsory or financial responsibility law motor vehicle insurance law are considered consider "autos". 13. "Occurrence" means an accident, including ncluding continuous or repeated exposure osure to substantially the same general harmful conditions. onditions. 14. "Personal and advertising injury" njury" means injury, including consequential "bodily injury", arising out of one or more of the offenses: he following fol nses: a. False arrest, detention tention or imprisonment; ment; b. Malicious prosecution; ution; c. The wrongf wrongful eviction on from, wrongful entry ry into, into or invasion nvasion of the right ht of private occupancy occupa cy of a room, oom dwelling or premises that a person pe occupies, upie committed by or on behalf of its owner, lessor; er, landlord or les d. Oral orr written publication, publicatio , in any manner, of material that slanders rs or libels ibel a person or organization or disparages a person's or arag organization's goods, products or services; prod e. Oral or written publication, publicatio in any manner, of material that violates a person's right of t privacy; f. The use of another's advertising idea in your "advertisement"; or g. Infringing upon another's copyright, trade dress or slogan in your "advertisement". 15. "Pollutants" mean 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.

CG 00 01 04 13

16. "Products-completed operations hazard": a. Includes all "bodily injury" and "property damage" occurring away from premises you own or rent and arising out of "your product" or "your work" except: (1) Products that are still in your physical possession; or (2) Work that has not yet been completed or abandoned. However, "your work" will be deemed med ccompleted at the earliest of the following owing times: (a) all of the work called for in your a) When Wh contract has been completed. cont as b (b) When all of tthe work to be done at the job site has ha been completed if your contract ct calls for work at a more than one job site. (c) When that part of the work done at a job site sit has been put tto its intended use by any person or organization other than another cont contractor or subcontractor working rking on tthe same project. Work thatt may m need service, maintenance, correction, repair or replacement, but which is otherwise complete, will be treated as completed. b. Does not include "bodily injury" or "property damage" arising out of: (1) The transportation of property, unless the injury or damage arises out of a condition in or on a vehicle not owned or operated by you, and that condition was created by the "loading or unloading" of that vehicle by any insured; (2) The existence of tools, uninstalled equipment or abandoned or unused materials; or (3) Products or operations for which the classification, listed in the Declarations or in a policy Schedule, states that productscompleted operations are subject to the General Aggregate Limit. 17. "Property damage" means: a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the "occurrence" that caused it. For the purposes of this insurance, electronic data is not tangible property.

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Page 15 of 16

1 As used in this definition, electronic data means information, facts or programs stored as or on, created or used on, or transmitted to or from computer software, including systems and applications software, hard or floppy disks, CDROMs, tapes, drives, cells, data processing devices or any other media which are used with electronically controlled equipment. 18. "Suit" means a civil proceeding in which damages because of "bodily injury", "property damage" or "personal and advertising injury" to which this insurance applies are alleged. "Suit" includes: a. An arbitration proceeding in which such damages are claimed and to which the insured must submit or does submit with our consent; or b. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent. 19. "Temporary worker" means a person who o is furnished to you to substitute for a permanent ent "employee" on leave or to meet seasonal al or shorts term workload conditions. 20. "Volunteer worker" means a person who ho is not your "employee", and who donates his or her er work and acts at the direction of and d within the scope of duties determined by you, and is not paid a fee, fee salary or other compensation on by you or anyone else for their work performed forr you.

b. Includes: (1) Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your product"; and (2) The providing of or failure to provide warnings or instructions. c. Does not include vending machines or other property rented to or located for the use of others but ut not sold. 22. "Your work": rk": a. Means: ns: (1) Work rk or operations operation performed by you or on your behalf; and equipment furnished in ((2) Materials,, parts or equipm connection with such work o or operations. b. Includ Includes: (1) Warra Warranties or representations made at any rese time respect to the fitness, quality, me with respec durability, performance or use of "your ability, perform work"; and (2) of or failure to provide (2 The providing vid warnings or instructions.

21. "Your product": a. Means: (1) Any goods or products, other than real property, manufactured, ufactured, sold, sold handled, andle distributed istribute or disposed posed of by: (a) a) You; Y (b) trading under your name; or b) Others O der yo (c) A person or organization whose orga business usiness or assets you have acquired; and (2) Containers (other than han vehicles), materials, parts or equipment in connection pment furnished fur with such goods ds or products. pr

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CG 00 01 04 13

COMMERCIAL GENERAL LIABILITY CG 21 06 05 14

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

EXCLUSION – ACCESS OR DISCLOSURE OF CONFIDENTIAL OR PERSONAL INFORMATION N AND DATA-RELATED LIABILITY – WITH LIMITED BODILY INJURY EXCEPTION ION COMMERCIAL GENERAL LIABILITY COVERAGE PART

electronic data As used in this exclusion, elect electr means information, facts or o programs or used on, or stored as or on, created o computer software, transmitted to or from co and applications including systems disks, CD-ROMs, software, hard or floppy flo flop data processing tapes, drives, cells, c other media which are used devices or any o de controlled equipment. with electronically electronic

PL

A. Exclusion 2.p. of Section I – Coverage A – Bodily Injury And Property Damage Liability is replaced by the following:

E

This endorsement modifies insurance provided under the following:

M

2. Exclusions This insurance does not apply to: p. Access Or Disclosure Of Confidential Orr Personal Information And Data-related ed Liability Damages arising out of: (1) Any access to or disclosure losure off any person's or organization's n's confidential ial or o personal information,, including patents, trade secrets, processing rocessing methods, customer lists, financial nancial information, credit card information, health d rmation, information or any other type of nonpublic or c information; infor

SA

(2) The loss s of, loss of use of, damage to, corruption rruption n of, inability to access, or o inability to manipulate electronic data. data This exclusion applies even if damages damage damag are claimed for notification notificati costs, credit monitoring expenses, forensic expenses, public relations tions expenses expens or any a other loss, cost or expense incurred by you or others incurre b arising out of that whic which is described in Paragraph above. Paragr (1) or (2) (2 ab b However, unless nless Paragraph (1) above exclusion does not apply to applies, plies, this exc of "bodily injury". damages amages because beca

B. The following is added to Paragraph 2. Exclu Exclusions of Section I – Coverage B – And Advertising Injury Liability: Personal ersona An Exclusions 2. Exclu xclu This insurance does not apply to: Th Access Or Disclosure Of Confidential Or Personal Information "Personal and advertising injury" arising out of any access to or disclosure of any person's or organization's confidential or personal information, including patents, trade secrets, processing methods, customer lists, financial information, credit card information, health information or any other type of nonpublic information. This exclusion applies even if damages are claimed for notification costs, credit monitoring expenses, forensic expenses, public relations expenses or any other loss, cost or expense incurred by you or others arising out of any access to or disclosure of any person's or organization's confidential or personal information.

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© Insurance Services Office, Inc., 2013

Page 1 of 1

1 IL 02 49 09 08

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

SOUTH CAROLINA CHANGES – CANCELLATION AND NONRENEWAL This endorsement modifies insurance provided under the following: CAPITAL ASSETS PROGRAM (OUTPUT POLICY) COVERAGE PART COMMERCIAL GENERAL LIABILITY COVERAGE PART COMMERCIAL INLAND MARINE COVERAGE PART COMMERCIAL PROPERTY COVERAGE PART CRIME AND FIDELITY COVERAGE PART EMPLOYMENT-RELATED PRACTICES LIABILITY COVERAGE GE PART EQUIPMENT BREAKDOWN COVERAGE PART FARM COVERAGE PART LIQUOR LIABILITY COVERAGE PART E PART MEDICAL PROFESSIONAL LIABILITY COVERAGE POLLUTION LIABILITY COVERAGE PART TY COVERAGE PART PRODUCTS/COMPLETED OPERATIONS LIABILITY mmon A. Paragraphs 2. and 3. of Cancellation Common Policy Condition are replaced by the following: 2. We may cancel this policy byy mailing or delivering to the first Named Insured and the agent, if any, written notice of cancellation at least: ate of cancela. 10 days before the effective date lation if we cancel ncel for nonpayment n ent of premium; or

b. Material misrepresentation of fact which, if known to us, would have caused us not to k issue issu the policy; c. Subs Substantial change in the risk assumed, except to the extent that we should reasonably have foreseen the change or contemplated the risk in writing the policy; d. Substantial breaches of contractual duties, conditions or warranties; or

b. 30 days before the e effective date of cancelncellation n if we ccancel for or any other reason. reason 3. We willll ma mail or deliver our notice to the first fir Named and agent's d Insured's In ent's last known addresses. s.

e. Loss of our reinsurance covering all or a significant portion of the particular policy insured, or where continuation of the policy would imperil our solvency or place us in violation of the insurance laws of South Carolina. Prior to cancellation for reasons permitted in this Item e., we will notify the Commissioner, in writing, at least 60 days prior to such cancellation and the Commissioner will, within 30 days of such notification, approve or disapprove such action. Any notice of cancellation will state the precise reason for cancellation.

B. The following Comg is added to the Cancellation Cance mon Policy Condition: 7. Cancellation Of Policies In Effect For 120 E Days Or More If this policy has been for 120 days or en in effect e more, or is a renewal or continuation of a policy we issued, we may cancel this policy only for one or more of the following reasons: a. Nonpayment of premium;

IL 02 49 09 08

¤ ISO Properties, Inc., 2007

Page 99

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C. The following is added and supersedes any provisions to the contrary: Nonrenewal 1. We will not refuse to renew a policy issued for a term of more than one year, until expiration of its full term, if anniversary renewal has been guaranteed by additional premium consideration. 2. If we decide not to renew this policy, we will: a. Mail or deliver written notice of nonrenewal to the first Named Insured and agent, if any, before: (1) The expiration date of this policy, if the policy is written for a term of one year or less; or (2) An anniversary date of this policy, if the policy is written for a term of more than one year or for an indefinite term; and

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b. Provide at least: (1) 60 days' notice of nonrenewal, when nonrenewal is to become effective between November 1 and May 31; or (2) 90 days' notice of nonrenewal, when nonrenewal is to become effective between June 1 and October 31. 3. Any notice of nonrenewal will be mailed or delivered to the first Named Insured's and agent's last known addresses. If notice is mailed, proof of mailing will be sufficient proof m of notice. 4. Any notice will state the precise ce of nonrenewal n reason for or nonrenewal.

¤ ISO Properties, Inc., 2007

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IL 02 49 09 08

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2

The Society of Certified Insurance Counselors a proud member of The National Alliance for Insurance Education & Research

SECTION 2

Additional Insured Concepts and Endorsements

Duane M. DiPirro, CIC, CPCU, AU Lawley Service, Inc. Lancaster, NY

www.TheNationalAlliance.com © 2016. The National Alliance for Insurance Education & Research. All Rights Reserved. This outline or any part thereof may not be reproduced in any form or by any means or stored in any information retrieval system without the express written consent of the author. This publication includes copyrighted material of Insurance Services Office, Inc., with its permission.

2

ADDITIONAL INSURED CONCEPTS AND ENDORSEMENTS

Duane M. DiPirro, CIC, CPCU, AU Lawley Insurance Buffalo, New York

The following material is based on the ISO 2013 edition of the Commercial General Liability Coverage Form and the most recent endorsements.

Copyright © Duane M. DiPirro, CIC, CPCU, AU ALL RIGHTS TO THE FOLLOWING MATERIAL ARE RESERVED. This outline or any part thereof may not be reproduced in any form or by any means or stored in any information retrieval system without express written consent of the author.

All material found in this document in the enclosed border is copyrighted material of Insurance Services Offices, Inc. and is used with their permission. Italics and underlines have been added for emphasis.

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

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2

Learning Objectives After completing this session the participant will be able to respond to questions concerning the following key learning objectives: 1.

Understand the waiver of subrogation concept and how it applies to the Commercial General Liability Coverage Form for client contract compliance. (Page 6)

2.

Understand the Other Insurance Condition and how it applies to the contractual request for additional insured status provided on a primary and non-Contributory basis for client contract compliance. (Page 10)

3.

Identify the reasons for requesting additional insured status. (Page 16)

4.

Provide reasons why the addition of others as additional insureds may cause problems. (Page 18)

5.

Describe the purpose, coverage, and limitations or exclusions for common additional insured endorsements added to the Commercial General Liability Policy. (Page 23)

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

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I.

INTRODUCTION A.

This class is not designed to discuss and apply contract clauses that impact insurance contracts.

B.

Clients are always signing contracts.

C.

Typical issues that producers and CSRs face daily when working with clients 1.

The client agrees to indemnify and hold harmless the other parties in the contract.

2.

The client generally agrees to provide a waiver of subrogation to the other parties.

3.

The client agrees that their insurance coverages will be primary and in some instances non-contributory.

4.

The client agrees to provide additional insured status to the other parties.

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 4

2

Notes

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 5

Learning Objective 1: Understand the waiver of subrogation concept and how it applies to the Commercial General Liability Coverage Form for client contract compliance.

II.

WAIVER OF SUBROGATION REQUIREMENTS A.

Definition of subrogation

Subrogation: The assignment to an insurer by terms of the policy or by law, after payment of a loss, of the rights of the insured to recover the amount of the loss from one legally liable for it. Subrogation Waiver: An agreement between two parties in which one party agrees to waive subrogation rights against another in the event of a loss. Generally, insurance policies do not bar coverage if an insured waives subrogation against a third party before a loss. However, coverage is excluded from many policies if subrogation is waived after a loss because to do so would violate the principle of indemnity. "Reprinted with permission from this product. Copyright International Risk Management Institute,

Inc., Dallas, TX."

Example: During a construction project, a subcontractor electrician does damage to concrete work performed by the general contractor. General contractor’s unendorsed CGL policy covers damage to GC’s work damaged by subcontractors.

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

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2

Notes: 1.

Insurance companies have a legal right to recapture money paid on a claim through subrogation.

2.

In other words the insurance company can recover against a third party which is responsible for the claim.

3.

What would be the significance of a waiver of subrogation? Injured party waives the right to recover against another party that caused the injury or damage.

4.

Is that a benefit to the insurance company? NO!

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

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B.

CGL Subrogation Condition

CG 00 01 SECTION IV - COMMERCIAL GENERAL LIABILITY CONDITIONS 8. Transfer Of Rights Of Recovery Against Others To Us If the insured has rights to recover all or part of any payment we have made under this Coverage Part, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring “suit” or transfer those rights to us and help us enforce them.

1.

The policy language clearly states that the insured is to do nothing to infringe on the rights of the insurance company to subrogate after a loss.

2.

The right of the insurance company to subrogate can be waived prior to a loss.

3.

Endorsement

x

CG 24 04 Waiver of Transfer of Rights of Recovery Against Others To Us

EXAMPLE: Mike’s Drywall Inc. installs drywall for the general contractor, Central Florida Big Homes (CFBH) who also does the framework on the homes. Mike’s insurance policy has the CG 24 04 endorsement with CFBH named in compliance with the construction agreement. CFBH did not properly place and install the correct number and size of beams. A loss occurred when part of the wall, including the drywall, fell and damaged some furniture. Mike’s insurance company paid for their portion of the loss to the claimant. CG 24 04 negates Mike’s insurance company from subrogating against CFBH.

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 8

POLICY NUMBER:

COMMERCIAL GENERAL LIABILITY CG 24 04 05 09

WAIVER OF TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART T PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART SCHEDULE

SA MP LE

Name Of Person Or Organization:

Information required to complete this Schedule, if not shown above, will be shown in the D De Declarations.

The following is added to Paragraph 8.. Transfer Of Rights Of Recovery Against inst Others To Us of Section IV – Conditions: ions: ons: We waive any right of recovery y we may have against the person or organization ion shown in the Schedule above ve because of payments we make for injury njury ury or damage going operations or arising out of your ongoing der er a contract with that "your work" done under ation on and included in the th person or organization eted operations hazard". "products-completed nly to the person or This waiver applies only n shown in the Schedule above. organization

CG 24 04 05 09

© Insurance Services Office, Inc., 2008

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 1 of 1

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2

Learning Objective 2: Understand the Other Insurance Conditions Clause and how it applies to the contractual request for Additional Insured Status provided on a Primary and Non-Contributory basis for client contract compliance.

III.

PRIMARY AND NON-CONTRIBUTORY Issue arises when two or more liability policies can be engaged on the same covered loss. A.

Contractual requirement 1.

A risk transfer technique that confirms that the named insured’s policy coverage will be primary for the additional insured before the additional insured’s own policy. (In other words, the AI’s policy is excess and does not share primary coverage with the named insured.) x

Definition of noncontributory

Noncontributory: Insurance issued on the basis that it will not seek contribution from other insurance policies that apply to a covered loss on the same basis (e.g., primary). Requests for additional insured status sometimes specify that such coverage be provided on a noncontributing or noncontributory basis. The additional insured in such cases is seeking assurance that its own policy will not be asked to contribute to a covered loss. Reprinted with permission. Copyright International Risk Management Institute, Inc., Dallas, TX.

B.

C.

Legality 1.

Statutes and court decisions will determine applicability.

2.

Most states will allow the wording prior to a loss

More current forms do not have conflicting language provisions. However, older forms or non-standard forms have Other Insurance policy provisions that create conflict between the named insured and an additional insured on the sharing of primary coverage.

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

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D.

CGL Other Insurance Condition 1.

The AI’s own policy is EXCESS for liability arising from premises, operations or products/completed operations IF they are added or included as an AI to another insured’s policy.

2.

Without this provision, a loss would be shared between the named insured’s policy and the additional insured’s policy.

CG 00 01 04 13 SECTION IV –COMMERCIAL GENERAL LIABILITY CONDITIONS 4. Other Insurance If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows: a. Primary Insurance This insurance is primary except when Paragraph b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in Paragraph c. below. b. Excess Insurance (1) This insurance is excess over: (a) Any of the other insurance, whether primary, excess, contingent or on any other basis: (i) That is Fire, Extended Coverage, Builder's Risk, Installation Risk or similar coverage for "your work"; (ii) That is Fire insurance for premises rented to you or temporarily occupied by you with permission of the owner; (iii) That is insurance purchased by you to cover your liability as a tenant for "property damage" to premises rented to you or temporarily occupied by you with permission of the owner; or (iv) If the loss arises out of the maintenance or use of aircraft, "autos" or watercraft to the extent not subject to Exclusion g. of Section I – Coverage A – Bodily Injury And Property Damage Liability. (b) Any other primary insurance available to you covering liability for damages arising out of the premises or operations, or the products and completed operations, for which you have been added as an additional insured. (2) When this insurance is excess, we will have no duty under Coverages A or B to defend the insured against any "suit" if any other insurer has a duty to defend the insured against that "suit". If no other insurer defends, we will undertake to do so, but we will be entitled to the insured's rights against all those other insurers. (3) When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of: (a) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and (b) The total of all deductible and self-insured amounts under all that other insurance. (4) We will share the remaining loss, if any, with any other insurance that is not described in this Excess Insurance provision and was not bought specifically to apply in excess of the Limits of Insurance shown in the Declarations of this Coverage Part.

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

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2

COMMERCIAL GENERAL LIABILITY CG 20 01 04 13 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

PRIMARY AND NONCONTRIBUTORY – OTHER INSURANCE CONDITION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART

Primary And Noncontributory Insurance

(2) You have agreed in writing in a contract or agreement that this insurance would be primary and would nott seek contrib contribution from any other insurance to the additional ance available ava insured.

LE

The following is added to the Other Insurance Condition and supersedes any provision to the contrary:

MP

This insurance is primary to and will not seek contribution from any other insurance available to an additional a al insured under your policy provided that: at:

SA

(1) The additional insured is a Named d Insured under such other insurance; nsura and

CG 20 01 04 13

© Insurance Services Office, Inc., 2012

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 1 of 1

Page 12

3.

Endorsement: ISO CG 20 01 Primary and Non-Contributory Other Insurance Condition x

Provides primary status provided that: 1)

The additional insured is a “Named Insured” under the other collectible insurance

2)

The Named Insured and Additional Insured have agreed to such an arrangement

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

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2

IV.

TYPES OF INSUREDS A.

Named Insureds – usually equals a “you” Throughout this policy the words “you” and “your” refer to the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy. The words “we,” “us” and “our” refer to the Company providing this

B.

Automatic insureds (see CGL provision – Who Is An Insured) Any person qualifying for such under the Who Is An Insured provision: x

If an individual include the spouse (sole proprietorship)

x

If partnership or joint venture, includes members, partners, spouses

x

If LLC, includes members, managers

x

If trust, includes trustees

x

If an organization (i.e. corporations); executive officers, directors

x

Employees and Volunteers

x

Real Estate Managers

x

Temporary custodian if the named insured dies

x

Legal Representative if the named insured dies

x

Newly acquired or formed organizations

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

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C.

2

Additional insureds – non-automatic 1.

What is an Additional Insured? a.

Definition of “Additional Insured …is intended to signify those insureds that generally are not automatically included as insureds under the liability policy of another, but for whom the named insured desires or is required to provide a certain 1 degree of protection under its liability policies.”

b.

How do you achieve such status? 1)

Added by endorsement, or

2)

Provided by a provision in a policy that is triggered by some requirement for this additional insured status in the underlying contractual agreement. x

3)

Usually a proprietary insurer filing with state regulators

There may be some insurers that may directly provide additional insured status by a provision in their coverage form and not by endorsement.

1

th

Malecki, Ligeros and Gibson The Additional Insured Book, 4 Edition , International Risk Management Institute, Inc. Dallas, TX , 2000. p. 57 © Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 15

Learning Objective 3: Identify the reasons for requesting additional insured status.

V.

Reasons For Requesting Additional Insured Status A.

B.

It may assure greater safety in a risk transfer x

A “Safety Net” in the event a hold harmless agreement is not enforceable due to a state's statute

x

Example: General contractor added as an Additional Insured on a plumbing subcontractor’s policy transfers the risk to the plumber.

It can give direct rights (defense) under the other party's insurance to those parties who attempt to transfer potential risk x

C.

It may protect the party/ies who attempt the transfer of potential risk from subrogation x

D.

GC listed as an Additional Insured on plumbers’ policy may be protected from subrogation

Potential for higher total limits available x

E.

Example: A landlord added as an Additional Insured on tenant’s policy gets the right to defense from the tenant’s policy.

GC may only have $1 million limit and sub carries $5 million

Potential reduction of insurance cost x

Lower premiums due to lower loss experience

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

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VI.

Why Would An Insured Want To Add An Additional Insured? A.

2

Wish to protect another party due to a close relationship with the named insured Example:

Clubs & churches may want to protect their members CG 20 22 - Additional Insured - Church Members and Officers CG 20 02 – Additional Insured – Club Members

B.

People or organizations with which the named insured has a business relationship and, typically, a contractual relationship Examples:

Project owners added to general contractors policies. General contractors added to subcontractors policies. CG 20 10 - Additional Insured - Owners, Lessees or Contractors – Scheduled Person or Organization CG 20 37 - Additional Insured Owners, Lessees or Contractors- Completed Operations

Example:

Owners or lessors of real estate require additional insured status on the policies of their tenants/lessees. CG 20 11 – Additional Insured-Managers or Lessors of Premises

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 17

Learning Objective 4: Provide reasons why the addition of others as additional insureds may cause problems.

VII. Problems Associated With Additional Insureds A.

Problems for named insured 1.

Diminution of policy limits The CGL makes it clear in severability of interest provisions, that the policy will apply separately to each insured against whom a claim is made or suit is brought except with respect to the policy’s limits.

SECTION IV – COMMERCIAL GENERAL LIABILITY CONDITIONS 7. Separation Of Insureds Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Coverage Part to the first Named Insured, this insurance applies: a. As if each Named Insured were the only Named Insured; and b. Separately to each insured against whom claim is made or "suit" is brought. CG 00 01 04 13

2.

© Insurance Services Office, Inc., 2012

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Unintended coverage provided Example: The named insured may enter into a intermediate hold harmless agreement (risk transfer for joint negligence, not sole negligence) with an Additional Insured. Depending on the AI endorsement wording (manuscript or older versions), the Additional Insured may try to get coverage for its sole negligence.

3.

Defense conflicts x

When a suit is brought against a name insured and an additional insured often the best defense for one of the parties involves condemnation of the actions of the other party.

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 18

4.

2

Compliance problems Examples: Limits may be exhausted or insufficient due to previous claims; gaps in required coverage; AI may not meet the supplementary provisions.

B.

Problems for the additional insured 1.

Loss of defense control a.

Indemnitor and Indemnitee must be named

b.

Insurance company controls defense

1. Insuring Agreement a. … We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result. … CG 00 01 04 13

2.

3.

© Insurance Services Office, Inc., 2012

Page 1 of 16

"Other Insurance" conflicts a.

Older CGL forms and non-standard CGL forms have “Other Insurance” policy provisions that create conflict between the named insured’s policy and the additional insured’s policy.

b.

Underlying contract between the parties needs to clarify what policy will apply as primary insurance.

Increased probability of disputes over coverage x

Named insured’s policy controls

4.

Limited coverage under current forms

5.

Loss of immunity – political subdivision (e.g. city or county) may be granted immunity or provided limitation to liability by statute. Being added to another’s policy may waive such immunity.

6.

It is not a good idea to depend on someone else’s insurance.

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 19

VIII. Significant Changes by ISO Affected Many Endorsements A.

What was the July 2004 change about? 1.

Many of the July 2004 ISO editions of the Additional Insured endorsements were revised to eliminate coverage for the sole negligence of the additional insured (indemnitee)

2.

Contractual Liability Issue x

Coverage for sole negligence of an indemnitee may still be provided through the contractual liability exception in paragraph f. of an “insured contract” in the CGL Coverage Form

x

Contractual indemnification

x

Paragraph f. is customarily referred to as “blanket broad form contractual liability”

Partial CGL definition 9. "Insured contract" means: f.

That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement. Paragraph f. does not include that part of any contract or agreement: (1) That indemnifies …

Page 14 of 16

© Insurance Services Office, Inc., 2012

3.

CG 00 01 04 13

Caution: CG 24 26 Amendment of Insured Contract Definition a.

Amends the definition of “Insured Contract”

b.

Limits BI and PD liability coverage

c.

No longer provides for sole negligence of others assumed in a contract

Partial endorsement

f.

That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization, provided the "bodily injury" or "property damage" is caused, in whole or in part, by you or by those acting on your behalf. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.

CG 24 26 04 13

© Insurance Services Office, Inc., 2012

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 1 of 1

Page 20

B.

2

April 2013 ISO Revision Many of the April 2013 ISO editions of the Additional Insured endorsements were revised in response to anti-indemnification statutes that exist in numerous states a.

Coverage limited to the extent permitted by law

b.

Coverage limited to the extent the named insured is required by contract or agreement

However, the insurance afforded to such additional insured described above: a. Only applies to the extent permitted by law; and b. Will not be broader than that which you are required by the contract or agreement to provide for such additional insured.

c.

If coverage is required by contract or agreement, the most paid is the amount required by the contract or agreement or the amount available under the applicable limit of insurance, whichever is less

With respect to the insurance afforded to these additional insureds, the following is added to Section III – Limits Of Insurance: If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance: 1. Required by the contract or agreement; or 2. Available under the applicable Limits of Insurance shown in the Declarations; whichever is less. This endorsement shall not increase the applicable Limits of Insurance shown in the Declarations.

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 21

POLICY NUMBER:

COMMERCIAL GENERAL LIABILITY CG 20 10 04 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

ADDITIONAL INSURED – OWNERS, LESSEES OR CONTRACTORS – SCHEDULED PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE

Location(s) cation(s) ation(s) Of C Cov Covered Operations

MP LE

Name Of Additional Insured Person(s) Or Organization(s)

Information required to complete this Schedule, if not shown above, will be sshown in the Declarations. A. Section II – Who Is An Insured is amended ded ed to include as an additional insured d the he person(s) or organization(s) shown n in the Schedule, but only with respect to o liability iability for f "bodily injury", "property damage" ge" or "personal and advertising injury" njury" ury" caused, in whole or in part, by:

SA

1. Your acts or omissions; ons; or

2. The acts or omissions on issions ssions of those acting ac your behalf; in the performance nce ce of your ongoing o on operations for the additional insured(s) at the tional al insure insured location(s) designated above. ove. However:

1. The insurance afforded to such additional insured only applies to the extent permitted by law; and 2. If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured. CG 20 10 04 13

B. With respect to the insurance afforded to resp these additional insureds, the following additional exclusions apply: ad addit This insurance does not apply to "bodily T injury" or "property damage" occurring after: 1. All work, including materials, parts or equipment furnished in connection with such work, on the project (other than service, maintenance or repairs) to be performed by or on behalf of the additional insured(s) at the location of the covered operations has been completed; or 2. That portion of "your work" out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project.

© Insurance Services Office, Inc., 2012

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 1` of 2

Page 22

IX.

Some of the Most Common Additional Insured Endorsements Added to the Commercial General Liability Policy

2

Learning Objective 5: Describe the purpose, coverage and limitations or exclusions for common additional insured endorsements added to the CGL policy. A.

Additional Insured – Owners, Lessees or Contractors – Scheduled Person or Organization CG 20 10 04 13 1.

Adds an owner of a project, a lessee, or a general contractor to a named insured’s (subcontractor’s) policy

2.

Provides liability for "BI", "PD" or "P&A Injury" for the Additional Insured caused:

3.

4.

a.

in whole or in part, by your acts or omissions; or

b.

the acts or omissions of those acting on your behalf;

c.

ongoing operations at described locations

Limitations x

Coverage is afforded to such additional insured only to the extent law permits

x

Coverage provided to AI is required by contract or agreement and will not be broader than what is required by the contract to provide such AI status

x

No coverage for AI’s sole negligence

Exclusions: a.

No completed operations coverage

b.

No coverage for work put to its intended use.

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 23

C. With respect to the insurance afforded to these additional insureds, the following is added to Section III – Limits Of Insurance: If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance:

2. Available under the applicable Limits of Insurance shown in the Declarations; whichever is less. This endorsement shall not increase the applicable Limits of Insurance shown in the Declarations.

SA

MP

LE

1. Required by the contract or agreement; or

Page 2 of 2

© Insurance Services Office, Inc., 2012

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

CG 20 10 04 13

Page 24

CG 20 10 04 13- continued

5.

x

6.

2

Limits of liability If coverage is required by contract or agreement, the most paid is the amount required by the contract or agreement or the amount available under the applicable limit of insurance, whichever is less

The CG 20 10 11 85 Edition is hard to get and provides operations and completed operations coverage. It will also provide for sole negligence of the additional insured.

POLICY NUMBER:

COMMERCIAL GENERAL LIABILITY

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

E

ADDITIONAL INSURED – OWNERS, NERS, LE L LESSEES OR FORM B) CONTRACTORS – (FORM This endorsement modifies insurance provided under the following: ollo

MP L

COMMERCIAL GENERAL LIABILITY COVERAGE E PART. SCHEDULE HEDULE

Name of Person or Organization:

SA

(If no entry appears above, information rmation required to complete this endorsement will be shown in the Declarations as applicable to this endorsement.) WHO IS AN INSURED amended to include as an insured the person or organization shown D (Section II) is amende ame in the Schedule, but only arising out of "your work" for that insured by or for you. nlyy with respect to liability liab lia

CG 20 10 11 85

Copyright, Insurance Services Office, Inc., 1984

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 1 of 1

Page 25

POLICY NUMBER:

COMMERCIAL GENERAL LIABILITY CG 20 37 04 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

ADDITIONAL INSURED – OWNERS, LESSEES OR CONTRACTORS – COMPLETED OPERATIONS This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART SCHEDULE Location And nd d Description D Of Completed Operations Op

SA MP LE

Name Of Additional Insured Person(s) Or Organization(s)

Information required to complete this Schedule, ule, e, if not shown above, w will be shown in the Declarations.

A. Section II – Who Is An Insured is amended to include as an additionall insured ed the person(s) or organization(s) s) shown in the Schedule, but only with respect espect ct to liability for "bodily injury" or "property perty erty damage" caused, in whole or in part, t,, by "your work" at the location designated ed d and described in the th Schedule of this endorsement performed dorsement perform performe for that additional insured ed and included in the "products-completed operations perations ations hazard". haz ha However:

1. The insurance afforded to such additional insured only applies to the extent permitted by law; and

2. If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured.

CG 20 37 04 13

B. respect to the insurance afforded to B With W these additional insureds, the following is added to Section III – Limits Of Insurance: If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance: 1. Required by the contract or agreement; or 2. Available under the applicable Limits of Insurance shown in the Declarations;

whichever is less.

This endorsement shall not increase the applicable Limits of Insurance shown in the Declarations.

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Page 26

B.

2

Additional Insured – Owners, Lessees or Contractors – Completed Operations CG 20 37 04 13 1.

Adds an owner of a project, a lessee, or a general contractor to a named insured’s (subcontractor’s) policy

2.

Provides liability for "bodily injury" or "property damage" for the Additional Insured caused,

3.

4.

a.

in whole or in part, by "your work"

b.

at the location designated

c.

for completed operations performed for that additional insured

Limitations x

Coverage is afforded to such additional insured only to the extent law permits

x

Coverage provided to AI is required by contract or agreement and will not be broader than what is required by the contract to provide such AI status

x

BI & PD only, no Personal & Advertising

x

No ongoing operations

x

No coverage for AI’s sole negligence

Limits of liability x

If coverage is required by contract or agreement, the most paid is the amount required by the contract or agreement or the amount available under the applicable limit of insurance, whichever is less

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 27

POLICY NUMBER:

COMMERCIAL GENERAL LIABILITY CG 20 11 04 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

ADDITIONAL INSURED – MANAGERS OR LESSORS OF PREMISES This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE Designation Of Premises (Part Leased To You):

SA MP LE

Name Of Person(s) Or Organization(s) (Additional Insured): ed):

Additional Premium: $

Information required to complete this Schedule, ule, le, if not shown above, will wi w be shown in the Declarations.

A. Section II – Who Is An Insured is s amend amended to include as an additional insured red the person(s) or organization(s)) shown in the Schedule, but only with respect pect to liability arising out of the ownership, rship, maintenance aintenance or use of that part of the e premises leased to you and shown in the Schedule chedule and subje subject to the th following additional al exclusions: This insurance does not apply to:

1. Any "occurrence" which hich ch takes place after you cease to be a tenant that premises. ntt in th

2. Structural alterations, new construction or demolition operations performed by or on behalf of the person(s) or organization(s) shown in the Schedule. However: 1. The insurance afforded to such additional insured only applies to the extent permitted by law; and

CG 20 11 04 13

2. 2 If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured.

B. With respect to the insurance afforded to these additional insureds, the following is added to Section III – Limits Of Insurance: If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance: 1. Required by the contract or agreement; or 2. Available under the applicable Limits of Insurance shown in the Declarations; whichever is less. This endorsement shall not increase the applicable Limits of Insurance shown in the Declarations.

© Insurance Services Office, Inc., 2012

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Page 28

C.

2

Additional Insured – Managers or Lessors of Premises – CG 20 11 07 04 1.

Adds a manager or a lessor/owner to a named insured’s policy

2.

Provides Premises Liability to the Additional Insured arising out of the ownership, maintenance or use of that part of the described premise x

3.

4.

5.

Only covers that part of the premise that is listed as a location for the named insured

Exclusions x

Coverage ceases after Named Insured is no longer a tenant

x

Does not cover structural alterations, new construction performed by the Additional Insured

Limitations x

Coverage is afforded to such additional insured only to the extent law permits

x

Coverage provided to AI is required by contract or agreement and will not be broader than what is required by the contract to provide such AI status

Limits of liability x

If coverage is required by contract or agreement, the most paid is the amount required by the contract or agreement or the amount available under the applicable limit of insurance, whichever is less

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POLICY NUMBER:

COMMERCIAL GENERAL LIABILITY CG 20 28 04 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

ADDITIONAL INSURED – LESSOR OF LEASED EQUIPMENT This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE

SA MP L

E

Name Of Additional Insured Person(s) Or Organization(s):

Information required to complete this Schedule, dule, e, if not shown above, w will be shown in the Declarations. A. Section II – Who Is An Insured is s amen amended to include as an additional insured ured the person(s) or organization(s) shown in the Schedule, but only with respect spect ect to liability for "bodily injury", "property perty damage" or "personal and advertising sing injury" caused, in whole or in part, by your mainte maintenance, maintenance operation or use of equipment leased to you y by such person(s) orr organization(s). However:

1. The insurance afforded d to such suc additional insured only applies to the extent permitted by law; and

2. If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured.

CG 20 28 04 13

B. With respect to the insurance afforded to W Wit these additional insureds, this insurance t does not apply to any "occurrence" which takes place after the equipment lease expires. C. With respect to the insurance afforded to these additional insureds, the following is added to Section III – Limits Of Insurance: If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance: 1. Required by the contract or agreement; or 2. Available under the applicable Limits of Insurance shown in the Declarations; whichever is less. This endorsement shall not increase the applicable Limits of Insurance shown in the Declarations.

© Insurance Services Office, Inc., 2012

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D.

2

Additional Insured – Lessor of Leased Equipment CG 20 28 04 13 1.

Adds owner of equipment to the Named Insured’s policy

2.

Provides liability for "BI", "PD" or "P&A Injury" for the Additional Insured caused, in whole or in part, by the Named Insured’s maintenance and operation of the equipment leased to the Named Insured

3.

Limitations

4.

x

No coverage for AI’s sole negligence

ƒ

Coverage is afforded to such Additional Insured only to the extent law permits

ƒ

Coverage provided to Additional Insured is required by contract or written agreement and will not be broader than what is required by the contract to provide for such AI status

x

No coverage after lease expires

Limits of liability x

5.

If coverage is required by contract or agreement, the most paid is the amount required by the contract or agreement or the amount available under the applicable limit of insurance, whichever is less

Do not forget to coordinate with the CA 20 01 Additional Insured and Loss Payee for any mobile equipment exposure

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 31

POLICY NUMBER:

COMMERCIAL GENERAL LIABILITY CG 20 15 04 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

ADDITIONAL INSURED – VENDORS This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART SCHEDULE Name Of Additional Insured Person(s) Or Organization(s) (Vendor)

PL E

Your Products

Information required to complete this Schedule, if not ott shown above, abov will be sh shown in the Declarations. A. Section II – Who Is An Insured is amended ed to include as an additional insured any person(s) or organization(s) (referred rred to throughout this endorsement as s vendor) ve shown in the Schedule, but only with th respect respec to "bodily injury" or "property damage" amage" arising out of "your products" shown n in the Schedule which are distributed or sold in the regular course of the vendor's business. However: 1. The insurance e afforded to such vendor ven only applies to the extent permit permitted by permitt law; and 2. If coverage provided to the vendor is required by a contract orr agreement, the a insurance afforded to such vendor will not be broader than that which you are required by the contract or agreement to provide for such vendor.

CG 20 15 04 13

B. With respect respe to the insurance afforded to these vendors, the following additional v exclusions apply: exclus 1. The insurance afforded the vendor does not apply to: a. "Bodily injury" or "property damage" for which the vendor is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages that the vendor would have in the absence of the contract or agreement; b. Any express warranty unauthorized by you; c. Any physical or chemical change in the product made intentionally by the vendor; d. Repackaging, except when unpacked solely for the purpose of inspection, demonstration, testing, or the substitution of parts under instructions from the manufacturer, and then repackaged in the original container;

© Insurance Services Office, Inc., 2012

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E.

2

Additional Insured – Vendors CG 20 15 04 13 1.

Adds vendors who distribute or sell the Named Insured’s products to the Named Insured’s policy

2.

Provides coverage to the Additional Insured for BI & PD arising out of named insured’s products shown in the schedule in the regular course of the vendor's business

3.

Limitations

4.

x

Coverage is afforded to such Additional Insured only to the extent law permits

x

Coverage provided to Additional Insured is required by contract or written agreement and will not be broader than what is required by the contract to provide for such AI status

Exclusions a.

Excludes BI/PD for which vendor is obligated to pay damages by reason of assumption of liability in a contract

b.

Excludes any expressed warranty unauthorized by the named insured

c.

Excludes any physical or chemical change in the product made intentionally by vendor

d.

Excludes repackaging

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Page 33

e. Any failure to make such inspections, adjustments, tests or servicing as the vendor has agreed to make or normally undertakes to make in the usual course of business, in connection with the distribution or sale of the products;

(2) Such inspections, adjustments, tests or servicing as the vendor has agreed to make or normally undertakes to make in the usual course of business, in connection with the distribution or sale of the products.

f. Demonstration, installation, servicing or repair operations, except such operations performed at the vendor's premises in connection with the sale of the product;

2. This insurance does not apply to any insured person or organization, from whom you have acquired such products, or any ingredient, part or container, entering into, accompanying or containing such products.

g. Products which, after distribution or sale by you, have been labeled or relabeled or used as a container, part or ingredient of any other thing or substance by or for the vendor; or

C. With respect ec to the insurance afforded to ect these vendors, the following is added to endo Section Limits on III – Limi m Of Insurance:

h. "Bodily injury" or "property damage" arising out of the sole negligence of the vendor for its own acts or omissions or those of its employees or anyone else acting on its behalf. However, this exclusion does not ot apply to:

1. 1 Required by tthe contract or agreement; or

LE

If coverage erage provided provi tto the vendor is required by a contract the most we will ntract or agreement, agreem pay on behalf of the vvendor is the amount of insurance: ins

MP

2. 2 Available vailable under the applicable Limits of Insurance Insuran ran shown in the Declarations;

whichever whichev is less. This Th endorsement shall not increase the applicable Limits of Insurance shown in the a Declarations.

SA

(1) The exceptions contained in n Subbparagraphs d. or f.; or

Page 2 of 2

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CG 20 15 04 13

Page 34

2

CG 20 15 Exclusions continued

5.

e.

Failure to inspect

f.

Demonstrations, etc. except at vendor’s premises

g.

Relabeled products

h.

No coverage for AI’s sole negligence subject to exceptions

i.

No coverage for any insured from whom products have been purchased

Limits of liability x

If coverage is required by contract or agreement, the most paid is the amount required by the contract or agreement or the amount available under the applicable limit of insurance, whichever is less

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 35

X.

Automatic Status Additional Insured Endorsements A.

B.

C.

Why They Are Used? 1.

Automatic coverage when agreed to in a written contract

2.

Less administrative work with frequent requests

The Challenges and Problems of Using Automatic Status Additional Insured Endorsements 1.

Must have a written contract to requiring AI to be added to the Named Insured’s policy

2.

Coverage may not be adequate to comply with contractual needs

3.

Too many AI’s sharing the same limits

Similar limitations 1.

Limits coverage to BI, PD, P&A Injury caused in whole or in part by the named insured. No coverage for AI’s sole negligence

2.

Coverage is afforded to such Additional Insured only to the extent law permits

3.

Coverage provided to Additional Insured is required by contract or written agreement and will not be broader than what is required by the contract to provide for such AI status

4.

If coverage is required by contract or agreement, the most paid is the amount required by the contract or agreement or the amount available under the applicable limit of insurance, whichever is less

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 36

D.

ISO Automatic Status Additional Insured Endorsements 1.

2

CG 20 33 Additional Insured – Owners, Lessees or Contractors – Automatic Status When Required in Construction Agreement x

Does nothing for an “upstream party” such as an owner if used on subcontractors CGL

x

Only provides AI status to entity that directly contracted for services (in writing)

CG 20 33 A. Section II – Who Is An Insured is amended to include as an additional insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability for "bodily injury", "property damage" or "personal and advertising injury" caused, in whole or in part, by …:

2.

CG 20 38 Additional Insured – Owners, Lessees or Contractors – Automatic Status For Other Parties When Required in Written Construction Agreement x

Allows AI status for “any other person or organization you are required to add as an additional insured under a contractor agreement…”

x

Provides AI status for “upstream parties” such as an owner in GC/Subcontractor agreements

CG 20 38 A. Section II – Who Is An Insured is amended to include as an additional insured: 1. Any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy; and 2. Any other person or organization you are required to add as an additional insured under the contract or agreement described in Paragraph 1. above.

Note: Both CG 20 33 and CG 20 38 a)

Require written contract

b)

Limit coverage to ongoing operations only. No coverage for completed operations.

c)

Exclude professional services

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 37

POLICY NUMBER:

COMMERCIAL GENERAL LIABILITY CG 20 33 04 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

ADDITIONAL INSURED – OWNERS, LESSEES OR CONTRACTORS – AUTOMATIC STATUS WHEN T WITH YOU REQUIRED IN CONSTRUCTION AGREEMENT This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART

A. Section II – Who Is An Insured is amended to include as an additional insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person on n or organization be added as an additional onal insured on your policy. Such person son on o or organization is an additional insured onlyy with respect to liability for "bodily injury", y", "property perty damage" or "personal and advertising vertising injury" ury" caused, in whole or in part, by: y: 1. Your acts or omissions; s; or 2. The acts or omissions sions of those se acting on your behalf; in the performance rmance nce of your ongoing operations forr the additional ditional insured. However, the insurance ce afforded to such additional al insured: insured 1. Only nly applies to the extent exten permitted by law; w; and a 2. Will ill not be broader than that tha which you are required by the contract o or agreement to provide insured. vide for such additional addition dditi A person's or organizatio organization's status as an additional insured under this endorsement ured red unde ends when your operations for that additional opera insured are completed.

CG 20 33 04 13

B. With respect to the insurance afforded to aff af these following ese additional insureds, the th additional exclusions apply: This insurance does not a apply app to: 1. "Bodily injury", "pr "property damage" or "pro "personal and advertising injury" arising ad out of the rend rendering of, or the failure to render, any professional architectural, engineering or surveying services, including: including a. The preparing, approving, or failing to T prepare or approve, maps, shop drawings, opinions, reports, surveys, field orders, change orders or drawings and specifications; or b. Supervisory, inspection, architectural or engineering activities. This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the "occurrence" which caused the "bodily injury" or "property damage", or the offense which caused the "personal and advertising injury", involved the rendering of or the failure to render any professional architectural, engineering or surveying services.

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Page 38

or

"property damage"

a. All work, including materials, parts or equipment furnished in connection with such work, on the project (other than service, maintenance or repairs) to be performed by or on behalf of the additional insured(s) at the location of the covered operations has been completed; or

The most we will pay on behalf of the additional insured is the amount of insurance: 1. Required by the contract or agreement you have entered into with the additional insured; or 2. Available underr the applicable Limits of Insurance shown own in the Declarations; whichever is less. ess. This endorsement orsement rsement shall not iincrease the applicable Insurance shown in the ble Limits mits of Insuran sho Declarations. arations.

SA M

PL

b. That portion of "your work" out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project.

C. With respect to the insurance afforded to these additional insureds, the following is added to Section III – Limits Of Insurance:

E

2. "Bodily injury" occurring after:

Page 2 of 2

© Insurance Services Office, Inc., 2012

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CG 20 33 04 13

Page 39

2

POLICY NUMBER:

COMMERCIAL GENERAL LIABILITY CG 20 38 04 13 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

ADDITIONAL INSURED – OWNERS, LESSEES OR CONTRACTORS – AUTOMATIC STATUS FOR OTHER PARTIES WHEN REQUIRED IN WRITTEN CONSTRUCTION AGREEMENT This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART

This insurance does not apply to:

1. "Bodily injury", "property damage" or d "personal personal and advertising injury" arising out of the rendering o of, or the failure to render, any professional architectural, profess engineering or surveying services, including: inc

PL

1. Any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy; and

B. With respect afforded to spect ct to the insurance insuran a these additional onal insureds, the following f additional ditional exclusions ions apply: app

E

A. Section II – Who Is An Insured is amended to include as an additional insured:

2. Any other person or organization you are re e required to add as an additional insured ured under the contract or agreement eement emen described in Paragraph 1. above.

SA M

Such person(s) or organization(s) on(s) is an additional insured only with respect spect to liability for "bodily injury", "property erty rty damage" or "personal and advertising g injury" ury" caused, caused in whole or in part, by: a. Your acts or omissions; or omiss

b. The acts or omissions of those acting on yourr behalf;

in the performance erformance of your ongoing operations ons for the additional insured. insure However, wever, ever, the insurance afforded affo to ssuch additional above: dditional onal insured described abo

a. by a Only applies to the extent permitted pe p law; aw; and

b. Willl not be broader that which ader than t you are by the contract or e required b agreement ent to provide for such additional insured. nsur

A person's or organization's status as an additional insured under this endorsement ends when your operations for the person or organization described in Paragraph 1. above are completed.

CG 20 38 04 13

a. The prepa preparing, approving, or failing to prepare or approve, maps, shop drawings, opinions, reports, surveys, drawin field orders, change orders or drawings and specifications; or d

b. b Supervisory, inspection, architectural or engineering activities.

This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the "occurrence" which caused the "bodily injury" or "property damage", or the offense which caused the "personal and advertising injury", involved the rendering of, or the failure to render, any professional architectural, engineering or surveying services. 2. "Bodily injury" occurring after:

"property damage"

a. All work, including materials, parts or equipment furnished in connection with such work, on the project (other than service, maintenance or repairs) to be performed by or on behalf of the additional insured(s) at the location of the covered operations has been completed; or

© Insurance Services Office, Inc., 2012

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or

Page 1` of 2

Page 40

b. That portion of "your work" out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project.

2. Available under the applicable Limits of Insurance shown in the Declarations; whichever is less. This endorsement shall not increase the applicable Limits of Insurance shown in the Declarations.

C. With respect to the insurance afforded to these additional insureds, the following is added to Section III – Limits Of Insurance:

SA M

PL

1. Required by the contract or agreement described in Paragraph A.1.; or

E

The most we will pay on behalf of the additional insured is the amount of insurance:

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CG 20 38 04 13

Page 41

2

XI.

Certificates of Insurance A.

ACORD 25 (2014/01) Certificate of Liability Insurance

THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.

IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).

SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS.

B.

To avoid being non-compliant, use only the most current ACORD form or other state approved form

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 42

2

XII. SUMMARY OF LEARNING OBJECTIVES 1.

Understand the waiver of subrogation concept and how it applies to the Commercial General Liability Coverage Form for client contract compliance. (Page 6)

2.

Understand the Other Insurance Condition and how it applies to the contractual request for additional insured status provided on a primary and non-Contributory basis for client contract compliance. (Page 10)

3.

Identify the reasons for requesting additional insured status. (Page 16)

4.

Provide reasons why the addition of others as additional insureds may cause problems. (Page 18)

5.

Describe the purpose, coverage, and limitations or exclusions for common additional insured endorsements added to the Commercial General Liability Policy. (Page 23)

© Duane M. DiPirro, CIC, CPCU, AU Additional Insureds Concepts and Endorsements 11/2013

Page 43

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The Society of Certified Insurance Counselors a proud member of The National Alliance for Insurance Education & Research

SECTION 3

Business Automobile Coverages

Terry L. Tadlock, CIC, CPCU, CRIS Coastal Plains Insurance Hilton Head Island, SC

www.TheNationalAlliance.com © 2016. The National Alliance for Insurance Education & Research. All Rights Reserved. This outline or any part thereof may not be reproduced in any form or by any means or stored in any information retrieval system without the express written consent of the author. This publication includes copyrighted material of Insurance Services Office, Inc., with its permission.

Business Automobile Coverages

3

Prepared by: Terry L. Tadlock, CIC, CPCU, CRIS Coastal Plains Insurance 15 Bow Circle Hilton Head, SC 29926 (850) 766-3601 [email protected]

The following material covers Business Auto Coverages used with the ISO 2013 edition of the Business Auto Coverage Form and the most recent endorsements.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 1

Notes

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 2

LEARNING OBJECTIVES

3

After completing this session the participant will be able to respond to questions concerning the following key learning objectives: 1.

Identify a covered auto when presented the appropriate symbol information. (Page 13)

2.

Determine whether a newly-acquired auto is covered by the Business Auto Coverage Form. (Page 15)

3.

Identify the types of vehicles that are granted liability coverage and considered covered autos for Covered Auto Liability Coverage. (Page 17)

4.

Determine who is and who is not an insured in the Business Auto Coverage Form. (Page 25)

5.

Briefly describe the purpose for each of the endorsements used to modify the Who Is An Insured provision in the Business Auto Coverage Form. (Page 30)

6.

Given a loss situation, explain if any liability exclusions found in the Business Auto Coverage Form apply. (Page 41-49)

7.

Given a loading and unloading situation, determine whether coverage is provided under the BAP or CGL. (Page 43)

8.

Given a pollution incident, understand under what circumstances coverage is excluded and when the exceptions to the Pollution Exclusion apply. (Page 47)

9.

Given a loss situation, apply physical damage exclusions found in the Business Auto Coverage Form. (Page 59)

10.

Briefly explain the coverage afforded under Auto Medical Payments Coverage. (Page 73)

11.

Briefly describe the coverage afforded under Uninsured/Underinsured Motorist Coverage. (Page 77)

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 3

BUSINESS AUTO POLICY STRUCTURE

COMMON POLICY DECLARATIONS

THESE FIVE PARTS MAKE UP THE BUSINESS AUTO POLICY

COMMON POLICY CONDITIONS

BUSINESS AUTO DECLARATIONS

BUSINESS AUTO COVERAGE FORM

ENDORSEMENTS

©Society of CIC and Society of CISR 2000 by R. P. Bisaillon, Jr.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 4

I.

Commercial Auto Policy–General Information A.

3

Types of Commercial Auto Policies 1.

Business Auto Policy

2.

Auto Dealers Policy – A combination of

3.

a.

Business Auto Policy

b.

Commercial General Liability Policy covering premises, operations, and completed operations

Motor Carrier Policy Motor carriers that operate in interstate, intrastate, or both interstate and intrastate commerce may be subject to regulations with respect to registration and financial responsibility requirements

x

B.

The Truckers Form has been withdrawn in the states that have approved the ISO 2010 Revisions.

Policy Organization - See Exhibit

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 5

BUSINESS AUTO POLICY COVERAGES

LIABILITY COVERAGE

PHYSICAL DAMAGE COVERAGE

OWNED

COMPREHENSIVE

NON-OWNED

SPECIFIED CAUSES OF LOSS

HIRED OR BORROWED

COLLISION TOWING (PRIVATE PASSENGER AUTOS ONLY)

©Society of CIC and Society of CISR 2000 by R.P. Bisaillon, Jr.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 6

C.

Business Auto Coverages 1.

2.

3

Policy Coverage a.

Liability

b.

Physical Damage 1)

Comprehensive

2)

Specified causes of loss

3)

Collision

4)

Towing

Endorsement Coverages a.

Medical Payments

b.

Uninsured/Underinsured Motorists

c.

Others

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 7

BUSINESS AUTO COVERAGE FORM Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered. Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations. The words "we", "us" and "our" refer to the company providing this insurance. Other words and phrases that appear in quotation marks have special meaning. Refer to Section V – Definitions. Page 1 of 12 CA 00 01 10 13

SECTION V – DEFINITIONS A. "Accident" includes continuous or repeated exposure to the same conditions resulting in "bodily injury" or "property damage". B. "Auto" means: 1. A land motor vehicle, "trailer" or semitrailer designed for travel on public roads; or 2. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. However, "auto" does not include "mobile equipment". C. "Bodily injury" means bodily injury, sickness or disease sustained by a person, including death resulting from any of these. E. "Diminution in value" means the actual or perceived loss in market value or resale value which results from a direct and accidental "loss". Page 10 -12 of CA 00 01 10 13

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 8

II.

Definitions

3

A.

“You

B.

“Accident”

C.

“Auto” 1.

Designed for travel on public road

2.

Includes ANY land vehicle subject to financial responsibility

3.

Includes any attached machinery or equipment

4.

Does not include mobile equipment

D.

“Bodily Injury”

E.

“Diminution in Value”

F.

“Property Damage”

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 9

SECTION V – DEFINITIONS H. "Insured contract" means: 1. A lease of premises; 2. A sidetrack agreement; 3. Any easement or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad; 4. An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality; 5. That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another to pay for "bodily injury" or "property damage" to a third party or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement; or 6. That part of any contract or agreement entered into, as part of your business, pertaining to the rental or lease, by you or any of your "employees", of any "auto". However, such contract or agreement shall not be considered an "insured contract" to the extent that it obligates you or any of your "employees" to pay for "property damage" to any "auto" rented or leased by you or any of your "employees". An "insured contract" does not include that part of any contract or agreement: a. That indemnifies a railroad for "bodily injury" or "property damage" arising out of construction or demolition operations, within 50 feet of any railroad property and affecting any railroad bridge or trestle, tracks, roadbeds, tunnel, underpass or crossing; b. That pertains to the loan, lease or rental of an "auto" to you or any of your "employees", if the "auto" is loaned, leased or rented with a driver; or c. That holds a person or organization engaged in the business of transporting property by "auto" for hire harmless for your use of a covered "auto" over a route or territory that person or organization is authorized to serve by public authority. J. "Loss" means direct and accidental loss or damage. M. "Property damage" means damage to or loss of use of tangible property. P. "Trailer" includes semitrailer. Page 10 -12 of CA 00 01 10 13

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 10

G.

”Insured Contract” Adds to the CGL Definition: “That part of any contract or agreement entered into, as part of your business, by you or any of your employees pertaining to the rental or lease of any auto”

H.

Loss - both direct and accidental

I.

“Mobile Equipment” (same definition as found in Commercial General Liability Coverage Form)

complete definition of mobile equipment can be found in exhibits However, self-propelled vehicles with the following types of permanently attached equipment are not "mobile equipment" but will be considered "autos": a. Equipment designed primarily for: (1) Snow removal; (2) Road maintenance, but not construction or resurfacing; or (3) Street cleaning; b. Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and c. Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting or well-servicing equipment. However, "mobile equipment" does not include land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered "autos".

1.

CA 23 03 – Multi-Purpose Equipment The vehicles described in the Schedule are “mobile equipment” and not “autos”. Used to provide physical damage coverage to scheduled items under the BAP, while covering the liability under a CGL Policy.

2.

J.

CA 20 15 - Mobile Equipment a.

The vehicles described in the endorsement schedule will be considered covered “autos” and not “mobile equipment”.

b.

However, liability coverage does not apply to the operation of any attached machinery or equipment.

“Trailer” - includes semitrailer

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 11

3

COMMERCIAL AUTO CA 00 01 10 13

BUSINESS AUTO COVERAGE FORM Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered. Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations. The words "we", "us" and "our" refer to the company providing this insurance. Other words and phrases that appear in quotation marks have special meaning. Refer to Section V – Definitions. Symbol 1 Any "Auto" 2 Owned "Autos" Only 3 4

5

6

7

Owned Private Passenger "Autos" Only Owned "Autos" Other Than Private Passenger "Autos" Only Owned "Autos" Subject To Nofault Owned "Autos" Subject To A Compulsory Uninsured Motorists Law Specifically Described "Autos"

8

Hired "Autos" Only

9

Non-owned "Autos" Only

CA 00 01 10 13

SECTION I – COVERED AUTOS Item Two of the Declarations shows the "autos" that are covered "autos" for each of your coverages. The following numerical symbols describe the "autos" s that may be covered "autos". The symbols entered ntered next to a coverage on the Declarations designate the only "autos" that are design covered "autos". tos". A. Description on Of Covered Auto Designation Symbols

Description Of Covered Auto Symbols uto Designation De Symbo Only those "autos" you own (and (an for or Covered Cov Autos Liability Coverage any "trailers" you don't't own while atta attached d to power units you you own). This includes those "autos" autos" you acquire ownership ership of after the t policy begins. Only the private ivat passenger ssenger "autos" you own. n. This includes inc those private passengerr "autos" of after the policy begins. "autos you u acquire ownership ow autos" you own that are a not of the private passenger type (and Only those "autos" for Covered Autos Liability Liabilit Coverage verage any "trailers" you don't own while attached to power units you own). ). This Thi includes those "autos" not of the ownership of after the policy begins. private passenger type you acquire ac Only ly those "autos" you own tha that are required to have no-fault benefits in the state ate where they are licensed or principally garaged. This includes those "autos" utos" you acquire ownership of after the policy begins provided they are required equired to have no-fault benefits in the state where they are licensed or principally rincipa garaged. Only those "autos" you own that because of the law in the state where they are licensed or principally garaged are required to have and cannot reject Uninsured Motorists Coverage. This includes those "autos" you acquire Un ownership of after the policy begins provided they are subject to the same ow state uninsured motorists requirement. Only those "autos" described in Item Three of the Declarations for which a premium charge is shown (and for Covered Autos Liability Coverage any "trailers" you don't own while attached to any power unit described in Item Three). Only those "autos" you lease, hire, rent or borrow. This does not include any "auto" you lease, hire, rent or borrow from any of your "employees", partners (if you are a partnership), members (if you are a limited liability company) or members of their households. Only those "autos" you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes "autos" owned by your "employees", partners (if you are a partnership), members (if you are a limited liability company) or members of their households but only while used in your business or your personal affairs. © Insurance Services Office, Inc., 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 1 of 12

Page 12

III.

Covered Autos – Section I

Learning Objective 1: Identify a covered "auto" when presented the appropriate symbol information.

A.

Overview of Covered Auto Symbols

Symbol Description 1 Any "Auto"

APPLICABLE COVERAGES Liability Only

2

Owned "Autos" Only

Liability, Physical Damage, Medical Payments, Personal Injury Protection, Uninsured Motorists

3

Owned Private Passenger "Autos" Only

Liability, Physical Damage, Medical Payments, Personal Injury Protection, Uninsured Motorists, Towing

4

Owned "Autos" Other Than Private Passenger "Autos" Only

Liability, Physical Damage, Medical Payments, Personal Injury Protection, Uninsured Motorists

5

Owned "Autos" Subject To No-fault

Personal Injury Protection for autos required to have No-fault benefits in the state where they are licensed or principally garaged

6

Owned "Autos" Subject To A Compulsory Uninsured Motorists Law

Uninsured Motorists Coverage when the law in the state where the autos are licensed or principally garaged are required to have and cannot reject Uninsured Motorists Coverage

.4

Specifically Described "Autos"

Liability, Physical Damage, Medical Payments, Personal Injury Protection, Uninsured Motorists

8

Hired "Autos" Only—meaning autos the Named Insured leases, hires, rents or borrows—excluding those from employees, partners of a partnership, members of a limited liability company, or members of their households

9

Nonowned "Autos" Only—autos the Named Insured does not own, lease, hire rent or borrow. Includes autos of employees, partners, members, and their respective households

19

Mobile Equipment Subject To Compulsory Or Financial Responsibility Or Other Motor Vehicle Insurance Law Only

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Liability, Physical Damage

Liability Only

Liability, Physical Damage, Medical Payments, Personal Injury Protection, Uninsured Motorists

Page 13

3

SECTION I – COVERED AUTOS B. Owned Autos You Acquire After The Policy Begins 1. If Symbols 1, 2, 3, 4, 5, 6 or 19 are entered next to a coverage in Item Two of the Declarations, then you have coverage for "autos" that you acquire of the type described for the remainder of the policy period. 2. But, if Symbol 7 is entered next to a coverage in Item Two of the Declarations, an "auto" you acquire will be a covered "auto" for that coverage only if: a. We already cover all "autos" that you own for that coverage or it replaces an "auto" you previously owned that had that coverage; and b. You tell us within 30 days after you acquire it that you want us to cover it for that coverage. Page 2 of 12

© Insurance Services Office, Inc. 2011

CA 00 01 10 13

Partial copy of CA 99 54 10 13

COVERED AUTO DESIGNATION SYMBOL This endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM

With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by the endorsement. This endorsement changes the policy effective on the inception date of the policy unless another date is indicated below: Named Insured: Endorsement Effective Date: Section I – Covered Autos in the Business Auto and Motor Carrier Coverage Forms and Section I – Covered Autos Coverages in the Auto Dealers Coverage Form are amended by adding the following: Item Two of the Declarations shows the "autos" that are covered "autos" for each of your coverages. The following numerical symbols may be used (in addition to the numerical symbols described in the Coverage Form) to describe the "autos" that may be covered "autos". The entry of one of these symbols next to a coverage on the Declarations will designate the only "autos" that are covered "autos". Symbol 10

CA 99 54 10 13

Description Of Covered Auto Designation Symbols For use with the Business Auto Coverage Form =

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 1 of 2

Page 14

Learning Objective 2: Determine whether a newly-acquired auto is covered by the Business Auto Coverage Form.

B.

3

Newly Acquired 1.

2.

If Symbols 1, 2, 3, 4, 5, 6, 19 are used a.

In Item Two of the declarations to trigger coverage

b.

Newly acquired autos of the same described type automatically have that coverage for the remainder of the policy period

BUT, if Symbol 7 is used: a.

In Item Two of the declarations to trigger coverage

b.

A newly acquired auto has coverage only if: 1)

Insurer already covers all owned “autos” for that specific coverage, or it is a replacement for an “auto” that had that coverage, and

3.

2)

The insured notifies the insurer within 30 days after the acquisition that they want that coverage

3)

If you have symbol 7, always consider symbol 19

Covered Auto Designation Symbol (CA 99 54) There is a way you can customize coverage for a client by using additional symbols. You attach the endorsement CA 99 54— Covered Auto Designation Symbol to describe the vehicles you wish to cover. For example, your insured may want to have collision coverage only on those vehicles that are fairly new. You would use Symbol 10, and could define it as follows: Only those “autos” you own with a model year of 2001 and newer. This includes those “autos” you acquire ownership of after the policy begins

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 15

SECTION I – COVERED AUTOS C. Certain Trailers, Mobile Equipment And Temporary Substitute Autos If Covered Autos Liability Coverage is provided by this Coverage Form, the following types of vehicles are also covered "autos" for Covered Autos Liability Coverage: 1. "Trailers" with a load capacity of 2,000 pounds or less designed primarily for travel on public roads. 2. "Mobile equipment" while being carried or towed by a covered "auto". 3. Any "auto" you do not own while used with the permission of its owner as a temporary substitute for a covered "auto" you own that is out of service because of its: a. Breakdown; b. Repair; c. Servicing; d. "Loss"; or e. Destruction. Page 2 of 12

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

CA 00 01 10 13

Page 16

Learning Objective 3: Identify the types of vehicles that are granted liability coverage and considered covered autos for Covered Auto Liability Coverage

C.

Certain Trailers, Mobile Equipment, And Temporary Substitute Autos Liability is provided for the following vehicles if it is provided by the policy: 1.

Trailers with a load capacity of 2,000 pounds or less that are designed primarily for travel on public roads. There is no automatic physical damage

2.

Mobile Equipment while being carried or towed by a covered auto. If mobile equipment is moving under its own power (on or off a roadway) liability coverage is provided by the CGL policy

3.

Temporary Substitute Autos a.

ANY non-owned auto (could be a gasoline tanker truck) while used with the permission of its owner as a temporary substitute of a covered auto you own

b.

Because your covered auto is out of service for one of five reasons (does not mean you want to borrow a friend’s auto because it has a great sound system)

c.

1)

breakdown

2)

repair

3)

servicing

4)

loss

5)

destruction

Does not include a rental car unless the rental is to replace a “covered auto” that is broken down, being repaired, etc.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 17

3

ITEM TWO Schedule Of Coverages And Covered Autos This policy provides only those coverages where a charge is shown in the premium column below. Each of these coverages will apply only to those "autos" shown as covered "autos". "Autos" are shown as covered "autos" for a particular coverage by the entry of one or more of the symbols from the Covered Autos section of the Business Auto Coverage Form next to the name of the coverage. Coverages Covered Autos Liability

Covered Autos 2, 8, 9

Personal Injury Protection (Or Equivalent No-fault Coverage) Added Personal Injury Protection (Or Equivalent Added No-fault Coverage) Property Protection Insurance (Michigan Only) Auto Medical Payments Medical Expense And Income Loss Benefits (Virginia Only) Uninsured Motorists Underinsured Motorists (When Not Included In Uninsured Motorists Coverage) Physical Damage e Comprehensive Coverage

Limit $

Premium $

Separately Stated In Each h Personal Pers Injury Protection Endorsement Minus nt Min $ Deductible ch Added Per Separately Stated In Each Personal Injury Protection Endorsement ment

$

Separately ately Stated S ed In The T Property Protection Endorsement Minus ection Insurance Insu ce En $ Deductible Dedu ble For Each Accident Acc d $ Each Insured Ins

$

$

$

S Separately ately Stated In The Medical edical Expense And Income ome Loss Benefits Endorsement d

$

2

$ $

$ $

3

Actual Cash Ca Value Or Cost Of Repair Whichever Deductible cheve Is Less, Minus $ For F Each Covered Auto, But No Deductible Applies To Loss Caused By Fire Or App Lightning Ligh See Item Four for Hired or Borrowed Autos. Actual Cash Value Or Cost Of Repair, Whichever Is Less, Minus $ Deductible For Each Covered Auto For Loss Caused By Mischief Or Vandalism See Item Four for Hired or Borrowed Autos. Actual Cash Value Or Cost Of Repair, Whichever Is Less, Minus $ Deductible For Each Covered Auto See Item Four for Hired or Borrowed Autos.

$

$ For Each Disablement Of A Private Passenger Auto

$

Physical sical Damage ified Causes Of Specified Loss Coverage overage

4

Physical Damage Collision Coverage ge

7

Physical Damage Towing And Labor

3

$

$

Premium For Endorsements $ Estimated Total Premium $ *This policy may be subject to final audit.

CA DS 03 10 13

© Insurance Services Office, Inc., 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 18

COVERED AUTOS – REVIEW Your client Mar-Jim’s Inc. (Named Insured) is a successful grocery store chain that owns six private passenger autos and fifteen trucks of varying sizes. Based on the Declarations Page opposite, for each situation below state what coverages apply for the Named Insured. Explain you answer. 1.

On February 15, Mar-Jim’s bought a new BMW, but did not notify you. On March 1, accident occurred.

2.

On April 1, Mar-Jim’s bought two additional delivery trucks. An accident occurred on May 29.

3.

In July, Bob Jimson, CEO went to the annual supermarket convention in Seattle where he rented a private passenger type car. While there Bob had an accident.

4.

In September, Danny Marker, (VP) had an accident while driving his own auto on company business.

5.

A scheduled truck was pulling a small utility trailer to the construction site for a new store. The trailer detached and struck three parked cars.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 19

3

DETERMINING COVERAGE UNDER COVERED AUTO LIABILITY COVERAGE When answering questions regarding whether or not specific persons, organizations or situations are covered for liability by a Business Auto Form, you may ask yourself three questions, in the following order: 1.

Is the auto involved a covered auto under the Business Auto Form in question;

2.

Is the person seeking coverage an insured, and

3.

Does any liability exclusion apply to the situation?

If the answers to the three questions are yes, yes and no in that order, there is coverage. (See the chart on the facing page.) The answer to question 1. is found in the symbols and in addition it is sometimes necessary to refer to the following items on page 2 of the Business Auto Coverage Form: B. Owned Autos You Acquire After the Policy Begins, and C. Certain Trailers, Mobile Equipment and Temporary Substitute Autos The answer to question 2. is found in the definition of Who Is An Insured, on page 2 of the Business Auto Coverage Form. Remember to consider individuals separately, one at a time. For some situations the policy will provide coverage for some persons and/or organizations and deny coverage to other persons and/or organizations. The answer to question 3. is found, of course, in the liability exclusions on pages 3 through 5 of the Business Auto Coverage Form.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 20

DETERMINING COVERAGE UNDER COVERED AUTO LIABILITY COVERAGE

Is the auto involved a covered auto under the Business Auto Coverage Form?

NO

3

N O

YES

Is the person seeking coverage an "insured"?

NO

YES

Does any Liability Coverage exclusion apply to the situation?

YES

C O V E R A G E

NO

COVERED

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 21

SECTION II – COVERED AUTOS LIABILITY COVERAGE A. Coverage We will pay all sums an "insured" legally must pay as damages because of "bodily injury" or "property damage" to which this insurance applies, caused by an "accident" and resulting from the ownership, maintenance or use of a covered "auto". We will also pay all sums an "insured" legally must pay as a "covered pollution cost or expense" to which this insurance applies, caused by an "accident" and resulting from the ownership, maintenance or use of covered "autos". However, we will only pay for the "covered pollution cost or expense" if there is either "bodily injury" or "property damage" to which this insurance applies that is caused by the same "accident". We have the right and duty to defend any "insured" against a "suit" asking for such damages or a "covered pollution cost or expense". However, we have no duty to defend any "insured" against a "suit" seeking damages for "bodily injury" or "property damage" or a "covered pollution cost or expense" to which this insurance does not apply. We may investigate and settle any claim or "suit" as we consider appropriate. Our duty to defend or settle ends when the Covered Autos Liability Coverage Limit of Insurance has been exhausted by payment of judgments or settlements. Page 2 of 12

© Insurance Services Office, Inc. 2011

CA 00 01 10 13

SECTION V– DEFINITIONS (Partial definition) D. "Covered pollution cost or expense" means any cost or expense arising out of: 1. Any request, demand, order or statutory or regulatory requirement that any "insured" or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, "pollutants"; or 2. Any claim or "suit" by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of, "pollutants". Page 10 of 12

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

CA 00 01 10 13

Page 22

IV.

Covered Autos Liability Coverage - Section II A.

B.

Insuring Agreement Promises to pay legal obligations of An "Insured" for: 1.

"Bodily Injury"

2.

"Property Damage"

3.

"Covered Pollution Cost or Expense" a.

Caused by an “accident” and resulting from the ownership maintenance or use of a covered “auto”, and

b.

If there is either BI or PD to which this insurance applies that is caused by the same accident

Defense 1.

The company can settle or defend any suit they choose

2.

There is no duty to defend if there is no coverage!

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 23

3

SECTION II – COVERED AUTOS LIABILITY COVERAGE A. Coverage 1. Who Is An Insured The following are "insureds": a. You for any covered "auto". b. Anyone else while using with your permission a covered "auto" you own, hire or borrow except: (1) The owner or anyone else from whom you hire or borrow a covered "auto". This exception does not apply if the covered "auto" is a "trailer" connected to a covered "auto" you own. (2) Your "employee" if the covered "auto" is owned by that "employee" or a member of his or her household. (3) Someone using a covered "auto" while he or she is working in a business of selling, servicing, repairing, parking or storing "autos" unless that business is yours. (4) Anyone other than your "employees", partners (if you are a partnership), members (if you are a limited liability company) or a lessee or borrower or any of their "employees", while moving property to or from a covered "auto". (5) A partner (if you are a partnership) or a member (if you are a limited liability company) for a covered "auto" owned by him or her or a member of his or her household. c. Anyone liable for the conduct of an "insured" described above but only to the extent of that liability. Page 2-3 of 12

© Insurance Services Office, Inc. 2011

CA 00 01 10 13

SECTION V– DEFINITIONS F. "Employee" includes a "leased worker". "Employee" does not include a "temporary worker". I. "Leased worker" means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm to perform duties related to the conduct of your business. "Leased worker" does not include a "temporary worker". O. "Temporary worker" means a person who is furnished to you to substitute for a permanent "employee" on leave or to meet seasonal or short-term workload conditions. Pages 10 -12

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

CA 00 01 10 13

Page 24

Learning Objective 4: Determine who is and who is not an insured in the Business Auto Coverage Form.

V.

Who Is An Insured – Covered Autos Liability Coverage A.

The person or organization named on the Declaration Page (you and your) for any covered auto

B.

Others while using a covered auto (that you own, hire or borrow) with permission, except

C.

1.

The owner of a hired or borrow covered auto unless covered auto is a trailer connected to a covered auto you own

2.

An employee using a covered auto owned by the employee or a member of the employee’s household

3.

Anyone using a covered auto while working in an auto type business, unless that is your business

4.

Non-employees for loading and unloading and under certain conditions employees when loading and unloading

5.

Partners/ members for autos owned by them individually or owned by a member of their household

Vicarious Liability for an Insured 1.

Anyone liable for the conduct of an insured

2.

Others can be named in suits such as: a.

A general contractor for whom the insured is working

b.

A charitable organization for which the insured is doing work

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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WHO IS AN INSURED?

NAMED INSURED FOR A COVERED AUTO

PERMISSIVE USER OF A COVERED AUTO

VICARIOUS RESPONSIBILITY

EXCEPT THE OWNER OR ANYONE ELSE FROM WHOM YOU HIRE OR BORROW A COVERED “AUTO” ** EMPLOYEE IF THE COVERED AUTO IS OWNED BY THE EMPLOYEE OR A MEMBER OF THEIR HOUSEHOLD ** ANYONE USING A COVERED AUTO WHILE WORKING IN THE AUTO BUSINESS UNLESS THAT IS YOUR BUSINESS

**

This coverage may be purchased by endorsement.

LOADING AND UNLOADING (Under certain circumstances) PARTNER/MEMBER IF THE COVERED AUTO IS OWNED BY THE PARTNER/MEMBER OR A MEMBER OF THEIR HOUSEHOLD**

© Society of CIC and Society of CISR 2000 R.P. Bisaillon, Jr.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 26

BAP - Who Is Insured – Review You have written several Business Auto policies with Symbol 1 (any auto) for liability coverage. For each of the following scenarios, state who is insured by the Business Auto Policy, and give a reason for your answer. The BAP Named Insured will be the entity in bold type. 1.

Elroy Inc. asked one of its employees, Judy, to run to pick up supplies with one of the company pick up trucks. While en route to the shop, Judy caused an accident resulting in extensive damage, as well as injury to others.

2.

Coe & Company is a partnership specializing in corporate tax work. Horatio Coe, while driving his own personal car to a client’s office caused a covered accident.

3.

After completing repairs, Mike Mechanic, an employee of Repairs R Us, testdrove one of Davy Drywall’s vans. During the test drive Mike took a corner too fast, spun out and hit two parked cars.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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WHO IS AN INSURED?

NAMED INSURED FOR A COVERED AUTO

PERMISSIVE USER OF A COVERED AUTO

VICARIOUS RESPONSIBILITY

EXCEPT THE OWNER OR ANYONE ELSE FROM WHOM YOU HIRE OR BORROW A COVERED “AUTO” ** EMPLOYEE IF THE COVERED AUTO IS OWNED BY THE EMPLOYEE OR A MEMBER OF THEIR HOUSEHOLD ** ANYONE USING A COVERED AUTO WHILE WORKING IN THE AUTO BUSINESS UNLESS THAT IS YOUR BUSINESS

**

This coverage may be purchased by endorsement.

LOADING AND UNLOADING (Under certain circumstances) PARTNER/MEMBER IF THE COVERED AUTO IS OWNED BY THE PARTNER/MEMBER OR A MEMBER OF THEIR HOUSEHOLD**

© Society of CIC and Society of CISR 2000 R.P. Bisaillon, Jr.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 28

BAP - Who Is Insured – Review You have written several Business Auto policies with Symbol 1 (any auto) for liability coverage. For each of the following scenarios, state who is insured by the Business Auto Policy, and give a reason for your answer. The BAP Named Insured will be the entity in bold type. 4.

Ray Lightning, an employee of Rosie’s Rivets, was driving a car registered to his father-in-law to call on clients. It was a snow morning, and Ray caused a serious accident in which several people were injured.

5.

Tina’s Office Supplies regularly delivers its products to JAM, Inc. During one of the deliveries, two incidents occurred: Tina’s employee Pam was moving boxes of paper using a dolly, when a box fell and hit an innocent bystander. On the other side of the building, Ashley who was an employee of JAM, Inc. did exactly the same thing, this time injuring another bystander.

6.

The CEO of Kozy Kennels, Inc., had one of his employees, Benny Barker, take a van to spend a day doing volunteer work for the Society for the Prevention of Cruelty to Animals (SPCA). During the day he had an accident in which he injured a pedestrian.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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Learning Objective 5: Briefly describe the purpose for each of the endorsements used to modify the Who Is An Insured provision in the Business Auto Coverage Form. D.

Additional Insureds for Liability – Added by Endorsement 1.

Lessor – Additional Insured & Loss Payee (CA 20 01) a.

Described leased autos are treated as owned autos

b.

Includes the lessor under the Who Is Insured provision

c.

Includes a loss payable clause applicable to physical damage

Partial copy of CA 20 01 10 13 A. Coverage 1. Any "leased auto" designated or described in the Schedule will be considered a covered "auto" you own and not a covered "auto" you hire or borrow. 2. For a "leased auto" designated or described in the Schedule, the Who Is An Insured provision under Covered Autos Liability Coverage is changed to include as an "insured" the lessor named in the Schedule. However, the lessor is an "insured" only for "bodily injury" or "property damage" resulting from the acts or omissions by: a. You; b. Any of your "employees" or agents; or c. Any person, except the lessor or any "employee" or agent of the lessor, operating a "leased auto" with the permission of any of the above. 3. The coverages provided under this endorsement apply to any "leased auto" described in the Schedule until the expiration date shown in the Schedule, or when the lessor or his or her agent takes possession of the "leased auto", whichever occurs first.

2.

Employees as Insureds (CA 99 33) a.

Changes Who Is Insured to include an employee using his or her own auto

b.

Prohibits the commercial auto carrier from subrogating against the employee if their negligence was the cause of the loss

Partial copy of CA 99 33 10 13 The following is added to the Section II – Covered Autos Liability Coverage, Paragraph A.1. Who Is An Insured provision: Any "employee" of yours is an "insured" while using a covered "auto" you don't own, hire or borrow in your business or your personal affairs.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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3.

Employee Hired Autos (CA 20 54) An employee of yours is an insured while operating an auto hired or rented under a contract or agreement in that employee’s name, with your permission, while performing duties related to the conduct of your business

Partial copy of CA 20 54 10 13 A. Changes In Covered Autos Liability Coverage The following is added to the Who Is An Insured Provision: An "employee" of yours is an "insured" while operating an "auto" hired or rented under a contract or agreement in an "employee's" name, with your permission, while performing duties related to the conduct of your business. B. Changes In General Conditions Paragraph 5.b. of the Other Insurance Condition in the Business Auto and Auto Dealers Coverage Forms and Paragraph 5.f. of the Other Insurance – Primary And Excess Insurance Provisions Condition in the Motor Carrier Coverage Form are replaced by the following: For Hired Auto Physical Damage Coverage, the following are deemed to be covered "autos" you own: 1. Any covered "auto" you lease, hire, rent or borrow; and 2. Any covered "auto" hired or rented by your "employee" under a contract in an "employee's" name, with your permission, while performing duties related to the conduct of your business. However, any "auto" that is leased, hired, rented or borrowed with a driver is not a covered "auto".

4.

Designated Insured (CA 20 48) a.

An endorsement developed by ISO to allow insurers to respond to requests to add an entity’s name to a BAP as an additional insured

b.

Grants no additional coverage

Partial copy of CA 20 48 10 13 Each person or organization shown in the Schedule is an "insured" for Covered Autos Liability Coverage, but only to the extent that person or organization qualifies as an "insured" under the Who Is An Insured provision contained in Paragraph A.1. of Section II – Covered Autos Liability Coverage in the Business Auto and Motor Carrier Coverage Forms and Paragraph D.2. of Section I – Covered Autos Coverages of the Auto Dealers Coverage Form.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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COMMERCIAL AUTO CA 99 17 10 13 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

INDIVIDUAL NAMED INSURED This endorsement modifies insurance provided under the following: BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by the endorsement. If you are an individual, the policy is changed as follows: A. Changes In Covered Autos Liability Coverage 1. The Fellow Employee Exclusion does not apply to "bodily injury" to your or anyy "family member's" fellow "employees". 2. Personal Auto Coverage If any "auto" you own of the e "private "pr passenger type" is a covered "auto" uto" under und Covered Autos Liability Coverage: ge: a. The following is added to the Who Is An Insured provision: on: "Family members" s" are "insureds" for any covered "auto" o" you own of the "private passenger type" pe" and any other "auto" described in Paragraph describ ragrap 2.b. of this endorsement. orsement b. Any "auto"" you don't own ow is a covered cove "auto" while e being used by you u or by b any "family member" except: ((1) Any "auto" owned by any "family "f members". (2) Any "auto" furnished fu nishe or available for your or any "family member's" "fam regular use.. (3) Any "auto" used by you or by any of your "family while working family members" me in a busines business of selling, servicing, repairing or parking "autos". (4) Any "auto", other than an "auto" of the "private passenger type", used by you or any of your "family members" while working in any other business or occupation.

CA 99 17 10 13

c. The and, if forming e Pollution Exclusion Excl a partt of the policy, policy the Nuclear Energy Liability Exclusion Exclusio (Broad Form), do not apply to any covered "auto" of the c au "private passenger enger type". d. The following exclusion xclusion is added and applies only to "private vate passenger type" covered vered "autos": This insurance nsurance does do not apply to: "Bodily injury" jury" or "property damage" for which an "insured" under the policy is also an "insured" under a nuclear energy liability policy or would be an "insured" but for its termination upon its "in exhaustion of its limit of liability. A ex nuclear energy liability policy is a policy issued by the Nuclear Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or any of their successors. This exclusion does not apply to "autos" registered or principally garaged in New York. B. Changes In Physical Damage Coverage Personal Auto Coverage If any "auto" you own of the "private passenger type" is a covered "auto" under Physical Damage Coverage, a "non-owned auto" will also be considered a covered "auto". However, the most we will pay for "loss" to a "non-owned auto" which is a "trailer" is $500. C. Additional Definitions As used in this endorsement: 1. "Family member" means a person related to you by blood, marriage or adoption who is a resident of your household, including a ward or foster child.

© Insurance Services Office, Inc., 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 1 of 2

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5.

Individual Named Insured Endorsement (CA 99 17) This endorsement is used when the Named Insured is an individual who insures all the personally owned autos under the Business Auto Policy, and does not have a Personal Auto Policy a.

The fellow employee exclusion is deleted

b

If any “auto” you own of the private passenger type is a covered “auto” for liability: 1)

Family members are insureds for owned private passenger autos and for those autos listed in the next section

2)

Covers use of non-owned autos for “you” or “family members” except:

3)

a)

Owned by a family member

b)

Furnished or available for regular use

c)

Auto business

d)

Business use of any vehicle other than a private passenger auto

No pollution exclusion if the auto is a “private passenger, type” auto

c.

Physical Damage Coverage for non-owned “private passenger types”

d.

“Private Passenger Type” – defined to include any covered auto you own of the pick-up or van type not used for business purposes

e.

Premium Charge = $0

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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2. The words "you" and "your" include your spouse if a resident of the same household except for notice of cancellation. 3. When the phrase "private passenger type" appears in quotation marks it includes any covered "auto" you own of the pickup or van type not used for business purposes, other than farming or ranching.

Page 2 of 2

4. "Non-owned auto" means any "private passenger type" "auto", pickup, van or "trailer" not owned by or furnished or available for the regular use of you or any "family member", while it is in the custody of or being operated by you or any "family member".

© Insurance Services Office, Inc Inc., 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

CA 99 17 10 13

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POLICY NUMBER:

COMMERCIAL AUTO CA 99 10 10 13 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

DRIVE OTHER CAR COVERAGE – BROADENED COVERAGE FOR NAMED INDIVIDUALS This endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, t, the provisions of the Coverage Form apply unless modified by the endorsement. This endorsement changes the policy effective on the inception date is ince on date of the policy cy unless another a indicated below. Named Insured: Endorsement Effective Date: SCHEDULE SCHED Name Of Individual: Covered Autos Liability Coverage Limit: $ Premium: $ t: Auto Medical Payments yments Limit: L $ Premium: $ Comprehensive Deductible: Deduc : $ Premium: $ Collision sion Deductible: eductible $ Premium: $ Uninsured nsure Motorists Limit: $ Premium: $ Underinsured erins Motorists s Limit: Li $ Premium: $ Information ation required to co complete plete this Schedule, if not shown above, will be shown in the Declarations. Note: When Uninsured Motorists oto Coverage is provided at limits higher than the basic limits required by a financial responsibility law, Underinsured Motorists Coverage is included, unless otherwise noted. If Underinsured Motorists is provided as a separate coverage, make appropriate entry in the rists Coverage Cov Schedule above.

CA 99 10 10 13

© Insurance Services Office, Inc., 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 1 of 2

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A. This endorsement changes only those coverages where a premium is shown in the Schedule. B. Changes In Covered Autos Liability Coverage 1. Any "auto" you don't own, hire or borrow is a covered "auto" while being used by any individual named in the Schedule or by his or her spouse while a resident of the same household except: a. Any "auto" owned by that individual or by any member of his or her household. b. Any "auto" used by that individual or his or her spouse while working in a business of selling, servicing, repairing or parking "autos". 2. The following is added to Who Is An n Insured: Any individual named in the Schedule and his or her spouse, while a resident sident of the same household, are "insureds" ds" while using any covered "auto" described ibed in Paragraph B.1. of this endorsement.. C. Changes In Auto Medical cal Payments And Uninsured And Underinsured rinsured Motorists Coverages The following is added to o Who Is An Insured: Any individual named in the Schedule t edule and his or her "familyy members" are a "insureds" nsured while "occupying" or while a pedestrian when occ pedest being ng struck struc by any ny "auto" you don’t own wn except: cept: Any "auto" owned by that individual or by any y "au at ind "family mily member".

Page 2 of 2

D. Changes In Physical Damage Coverage Any private passenger type "auto" you don't own, hire or borrow is a covered "auto" while in the care, custody or control of any individual named in the Schedule or his or her spouse while a resident of the same household except: 1. Any "auto" owned by that individual or by any member ber of his or her household. 2. Any "auto" by that individual or his auto" used u or her while working in a business er spouse spo of selling, elling, servicing, ng repairing or parking "autos". ". E. Additional Definition As used in this endorsement: endors "Family Family member" means a person perso related to the individual named indivi d in the Schedule by blood, marriage or adoption blo marri do ion who is a resident including a of the individual's ndivid s household, hou ward or foster child.

© Insurance Services Office, Inc., 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

CA 99 10 10 13

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6.

Drive Other Car Coverage Endorsement (CA 99 10) This endorsement is used for persons other than those named on the policy declaration page who are furnished company cars and have no Personal Auto Policy. These individuals need coverage for their personal use of nonowned autos a.

Liability coverage is provided for any non-owned auto that is hired or borrowed except: 1)

Autos owned by member of the insured’s household

2)

Any auto used while working in an auto business

b.

Family members are not automatically covered for Liability – they must be named for coverage to apply to them

c.

May extend liability, physical damage, medical payments, and/or underinsured/uninsured coverage to the individual (and resident spouse) named in the endorsement

d.

Medical Payments and Uninsured/Underinsured Motorist coverage may be provided to the named individual and “family members”

e.

Physical damage is covered for non-owned autos while in the care, custody, or control of the named individual (resident spouse) except: 1)

Autos owned by member of the insured’s household

2)

Any auto used while working in an auto business

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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SECTION II – COVERED AUTOS LIABILITY COVERAGE A. Coverage 2. Coverage Extensions a. Supplementary Payments We will pay for the "insured": (1) All expenses we incur. (2) Up to $2,000 for cost of bail bonds (including bonds for related traffic law violations) required because of an "accident" we cover. We do not have to furnish these bonds. (3) The cost of bonds to release attachments in any "suit" against the "insured" we defend, but only for bond amounts within our Limit of Insurance. (4) All reasonable expenses incurred by the "insured" at our request, including actual loss of earnings up to $250 a day because of time off from work. (5) All court costs taxed against the "insured" in any "suit" against the "insured" we defend. However, these payments do not include attorneys' fees or attorneys' expenses taxed against the "insured". (6) All interest on the full amount of any judgment that accrues after entry of the judgment in any "suit" against the "insured" we defend, but our duty to pay interest ends when we have paid, offered to pay or deposited in court the part of the judgment that is within our Limit of Insurance. These payments will not reduce the Limit of Insurance. b. Out-of-state Coverage Extensions While a covered "auto" is away from the state where it is licensed, we will: (1) Increase the Limit of Insurance for Covered Autos Liability Coverage to meet the limits specified by a compulsory or financial responsibility law of the jurisdiction where the covered "auto" is being used. This extension does not apply to the limit or limits specified by any law governing motor carriers of passengers or property. (2) Provide the minimum amounts and types of other coverages, such as no-fault, required of out-of-state vehicles by the jurisdiction where the covered "auto" is being used. We will not pay anyone more than once for the same elements of loss because of these extensions. CA 00 01 10 13

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 3 of 12

Page 38

VI.

Coverage Extensions A.

Six Supplementary Payments are paid in addition to limit of insurance 1.

Expenses incurred by the company

2.

Up to $2,000 for cost of bail bonds related to an accident

3.

Cost of bonds to release attachments

4.

Expenses of an insured at insurance company request, including up to $250 per day because of time off from work

5.

All court costs taxed against the insured as the result of a defended suit. x

6.

B.

Does not include attorneys' fees or attorneys' expenses

Post judgment interest on dollar amounts up to the limit of insurance. Note: Pre-judgment interest is not a supplementary payment

Out of State Coverage While a covered auto is away from the state where it is licensed, the policy will respond as required by the jurisdiction where the auto is being used 1.

Higher limits necessary to comply with financial responsibility laws or

2.

Additional benefits such as mandatory Personal Injury Protection to comply with a No Fault law

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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SECTION II – COVERED AUTOS LIABILITY COVERAGE B. Exclusions This insurance does not apply to any of the following: 1. Expected Or Intended Injury "Bodily injury" or "property damage" expected or intended from the standpoint of the "insured". 2. Contractual Liability assumed under any contract or agreement. But this exclusion does not apply to liability for damages: a. Assumed in a contract or agreement that is an "insured contract", provided the "bodily injury" or "property damage" occurs subsequent to the execution of the contract or agreement; or b. That the "insured" would have in the absence of the contract or agreement. 3. Workers' Compensation Any obligation for which the "insured" or the "insured's" insurer may be held liable under any workers' compensation, disability benefits or unemployment compensation law or any similar law. 4. Employee Indemnification And Employer's Liability "Bodily injury" to: a. An "employee" of the "insured" arising out of and in the course of: (1) Employment by the "insured"; or (2) Performing the duties related to the conduct of the "insured's" business; or b. The spouse, child, parent, brother or sister of that "employee" as a consequence of Paragraph a. above. This exclusion applies: (1) Whether the "insured" may be liable as an employer or in any other capacity; and (2) To any obligation to share damages with or repay someone else who must pay damages because of the injury. But this exclusion does not apply to "bodily injury" to domestic "employees" not entitled to workers' compensation benefits or to liability assumed by the "insured" under an "insured contract". For the purposes of the Coverage Form, a domestic "employee" is a person engaged in household or domestic work performed principally in connection with a residence premises. 5. Fellow Employee "Bodily injury" to: a. Any fellow "employee" of the "insured" arising out of and in the course of the fellow "employee's" employment or while performing duties related to the conduct of your business; or b. The spouse, child, parent, brother or sister of that fellow "employee" as a consequence of Paragraph a. above. CA 00 01 10 13

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 3-4 of 12

Page 40

Learning Objective 6: Given a loss situation, explain if any liability exclusions found in the Business Auto Coverage Form apply.

VII.

Exclusions-Liability Coverage A.

Expected or Intended Bodily Injury or Property Damage If the insured expects or intends to cause bodily injury or property damage, then the policy does not provide coverage. The CGL has an exception for bodily injury resulting from reasonable force to protect persons or property, but there is no such exception in the BAP

B.

Contractual Liability This BAP does not cover liability assumed under any contract or agreement, other than liability assumed in an “insured contract.”

C.

1.

There is no coverage for damage to a rented vehicle

2.

All other policy exclusions still apply

Workers Compensation, Disability Benefits, or Unemployment Compensation Law or Similar Law The BAP will not cover any obligation of the insured to provide benefits under workers compensation, disability benefits, or unemployment compensation law

D.

Employee Indemnification and Employer’s Liability Any obligation of the “insured” to pay for liability arising out of work-related accidents to an employee is not covered. However, this exclusion doe s not apply to: 1. domestic employees not entitled to WC benefits; or 2. liability the “insured” assumed under an “insured” contract

E.

Fellow Employee Liability for bodily injury arising out of an auto accident in which one employee negligently injures a fellow employee is not covered 1. 2.

Fellow Employee Coverage (CA 20 55) removes this exclusion Fellow Employee Coverage (CA 20 56) removes this exclusion for specified employee(s), job title(s), or position(s)

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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SECTION II – COVERED AUTOS LIABILITY COVERAGE B. Exclusions This insurance does not apply to any of the following: 6. Care, Custody Or Control "Property damage" to or "covered pollution cost or expense" involving property owned or transported by the "insured" or in the "insured's" care, custody or control. But this exclusion does not apply to liability assumed under a sidetrack agreement. 7. Handling Of Property "Bodily injury" or "property damage" resulting from the handling of property: a. Before it is moved from the place where it is accepted by the "insured" for movement into or onto the covered "auto"; or b. After it is moved from the covered "auto" to the place where it is finally delivered by the "insured". 8. Movement Of Property By Mechanical Device "Bodily injury" or "property damage" resulting from the movement of property by a mechanical device (other than a hand truck) unless the device is attached to the covered "auto". Page 4 of 12

© Insurance Services Office, Inc. 2011

CA 00 01 10 13

EXAMPLE Exposure

Policy

Ozzie’s Office Supply store stacks boxes by the front door for pickup. The top two boxes fall, injuring a pedestrian.

Ozzie’s CGL provides coverage because the goods have not been accepted for movement onto an auto.

Ozzie’s driver begins moving the boxes onto the delivery truck. He drops one of the boxes and injures another pedestrian.

Ozzie’s BAP provides coverage because the goods have been accepted for movement onto an auto.

While driving across town, one of the boxes falls off the truck, causing extensive damage to the parked Jaguar it hit.

Ozzie’s BAP provides coverage because the goods have been accepted for movement onto an auto, are in transit, and have not been finally delivered.

After final delivery of the shipment, the improperly stacked boxes fall and damage some computer equipment at the purchaser’s office.

Ozzie’s BAP no longer provides coverage because the goods have been finally delivered by the insured. This represents liability arising out of a completed operation that Ozzie’s CGL will cover.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 42

Learning Objective 7: Given a loading and unloading situation, determine whether coverage is provided under the BAP or CGL.

F.

Care, Custody, Control This exclusion states that damage to property owned by, being transported by, or in the care, custody or control of the “insured” is not covered. This includes any cargo. There are special inland marine policies to cover these exposures

G.

Handling of Property – this BAP does not cover bodily injury or property damage resulting from the handling of property: 1.

Before it is moved from the place where it is accepted by the insured for movement into or onto the covered auto; or

2.

After it is moved from the covered auto to the place where it is finally delivered by the insured The BAP and CGL dovetail the treatment of loading and unloading. The CGL stops when goods are accepted for movement onto the auto, the BAP covers the exposure associated with loading, in transit, and unloading, and the BAP continues until the goods are finally delivered

H.

Movement of Property by a Mechanical Device This insurance does not apply to bodily injury or property damage resulting from the movement of property by a mechanical device (other than a hand truck) unless the device is attached to the covered auto

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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SECTION II – COVERED AUTOS LIABILITY COVERAGE B. Exclusions This insurance does not apply to any of the following: 9. Operations "Bodily injury" or "property damage" arising out of the operation of: a. Any equipment listed in Paragraphs 6.b. and 6.c. of the definition of "mobile equipment"; or b. Machinery or equipment that is on, attached to or part of a land vehicle that would qualify under the definition of "mobile equipment" if it were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. 10. Completed Operations "Bodily injury" or "property damage" arising out of your work after that work has been completed or abandoned. In this exclusion, your work means: a. Work or operations performed by you or on your behalf; and b. Materials, parts or equipment furnished in connection with such work or operations. Your work includes warranties or representations made at any time with respect to the fitness, quality, durability or performance of any of the items included in Paragraph a. or b. above. Your work will be deemed completed at the earliest of the following times: (1) When all of the work called for in your contract has been completed; (2) When all of the work to be done at the site has been completed if your contract calls for work at more than one site; or (3) When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project. Work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete, will be treated as completed. Page 4-5 of 12

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

CA 00 01 10 13

Page 44

I.

Operations 1.

3

The operation of self propelled vehicles with permanently attached: a.

Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers

b.

Air compressors

c.

Pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting or well servicing equipment is not covered by the BAP

d.

Financial responsibility required

is NOT covered by the BAP.

2.

J.

The movement over the road or the locomotion (from point to point) of this equipment is covered by the BAP

Completed Operations Not intended to be covered by the BAP (look to the CGL)

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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SECTION II – COVERED AUTOS LIABILITY COVERAGE B. Exclusions This insurance does not apply to any of the following: 11. Pollution "Bodily injury" or "property damage" arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants": a. That are, or that are contained in any property that is: (1) Being transported or towed by, handled or handled for movement into, onto or from the covered "auto"; (2) Otherwise in the course of transit by or on behalf of the "insured"; or (3) Being stored, disposed of, treated or processed in or upon the covered "auto"; b. Before the "pollutants" or any property in which the "pollutants" are contained are moved from the place where they are accepted by the "insured" for movement into or onto the covered "auto"; or c. After the "pollutants" or any property in which the "pollutants" are contained are moved from the covered "auto" to the place where they are finally delivered, disposed of or abandoned by the "insured". Paragraph a. above does not apply to fuels, lubricants, fluids, exhaust gases or other similar "pollutants" that are needed for or result from the normal electrical, hydraulic or mechanical functioning of the covered "auto" or its parts if: (1) The "pollutants" escape, seep, migrate or are discharged, dispersed or released directly from an "auto" part designed by its manufacturer to hold, store, receive or dispose of such "pollutants"; and (2) The "bodily injury", "property damage" or "covered pollution cost or expense" does not arise out of the operation of any equipment listed in Paragraphs 6.b. and 6.c. of the definition of "mobile equipment". Paragraphs b. and c. above of this exclusion do not apply to "accidents" that occur away from premises owned by or rented to an "insured" with respect to "pollutants" not in or upon a covered "auto" if: (a) The "pollutants" or any property in which the "pollutants" are contained are upset, overturned or damaged as a result of the maintenance or use of a covered "auto"; and (b) The discharge, dispersal, seepage, migration, release or escape of the "pollutants" is caused directly by such upset, overturn or damage. CA 00 01 10 13

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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Learning Objective 8: Given a pollution incident, understand under what circumstances coverage is excluded and when the exceptions to the Pollution Exclusion apply.

K.

Pollution is not covered unless:

1.

The pollutant causing the loss comes directly from the auto part designed to hold it and the pollutant is needed for, or results from the normal electrical, hydraulic or mechanical function of the auto OR

2.

The pollutant causing the loss is

3.

a.

Not in or upon a covered auto, and

b.

Is released as a result of an accident arising from the maintenance or use of a covered auto which causes upset, overturn or damage, and

c.

The accident occurs away from a premises owned by or rented to an insured

Pollution Liability – Broadened Coverage for Covered Autos (CA 99 48)

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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SECTION II – COVERED AUTOS LIABILITY COVERAGE B. Exclusions This insurance does not apply to any of the following: 12. War "Bodily injury" or "property damage" arising directly or indirectly out of: a. War, including undeclared or civil war; b. Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or c. Insurrection, rebellion, revolution, usurped power or action taken by governmental authority in hindering or defending against any of these. 13. Racing Covered "autos" while used in any professional or organized racing or demolition contest or stunting activity, or while practicing for such contest or activity. This insurance also does not apply while that covered "auto" is being prepared for such a contest or activity. C. Limit Of Insurance Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", the most we will pay for the total of all damages and "covered pollution cost or expense" combined resulting from any one "accident" is the Limit Of Insurance for Covered Autos Liability Coverage shown in the Declarations. All "bodily injury", "property damage" and "covered pollution cost or expense" resulting from continuous or repeated exposure to substantially the same conditions will be considered as resulting from one "accident". No one will be entitled to receive duplicate payments for the same elements of "loss" under this Coverage Form and any Medical Payments Coverage endorsement, Uninsured Motorists Coverage endorsement or Underinsured Motorists Coverage endorsement attached to this Coverage Part.

CA 00 01 10 13

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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L.

War Expanded definition of war

M.

3

Racing Participating in or preparing for any professional or organized racing or demolition contest or stunting activity

VIII. Limit of Insurance A.

The limit on the Declarations Page is the limit.

B.

Coordination of benefits with Medical Payments and Uninsured Motorists.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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REVIEW QUESTIONS (© Jerry L. Kennedy, CIC, used with permission.) 1. Sally’s Sheetrock, Inc., insures their fleet of trucks and pickups on a BAP with your agency. Liability coverage uses symbols 2, 8 and 9. In each of the following claims identify: 1) If the auto is a covered auto under Sally's sheetrock's Business Auto Policy (BAP). 2) If the person is an insured and 3) If the loss is excluded. a. Business is booming so Sally’s Sheetrock rents a Ryder® rental truck to haul sheetrock to a work site. An employee can’t stop in time and runs over 3 school children in a crosswalk. Their parents sue Sally’s Sheetrock, the employee and Ryder® Truck Rental. Is the Ryder Truck a covered auto?

Yes ____ No ____

Indicate whether or not each of the following is an insured under Sally's BAP: (1) Sally’s Sheetrock

Yes ____ No ____

(2) The employee

Yes ____ No ____

(3) Ryder® Truck Rental.

Yes ____ No ____

Is the loss excluded?

Yes ____ No ____

b. One of Sally’s employees has an accident while driving his personally owned pickup to the hardware store for supplies. The person he rear-ended sues Sally’s Sheetrock and the employee. Is the employee's car a covered auto?

Yes ____ No ____

Indicate whether or not each of the following is an insured under Sally's BAP: (1) Sally’s Sheetrock

Yes ____ No ____

(2) The employee

Yes ____ No ____

Is the loss excluded?

Yes ____ No ____

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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c. While one of Sally’s pickups is being repaired by a local transmission shop, one of the shop’s mechanics has an accident while test-driving it. The injured parties sue the transmission shop, the mechanic and Sally’s Sheetrock Is the pickup a covered auto?

Yes ____ No ____

Indicate whether or not each of the following is an insured under Sally's BAP: (1). The transmission shop

Yes ____ No ____

(2). The mechanic

Yes ____ No ____

(3). Sally’s Sheetrock

Yes ____ No ____

Is the loss excluded?

Yes ____ No____

d. While in Maui, the company’s sales manager, Joe, rents a car from Dollar® to use while attending a sheetrock convention. He loses control on a sharp corner and takes out the better part of a papaya grove as well as seriously injuring a member of his sales staff, Sarah. The owners of the grove file a claim against Sally’s Sheetrock, Joe and Dollar Rent-A-Car. Is the rental car a covered auto? Yes ____ No ____ Indicate whether or not each of the following is an insured under Sally's BAP: (1). Sally’s Sheetrock

Yes ____ No ____

(2). Joe

Yes ____ No ____

(3). Dollar Rent-A-Car

Yes ____ No ____

Is the loss excluded?

Yes ____ No ____

Sarah files claims against: Sally’s Sheetrock, Joe and Dollar Rent-A-Car Is the loss excluded?

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Yes ____ No ____

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2 Pronto Pizza, a sole proprietorship owned by Paul Pesto, insures 2 pizza delivery vans on a BAP with your agency. Paul operates it as a franchisee from Pronto Pizza International. Liability coverage is symbol 7. In the following claims determine if: 1) the auto is a covered auto 2) if the person or organization is an insured and 3) if the loss is excluded. a. Trying to keep an advertised promise to get it there in 15 minutes or your pizza is free, an employee driving the delivery van runs a red light turning a pedestrian into a paraplegic. The former pedestrian sues: the employee, Pronto Pizza and Pronto Pizza International Is the van a covered auto?

Yes ____ No ____

Indicate whether or not each of the following is an insured under Paul's BAP: (1) Paul

Yes ____ No ____

(2) The employee

Yes ____ No ____

(3) Pronto Pizza International

Yes ____ No ____

Is the loss excluded?

Yes ____ No ____

b. While the delivery van is in the shop after the accident, Paul suggests that the employee should use his personal auto for deliveries until the van is fixed. The employee has another accident while racing across town. The injured parties sue the employee, Pronto Pizza and Pronto Pizza International Is the employee's car a covered auto?

Yes ____ No ____

Indicate whether or not each of the following is an insured under Paul's BAP: (1) Paul

Yes ____ No ____

(2) The employee

Yes ____ No ____

(3). Pronto Pizza International

Yes ____ No ____

Is the loss excluded?

Yes ____ No ____

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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3. Fred’s Fine Furniture, a partnership, insures their delivery trucks on a BAP with your agency. Liability coverage is symbol 1. In each of the following claims identify 1) if the auto is a covered auto 2) if the person is an insured and 3) if the loss is excluded. a. Fredrica, one of the partners in Fred’s Fine Furniture, takes her personally owned auto out to see customers and is involved in an at-fault accident. It turns out her husband didn’t pay their personal car insurance premium due last month and the policy lapsed 2 days before the accident. The injured parties sue Frederica and Fred’s Fine Furniture. Is Fredrica's car a covered auto under Fred’s Fine Furniture's BAP? Yes ____ No ____ Indicate whether or not each of the following is an insured under Paul's BAP: (1) Fredirica Yes ____ No ____ (2) Fred’s Fine Furniture Yes ____ No ____ Is the loss excluded? Yes ____ No ____ b. George, an employee, using one of Fred’s Fine Furniture's delivery trucks, delivers an oak desk to a customer’s home. George unloads the desk using a hand truck and while going through the front door, drops the desk on the customer’s foot, breaking the foot and the desk. The customer files claims for injury and damage to the desk against George and Fred’s Fine Furniture Is the auto a covered auto under Fred’s Fine Furniture's BAP? Yes ____ No ____ Indicate whether or not each of the following is an insured under Fred’s Fine Furniture's BAP: (1) George Yes ____ No ____ (2) Fred’s Fine Furniture Yes ____ No ____ Is the loss excluded? Yes ____ No ____ c. Later that day, George loads another oak desk into the back of a customer’s pickup truck using a forklift. The desk falls off the forklift and on top of the customer. The customer sues George and Fred’s Fine Furniture for his injury. Is the auto a covered auto under Fred’s Fine Furniture's BAP? Yes ____ No ____ Indicate whether or not each of the following is an insured under Paul's BAP: (1) George Yes ____ No ____ (2) Fred’s Fine Furniture Yes ____ No ____ Is the loss excluded? Yes ____ No ____

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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SECTION III – PHYSICAL DAMAGE COVERAGE A. Coverage 1. We will pay for "loss" to a covered "auto" or its equipment under: a. Comprehensive Coverage From any cause except: (1) The covered "auto's" collision with another object; or (2) The covered "auto's" overturn. b. Specified Causes Of Loss Coverage Caused by: (1) Fire, lightning or explosion; (2) Theft; (3) Windstorm, hail or earthquake; (4) Flood; (5) Mischief or vandalism; or (6) The sinking, burning, collision or derailment of any conveyance transporting the covered "auto". c. Collision Coverage Caused by: (1) The covered "auto's" collision with another object; or (2) The covered "auto's" overturn. 2. Towing We will pay up to the limit shown in the Declarations for towing and labor costs incurred each time a covered "auto" of the private passenger type is disabled. However, the labor must be performed at the place of disablement. 3. Glass Breakage – Hitting A Bird Or Animal – Falling Objects Or Missiles If you carry Comprehensive Coverage for the damaged covered "auto", we will pay for the following under Comprehensive Coverage: a. Glass breakage; b. "Loss" caused by hitting a bird or animal; and c. "Loss" caused by falling objects or missiles. However, you have the option of having glass breakage caused by a covered "auto's" collision or overturn considered a "loss" under Collision Coverage. Page 6 of 12

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

CA 00 01 10 13

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IX.

Physical Damage - Section III A.

3

Coverage 1.

The Insuring Agreement promises to pay for “loss” to a covered “auto” or its equipment a.

Comprehensive Coverage – any cause except collision or overturn

b.

Specified Causes of Loss Coverage

c.

2.

1)

Six classifications of causes of loss

2)

Can select which cause of loss to include or exclude

3)

Only mischief or vandalism have a deductible (usually$25)

Collision – with another object or overturn

Towing – Includes labor if performed at the place of disablement. Can be purchased only for private passenger type “autos”

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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SECTION III – PHYSICAL DAMAGE COVERAGE A. Coverage 4. Coverage Extensions a. Transportation Expenses We will pay up to $20 per day, to a maximum of $600, for temporary transportation expense incurred by you because of the total theft of a covered "auto" of the private passenger type. We will pay only for those covered "autos" for which you carry either Comprehensive or Specified Causes Of Loss Coverage. We will pay for temporary transportation expenses incurred during the period beginning 48 hours after the theft and ending, regardless of the policy's expiration, when the covered "auto" is returned to use or we pay for its "loss". b. Loss Of Use Expenses For Hired Auto Physical Damage, we will pay expenses for which an "insured" becomes legally responsible to pay for loss of use of a vehicle rented or hired without a driver under a written rental contract or agreement. We will pay for loss of use expenses if caused by: (1) Other than collision only if the Declarations indicates that Comprehensive Coverage is provided for any covered "auto"; (2) Specified Causes Of Loss only if the Declarations indicates that Specified Causes Of Loss Coverage is provided for any covered "auto"; or (3) Collision only if the Declarations indicates that Collision Coverage is provided for any covered "auto". However, the most we will pay for any expenses for loss of use is $20 per day, to a maximum of $600. Page 6 of 12

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

CA 00 01 10 13

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3.

Coverage Extension a.

b.

Pays temporary transportation expenses (subject to a daily maximum of $20 per day and per loss maximum limit of $600) because of: 1)

Total theft of a covered “auto” of the private passenger type

2)

48-hour waiting period before coverage begins

3)

This is not the same as Rental Reimbursement Coverage (CA 99 23)

Loss of use coverage resulting from physical damage for rented or hired autos: 1)

Insured is legally responsible to pay for loss of use

2)

Written contract or agreement

3)

No driver furnished

4)

Must carry coverage causing loss on any covered auto

5)

$20 per day limit to a maximum of $600

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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3

SECTION III – PHYSICAL DAMAGE COVERAGE B. Exclusions 1. We will not pay for "loss" caused by or resulting from any of the following. Such "loss" is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the "loss". a. Nuclear Hazard (1) The explosion of any weapon employing atomic fission or fusion; or (2) Nuclear reaction or radiation, or radioactive contamination, however caused. b. War Or Military Action (1) War, including undeclared or civil war; (2) Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or (3) Insurrection, rebellion, revolution, usurped power or action taken by governmental authority in hindering or defending against any of these. 2. We will not pay for "loss" to any covered "auto" while used in any professional or organized racing or demolition contest or stunting activity, or while practicing for such contest or activity. We will also not pay for "loss" to any covered "auto" while that covered "auto" is being prepared for such a contest or activity. 3. We will not pay for "loss" due and confined to: a. Wear and tear, freezing, mechanical or electrical breakdown. b. Blowouts, punctures or other road damage to tires. This exclusion does not apply to such "loss" resulting from the total theft of a covered "auto". 4. We will not pay for "loss" to any of the following: a. Tapes, records, discs or other similar audio, visual or data electronic devices designed for use with audio, visual or data electronic equipment. b. Any device designed or used to detect speed-measuring equipment, such as radar or laser detectors, and any jamming apparatus intended to elude or disrupt speed-measuring equipment. c. Any electronic equipment, without regard to whether this equipment is permanently installed, that reproduces, receives or transmits audio, visual or data signals. d. Any accessories used with the electronic equipment described in Paragraph c. above. 5. Exclusions 4.c. and 4.d. do not apply to equipment designed to be operated solely by use of the power from the "auto's" electrical system that, at the time of "loss", is: a. Permanently installed in or upon the covered "auto"; b. Removable from a housing unit which is permanently installed in or upon the covered "auto"; c. An integral part of the same unit housing any electronic equipment described in Paragraphs a. and b. above; or d. Necessary for the normal operation of the covered "auto" or the monitoring of the covered "auto's" operating system. 6. We will not pay for "loss" to a covered "auto" due to "diminution in value". CA 00 01 10 13

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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Learning Objective 9: Given a loss situation, apply physical damage exclusions found in the Business Auto Coverage Form. B.

Physical Damage Exclusions 1.

Specific causes of loss such as nuclear hazard, war, insurrection, rebellion, revolution, etc.

2.

Professional or organized racing, demolition contests or stunting activity, including practice and/or preparation for activity (racing can constitute any timed event)

3.

Loss caused by or resulting from wear and tear, freezing, mechanical or electrical breakdown, blowouts, punctures, or other road damage to tires unless resulting from the total theft of a covered auto

4.

Excluded equipment a.

Tapes, records, CDs, visual, or data electronic devices (CA 99 30 Tapes and Records Coverage)

b.

Speed measuring and/or jamming equipment

c.

Electronic equipment (regardless of installation) that reproduces, receives or transmits audio, visual or data signals

d.

Accessories used with the electronic equipment listed in 4.c. above

5.

Exceptions to Exclusions 4.c. and 4.d Electronic equipment and accessories operated and powered solely by the auto’s electrical system ARE COVERED IF: a. Permanently installed in or upon the covered auto; b. Removable from a housing that is permanently installed in or upon the covered auto c. Integral part of the same housing unit; or d. Necessary for normal operation of the covered auto

6.

No coverage for loss due to diminished value

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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SECTION III – PHYSICAL DAMAGE COVERAGE C. Limits Of Insurance 1. The most we will pay for: a. "Loss" to any one covered "auto" is the lesser of: (1) The actual cash value of the damaged or stolen property as of the time of the "loss"; or (2) The cost of repairing or replacing the damaged or stolen property with other property of like kind and quality. b. All electronic equipment that reproduces, receives or transmits audio, visual or data signals in any one "loss" is $1,000, if, at the time of "loss", such electronic equipment is: (1) Permanently installed in or upon the covered "auto" in a housing, opening or other location that is not normally used by the "auto" manufacturer for the installation of such equipment; (2) Removable from a permanently installed housing unit as described in Paragraph b.(1) above; or (3) An integral part of such equipment as described in Paragraphs b.(1) and b.(2) above. 2. An adjustment for depreciation and physical condition will be made in determining actual cash value in the event of a total "loss". 3. If a repair or replacement results in better than like kind or quality, we will not pay for the amount of the betterment. D. Deductible For each covered "auto", our obligation to pay for, repair, return or replace damaged or stolen property will be reduced by the applicable deductible shown in the Declarations. Any Comprehensive Coverage deductible shown in the Declarations does not apply to "loss" caused by fire or lightning. CA 00 01 10 13

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Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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C.

Loss Settlement 1.

The most that is paid for loss to any one covered auto: a.

b.

c.

3

The insurance company will pay the smaller of: x

Actual cash value at the time of loss; OR

x

Cost of repairing or replacing with like kind or quality

$1,000 for all electronic equipment that reproduces, receives or transmits audio, visual or data signals if: 1)

Permanently installed in the housing unit not normally used by the manufacturer for such equipment

2)

Removable from the permanently installed housing unit

3).

An integral part of such equipment

Use CA 99 60 Audio Visual and Data Electronic Equipment Coverage Added Limits Endorsement to increase the sublimit

Partial copy of CA 99 60 10 13

AUDIO, VISUAL AND DATA ELECTRONIC EQUIPMENT COVERAGE ADDED LIMITS Physical Damage Coverage is amended as follows: The sublimits in Paragraph C.1.b. of the Limits Of Insurance provision in the Business Auto and Motor Carrier Coverage Forms and in Paragraph 4.a.(2) of the Limits Of Insurance provision in the Auto Dealers Coverage Form are in addition to the Per "Loss" Limit shown in the Schedule of this endorsement.

D.

2.

Insurer will take depreciation

3.

No coverage for “betterment”

Deductible 1.

Deductible shown on declaration page will apply to each covered auto

2.

There is no deductible for fire or lightning if Comprehensive Coverage is shown in the declarations

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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Partial copy of CA 99 28 10 13

STATED AMOUNT INSURANCE A. This endorsement provides only those coverages where a premium is shown in the Schedule. Each of these coverages applies only to the vehicles shown as covered "autos". B. For a covered "auto" described in the Schedule, Physical Damage Coverage – Limits Of Insurance is replaced by the following: Limits Of Insurance 1. The most we will pay for any one "loss" to any one covered "auto" is the least of the following amounts: a. The actual cash value of the damaged or stolen property as of the time of the "loss"; b. The cost of repairing or replacing the damaged or stolen property with property of like kind and quality; or c. The Limit Of Insurance shown in the Schedule. 2. An adjustment for depreciation and physical condition will be made in determining actual cash value in the event of a total "loss". 3. If a repair or replacement results in better than like kind or quality, we will not pay for the amount of the betterment. C. Deductible 1. For each covered "auto", our obligation to pay: a. The actual cash value of the damaged or stolen property as of the time of the "loss" will be reduced by the applicable deductible shown in the Schedule; b. The cost of repairing or replacing the damaged or stolen property with property of like kind and quality will be reduced by the applicable deductible shown in the Schedule; or c. The damages for "loss" that would otherwise be payable will be reduced by the applicable deductible shown in the Schedule prior to the application of the Limit Of Insurance shown in the Schedule. 2. Any Comprehensive Coverage Deductible shown in the Schedule does not apply to "loss" caused by fire or lightning. Partial copy of CA 20 71 10 13

AUTO LOAN/LEASE GAP COVERAGE Physical Damage Coverage is amended by the addition of the following: In the event of a total "loss" to a covered "auto" shown in the Schedule or Declarations for which a specific premium charge indicates that Auto Loan/Lease GAP Coverage applies, we will pay any unpaid amount due on the lease or loan for a covered "auto", less: 1. The amount paid under the policy's Physical Damage Coverage; and 2. Any: a. Overdue lease/loan payments at the time of the "loss"; b. Financial penalties imposed under a lease for excessive use, abnormal wear and tear or high mileage; c. Security deposits not returned by the lessor; d. Costs for extended warranties, Credit Life Insurance, Health, Accident or Disability Insurance purchased with the loan or lease; and e. Carry-over balances from previous loans or leases.

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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E.

F.

Stated Amount Insurance (CA 99 28) 1.

This is not stipulated value. It is a limiting endorsement

2.

Policy pays the lesser of: a.

Actual Cash Value

b.

Cost to repair or replace

c.

Amount shown on the schedule

3

Auto Loan/Lease Gap Coverage (CA 20 71) 1.

Coverage applies only to described vehicles

2.

A total loss must occur

3.

Policy pays for an unpaid amount due on the lease or loan minus a.

Overdue payments

b.

Financial penalties (excessive use, high mileage, etc.)

c.

Non-refundable security deposits

d.

Cost of extended warranties, credit life, etc.

e.

Carry-over balances from previous loans/leases

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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SECTION IV – BUSINESS AUTO CONDITIONS The following conditions apply in addition to the Common Policy Conditions: A. Loss Conditions 1. Appraisal For Physical Damage Loss If you and we disagree on the amount of "loss", either may demand an appraisal of the "loss". In this event, each party will select a competent appraiser. The two appraisers will select a competent and impartial umpire. The appraisers will state separately the actual cash value and amount of "loss". If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will: a. Pay its chosen appraiser; and b. Bear the other expenses of the appraisal and umpire equally. If we submit to an appraisal, we will still retain our right to deny the claim. 2. Duties In The Event Of Accident, Claim, Suit Or Loss We have no duty to provide coverage under this policy unless there has been full compliance with the following duties: a. In the event of "accident", claim, "suit" or "loss", you must give us or our authorized representative prompt notice of the "accident" or "loss". Include: (1) How, when and where the "accident" or "loss" occurred; (2) The "insured's" name and address; and (3) To the extent possible, the names and addresses of any injured persons and witnesses. b. Additionally, you and any other involved "insured" must: (1) Assume no obligation, make no payment or incur no expense without our consent, except at the "insured's" own cost. (2) Immediately send us copies of any request, demand, order, notice, summons or legal paper received concerning the claim or "suit". (3) Cooperate with us in the investigation or settlement of the claim or defense against the "suit". (4) Authorize us to obtain medical records or other pertinent information. (5) Submit to examination, at our expense, by physicians of our choice, as often as we reasonably require. c. If there is "loss" to a covered "auto" or its equipment, you must also do the following: (1) Promptly notify the police if the covered "auto" or any of its equipment is stolen. (2) Take all reasonable steps to protect the covered "auto" from further damage. Also keep a record of your expenses for consideration in the settlement of the claim. (3) Permit us to inspect the covered "auto" and records proving the "loss" before its repair or disposition. (4) Agree to examinations under oath at our request and give us a signed statement of your answers.

Page 8 of 12

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

CA 00 01 10 13

Page 64

SECTION IV – BUSINESS AUTO CONDITIONS The following conditions apply in addition to the Common Policy Conditions: A. Loss Conditions

3

3. Legal Action Against Us No one may bring a legal action against us under this Coverage Form until: a. There has been full compliance with all the terms of this Coverage Form; and b. Under Covered Autos Liability Coverage, we agree in writing that the "insured" has an obligation to pay or until the amount of that obligation has finally been determined by judgment after trial. No one has the right under this policy to bring us into an action to determine the "insured's" liability. 4. Loss Payment – Physical Damage Coverages At our option, we may: a. Pay for, repair or replace damaged or stolen property; b. Return the stolen property, at our expense. We will pay for any damage that results to the "auto" from the theft; or c. Take all or any part of the damaged or stolen property at an agreed or appraised value. If we pay for the "loss", our payment will include the applicable sales tax for the damaged or stolen property. 5. Transfer Of Rights Of Recovery Against Others To Us If any person or organization to or for whom we make payment under this Coverage Form has rights to recover damages from another, those rights are transferred to us. That person or organization must do everything necessary to secure our rights and must do nothing after "accident" or "loss" to impair them.

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© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

CA 00 01 10 13

Page 65

POLICY NUMBER:

COMMERCIAL AUTO CA 04 44 10 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

WAIVER OF TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US (WAIVER OF SUBROGATION) This endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, t, the provisions of the Coverage Form apply unless modified by the endorsement. This endorsement changes the policy effective on date is n the inception incep n date of the policyy unless another a indicated below. Named Insured: Endorsement Effective Date: SCHEDULE SCHEDU Organization(s Name(s) Of Person(s) Or Organization(s):

Information ation re required to o complete this Sch Schedule, ule, if not shown above, will be shown in the Declarations. The Transfer Tran Of Rights ts Of Recovery Against Others condition does s To Us conditio doe not apply to the person(s)) or organization(s) organization(s shown show in the Schedule, but only to the extent that subrogation is waived prior hat su roga to the "accident" or the "loss" "los under a contract with that person or organization. ion.

CA 04 44 10 13

© Insurance Services Office, Inc., 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 1 of 1

Page 66

X.

Business Auto Conditions – Section IV A.

3

Loss Conditions 1.

Appraisal For Physical Damage Loss

2.

Duties In The Event Of Accident, Claim, Suit Or Loss

3.

Legal Action Against Us

4.

Loss Payment – Physical Damage Coverages

5.

Transfer Of Rights Of Recovery Against Others To Us a.

Also referred to as the subrogation provision

b.

Do nothing after the accident or loss to impair the insurance company’s right to subrogate against the responsible party

c.

CA 04 44 Waiver Of Transfer Of Rights Of Recovery Against Others To Us (Waiver Of Subrogation)

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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B. General Conditions 1. Bankruptcy Bankruptcy or insolvency of the "insured" or the "insured's" estate will not relieve us of any obligations under this Coverage Form. 2. Concealment, Misrepresentation Or Fraud This Coverage Form is void in any case of fraud by you at any time as it relates to this Coverage Form. It is also void if you or any other "insured", at any time, intentionally conceals or misrepresents a material fact concerning: a. This Coverage Form; b. The covered "auto"; c. Your interest in the covered "auto"; or d. A claim under this Coverage Form. 3. Liberalization If we revise this Coverage Form to provide more coverage without additional premium charge, your policy will automatically provide the additional coverage as of the day the revision is effective in your state. 4. No Benefit To Bailee – Physical Damage Coverages We will not recognize any assignment or grant any coverage for the benefit of any person or organization holding, storing or transporting property for a fee regardless of any other provision of this Coverage Form. 5. Other Insurance a. For any covered "auto" you own, this Coverage Form provides primary insurance. For any covered "auto" you don't own, the insurance provided by this Coverage Form is excess over any other collectible insurance. However, while a covered "auto" which is a "trailer" is connected to another vehicle, the Covered Autos Liability Coverage this Coverage Form provides for the "trailer" is: (1) Excess while it is connected to a motor vehicle you do not own; or (2) Primary while it is connected to a covered "auto" you own. b. For Hired Auto Physical Damage Coverage, any covered "auto" you lease, hire, rent or borrow is deemed to be a covered "auto" you own. However, any "auto" that is leased, hired, rented or borrowed with a driver is not a covered "auto". c. Regardless of the provisions of Paragraph a. above, this Coverage Form's Covered Autos Liability Coverage is primary for any liability assumed under an "insured contract". d. When this Coverage Form and any other Coverage Form or policy covers on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the Limit of Insurance of our Coverage Form bears to the total of the limits of all the Coverage Forms and policies covering on the same basis. CA 00 01 10 13

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 7-8 of 12

Page 68

B.

General Conditions. 1.

Bankruptcy

2.

Concealment, Misrepresentation Or Fraud

3.

Liberalization

4.

No Benefit To Bailee – Physical Damage Coverages

5.

Other Insurance

3

a.

The insured’s Coverage Form provides primary insurance for any covered auto that the insured owns

b.

The insured’s Coverage Form provides primary liability insurance for any trailer (owned or otherwise) if it is a covered auto and connected to a covered auto that the insured owns

c.

The insured’s Coverage Form provides excess insurance over any other collectable insurance for any covered auto that the insured does not own

d.

The insured’s Coverage Form provides excess liability insurance for any trailer (owned or otherwise) if it is a covered auto and connected to any motor vehicle that the insured does not own

e.

For Hired Auto Physical Damage, any covered auto the insured leases, hires, rents, or borrows is consider an owned auto

f.

The insured’s Coverage Form provides primary liability insurance for any liability assumed under an insured contract

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 69

B. General Conditions 6. Premium Audit a. The estimated premium for this Coverage Form is based on the exposures you told us you would have when this policy began. We will compute the final premium due when we determine your actual exposures. The estimated total premium will be credited against the final premium due and the first Named Insured will be billed for the balance, if any. The due date for the final premium or retrospective premium is the date shown as the due date on the bill. If the estimated total premium exceeds the final premium due, the first Named Insured will get a refund. b. If this policy is issued for more than one year, the premium for this Coverage Form will be computed annually based on our rates or premiums in effect at the beginning of each year of the policy. 7. Policy Period, Coverage Territory Under this Coverage Form, we cover "accidents" and "losses" occurring: a. During the policy period shown in the Declarations; and b. Within the coverage territory. The coverage territory is: (1) The United States of America; (2) The territories and possessions of the United States of America; (3) Puerto Rico; (4) Canada; and (5) Anywhere in the world if a covered "auto" of the private passenger type is leased, hired, rented or borrowed without a driver for a period of 30 days or less, provided that the "insured's" responsibility to pay damages is determined in a "suit" on the merits, in the United States of America, the territories and possessions of the United States of America, Puerto Rico or Canada, or in a settlement we agree to. We also cover "loss" to, or "accidents" involving, a covered "auto" while being transported between any of these places. 8. Two Or More Coverage Forms Or Policies Issued By Us If this Coverage Form and any other Coverage Form or policy issued to you by us or any company affiliated with us applies to the same "accident", the aggregate maximum Limit of Insurance under all the Coverage Forms or policies shall not exceed the highest applicable Limit of Insurance under any one Coverage Form or policy. This condition does not apply to any Coverage Form or policy issued by us or an affiliated company specifically to apply as excess insurance over this Coverage Form. CA 00 01 10 13

© Insurance Services Office, Inc. 2011

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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Page 70

6.

Premium Audit

3 7.

8.

Policy Period, Coverage Territory a.

The policy period is shown in the Declarations

b.

The coverage territory 1)

USA, territories and possessions, Puerto Rico, and Canada

2)

Anywhere in the world if: a)

It is a covered auto of the private passenger type

b)

It is leased, hired, rented, or borrowed for 30 days or less without a driver

c)

Insured’s liability is determined by suit in territory a. above or accepted by the insurance company

Two Or More Coverage Forms Or Policies Issued By Us

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 71

COMMERCIAL AUTO CA 99 58 04 14 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

SOUTH CAROLINA AUTO MEDICAL PAYMENTS COVERAGE This endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, the provisions ons of the Coverage Form apply unless modified by the endorsement. A. Coverage We will pay reasonable expenses incurred d for necessary medical and funeral services es to or for an "insured" who sustains "bodilyy injury" caused by "accident". We will pay o only those expenses incurred for services rendered within three years from the date of the "accident". B. Who Is An Insured 1. You while "occupying" ying" or, while a pedestrian, when struckk by any "auto". "auto 2. If you are an individual, al, any "family member" while "occupying" or, while a "o pedestrian, when struck struc by any "auto". "auto 3. Anyone else "occupying" a covered covere "auto" uto or a temporary emporary substitute substitu for a covered "auto". The covered "auto" must s be out of service vice because of its breakdown, repair,, servicing, loss or bre serv destruction. C. Exclusions sions This insurance does not apply ply to any of the following: 1. "Bodily injury" by an "insured" y" sustained sustai while "occupying" ying" a vehicle located for use as a premises. 2. "Bodily injury" sustained by you or any "family member" while "occupying" or struck by any vehicle (other than a covered "auto") owned by you or furnished or available for your regular use. CA 99 58 04 14

3. "Bodily injury" sustained "Bod ustained by any "family member" membe while "occupying" cupyin or struck by any vehicle (other th than a covered "auto") owned o d by or furnished furnishe or available for the regular use r se of any "family member". 4. "Bodily injury" y" to your "employee" arising out of and in the course of employment by you. However, we will cover "bodily injury" to your domestic "employees" if inju not entitled to workers' compensation benefits. For the purposes of this endorsement, a domestic "employee" is a person engaged in household or domestic work performed principally in connection with a residence premises. 5. "Bodily injury" to an "insured" while working in a business of selling, servicing, repairing or parking "autos" unless that business is yours. 6. "Bodily injury" arising directly or indirectly out of: a. War, including undeclared or civil war; b. Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or c. Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.

© Insurance Services Office, Inc., 2013

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 1 of 2

Page 72

Learning Objective 10: Briefly explain the coverage afforded under Auto Medical Payments Coverage.

XI.

Medical Payments Coverage A.

B.

Coverage 1.

Pays reasonable expenses for necessary medical and funeral

2.

Incurred within three years

3.

To an “insured” (insured has its own definition for this coverage part) by an accident

Who is an Insured? 1.

Named Insured while occupying an auto, a pedestrian or if struck by any auto

2.

If the Named Insured is an individual, then there is automatic coverage for family members. If NOT an individual then “Family Members” are not an “insured”

3.

a.

Do you have E&O if you don’t inform your policyholder of this?

b.

Do you have E&O if you don’t name both spouses in the Declarations?

Anyone occupying a covered auto or temporary substitute for a covered auto

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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3

7. "Bodily injury" to anyone using a vehicle without a reasonable belief that the person is entitled to do so. 8. "Bodily injury" sustained by an "insured" while "occupying" any covered "auto" while used in any professional racing or demolition contest or stunting activity, or while practicing for such contest or activity. This insurance also does not apply to any "bodily injury" sustained by an "insured" while the "auto" is being prepared for such a contest or activity. D. Limit Of Insurance Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", the most we will pay for "bodily injury" for each "insured" injured in any one "accident" nt" is the Limit Of Insurance for Auto Medical cal Payments Coverage shown in the Declarations.

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E. Changes In Conditions The Conditions are changed for Auto Medical Payments Coverage as follows: 1. The Transfer Of Rights Of Recovery Against Others To Us Condition does not apply. 2. The reference enc in Other Insurance in the Auto Dealers and Business Auto Deale Coverage and Other Insurance – erage Forms F Primary And Excess Insurance mary Provisions isions in tthe Motor Carrier Coverage "other collectible ge Form to t insurance"" applies only to other app collectible auto medical payments insurance. ins F. Additional dition Definitions ns this endorsement: As used ed in th rse en a person related 1. "Familyy member" means me tto you by blood, marriage or adoption who is a resi resident of your household, including a ward or foster child. 2. "Occupying" means in, upon, getting in, on, out or off. on

© Insurance Services Office, Inc., 2013

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

CA 99 58 04 14

Page 74

C.

Exclusions 1.

Bodily injury to anyone if occupying a vehicle located for use as a premise

2.

Bodily injury to you or a family member if occupying a vehicle, unless it is a covered auto, owned by you, or available for your regular use

3.

Bodily injury to family member if occupying a vehicle owned by or available for the regular use of any family member “You” have coverage, but not your family members (Do you have E&O if you fail to name both spouses in the Declarations?)

D.

4.

Bodily injury to an employee (except a non-covered domestic employee)

5.

Bodily injury to any insured if working in an auto business unless that business is yours

6.

Bodily injury caused by war

7.

Bodily injury to anyone using a vehicle without reasonable belief that they are entitled to do so

8.

Bodily injury to an insured if racing or contest or stunts activity applies

Limit of Insurance Ɣ

E.

F.

The maximum amount paid regardless of the number if insureds is the limit shown on the Declarations page.

Changes in Conditions 1.

No subrogation – This condition does not apply

2.

Other Insurance – Only applies duplication language to other collectible medical payments insurance.

Definition of Occupying – extremely broad

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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POLICY NUMBER:

COMMERCIAL AUTO CA 21 19 12 13 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

SOUTH CAROLINA UNINSURED MOTORISTS COVERAGE For a covered "auto" licensed or principally garaged in, or "auto dealer operations" conducted in, South Carolina, this endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, the provisions Form apply visions of the Coverage C unless modified by the endorsement. This endorsement changes the policy effective on the inception epti date of the he policy polic unless another date is indicated below. Named Insured: Endorsement Effective Date: SCHEDULE SCHE Limit Of Insurance:

E Each "Accident"

$

Information required to complete this Schedule, edule, if no not shown own above, ab will be shown in the Declarations. A. Coverage We will pay in accordance ance with the South Carolina Uninsured Motorists ts Law all sums the "insured" is legally entitled to recover as ga damages from or driver of an m the owner o "uninsured motor or vehicle". The damages mages must result from "bodily dily injury" sustained su ed by an "insured" ed or "property erty damage" caused ca d by an a "accident". cident". The owner's ner's or driver's liability liab y for f these ese damages must result from the ownership, maintenance wner nce or use of o the "uninsured insured motor vehicle". ve e". B. Who Is s An Insured If the Named Insured in the ed is i designated de Declarations as: 1. An individual, al, then the following are "insureds": a. The Named Insured and any "family members". b. Anyone else "occupying" a covered "auto" or a temporary substitute for a covered "auto". The covered "auto" must be out of service because of its breakdown, repair, servicing, "loss" or destruction. CA 21 19 12 13

c. Anyone for damages he or she is c An entitled to recover because of "bodily injury" sustained by another "insured". 2. A partnership, limited liability company, corporation or any other form of organization, then the following are "insureds": a. Anyone "occupying" a covered "auto" or a temporary substitute for a covered "auto". The covered "auto" must be out of service because of its breakdown, repair, servicing, "loss" or destruction. b. Anyone for damages he or she is entitled to recover because of "bodily injury" sustained by another "insured". c. The Named Insured for "property damage" only. C. Exclusions This coverage does not apply to any of the following: 1. Any claim settled without our consent.

© Insurance Services Office, Inc., 2013

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 1 of 5

Page 76

Learning Objective 11: Briefly describe the coverage afforded in Uninsured/Underinsured Motorists Coverage.

XII.

3

South Carolina Uninsured Motorists Coverage A.

Coverage: 1.

B.

Pays sums the insured is legally entitled to recover as compensatory damages from the owner of: a.

“Uninsured Motor Vehicle” for “bodily injury”

b.

“Uninsured Motor Vehicle” for “property damage”

c.

Must be caused by an “accident”

d.

Damages must result from an ownership, maintenance or use of an “uninsured motor vehicle.”

Who is Insured 1.

2.

When the named insured designated in the declarations is an individual, includes a.

Named insured and family member

b.

Anyone occupying your covered auto or temporary substitute

c.

Anyone who sustains damages due to bodily injury sustained by another insured

When the insured is a partnership, limited liability company, corporation or any other organization: a.

Anyone occupying a covered auto or temporary substitute

b.

Anyone who sustains damages due to bodily injury sustained by another insured

c.

Named insured for PD only

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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2. The direct or indirect benefit of any insurer or self-insurer under any workers' compensation, disability benefits or similar law. 3. Anyone using a vehicle without a reasonable belief that the person is entitled to do so. 4. The first $200 of the amount of "property damage" to the property of each "insured" as the result of any one "accident". 5. That part of "property damage" for which an "insured" has been compensated by insurance or otherwise. 6. "Bodily injury" or "property damage" arising directly or indirectly out of: a. War, including undeclared or civil war; b. Warlike action by a military force, including action in hindering or defending against an actual or rnm expected attack, by any government, ty using usi sovereign or other authority ents; or military personnel or other agents; olution, c. Insurrection, rebellion, revolution, n by b usurped power, or action taken hority in hindering or governmental authority thes defending against any of these. D. Limit Of Insurance er of covered 1. Regardless of the number insureds" iums paid, "autos", "insureds", premiums e or vehicles vehicle involved ved in the claims made e most we will wi pay for all a "accident", the amag ulting from any a damages resulting one "acciden he limit of Uninsured Unin d "accident" is the Mot age shown in the Motorists Coverage Sch "bod Schedule. If the "bodily injury" or damage is sustained su "property damage" by an dividual Named Insured In ured or any "family individual "occ pying a covered member" while "occupying" "auto", our limit is the of: he sum s a. The Limit Off Insurance shown in the Insur Schedule for this coverage as applicable to a covered "auto"; and b. That part of the limit for this coverage that applies to each additional covered "auto" that does not exceed the limit of insurance applicable to the covered "auto" involved in the "accident".

Page 2 of 5

2. Subject to the maximum limit of insurance for all damages: a. Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", the most we will pay for "bodily injury" or "property damage" sustained in an "accident" by an "insured" ed other than an individual Named med Insured or any "family member" member is that "insured's" pro rata share of the limit shown in the Schedule chedule for this coverage that applies that "insured" lies to the vehicle v was "occupying" at the time of the occupyin "accident". t". or any b. The individual al Named Insured Ins "family member" "bodily "fa er" who sustains su injury" in that injury or "property erty damage" d "accident" accident" will also als be entitled to a pro rata a share of the th limit described in Paragraph above. raph a. a A person's pro rata share shall be the proportion that that person's damages bear to the total damages sustained by all b "insureds". "ins 3. Reg Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", if "bodily injury" or "property damage" is sustained by an individual Named Insured or any "family member" while not "occupying" any "auto", the most we will pay for all damages resulting from that "accident" is the sum of: a. The highest limit of insurance for this coverage applicable to any one of such Named Insured's covered "autos"; and b. That part of the limit for this coverage that applies to each additional covered "auto" that does not exceed the limit of insurance applicable to the covered "auto" involved in the "accident".

© Insurance Services Office, Inc., 2013

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

CA 21 19 12 13

Page 78

C.

Exclusions 1.

Any claim settled without our consent

2.

Workers Compensation, disability or similar law

3.

Anyone using a vehicle without a reasonable belief that the person is entitled to do so

4.

The first $200 of property damage

5.

Property damage the insured is compensated for by insurance or any other form

6.

War

3

D. Limit of Insurance 1.

The most we will pay is the amount of coverage shown on the declarations

2.

Pro rata if other insurance exists

3.

Limited to the highest limit if injured while not occupying a covered vehicle

4.

Limited to the highest limit if injured in a non-owned auto

5.

If the injured person is not the named insured or family member the limit is restricted to the limit on the vehicle they are occupying

6.

No one will be allowed to duplicate payments with other forms of auto insurance

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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4. Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", if "bodily injury" or "property damage" is sustained in an "accident" by an individual Named Insured or any "family member" while "occupying" a vehicle not owned by that Named Insured or any "family member", the most we will pay for all damages resulting from the "accident" will be the highest limit of insurance for this coverage that applies to any one of such Named Insured's covered "autos". 5. Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", if "bodily injury" or "property damage" is sustained by an "insured" other than an individual Named Insured ed or any "family member" in an "accident" in which neither such Named Insured red nor any "family member" sustained d "bodily "bod injury" or "property damage", the most we will pay for all damages resulting g from that "accident" is the Limit Of Insurance rance shown in the Schedule le for this coverage that applies to the vehicle ehicle that "insured" was "occupying" at the time of the "accident". 6. No one will b be entitled to receive duplicate payments for the same elements of "loss" under this Coverage Covera Form and any Liability Coverage form Covera orm or Underinsured Motorists Coverage Underin Co rage endorsement attached endorse ached to this Coverage Cover Part. Pa We will not make payment mak a duplicate du under element of nder this coverage for any a "loss"" for which payment paym nt has ha been made by or for anyone is legally one who h responsible.

CA 21 19 12 13

E. Changes In Conditions The Conditions are changed for Uninsured Motorists Coverage as follows: 1. Other Insurance in the Auto Dealers and Business Auto Coverage Forms and Other Insurance – Primary And Excess Insurance Provisions in the Motor Carrier Coverage Form are replaced by the following: wing: a. If an "ins "insured" sustains "bodily injury" while ""occupying" a vehicle not owned person or while not by that perso "occupying" cupying" any vehicle, the following priorities coverage apply: ies of cov The policy affording Uninsured afford Motorists Coverage to the vehicle the "insured" was at the time as "occupying" "o "accident". of the "accid Any poli policy affording Uninsured Motorists otorist Coverage to a Named Insured or a "family member", if the Named Insured is an individual.

First Fi Priority Prior

Second econ Priority Prior

(1) If there is no applicable insurance (1 available under the first priority, the maximum recovery under all policies in the second priority shall not exceed the highest applicable limit for any one vehicle under any one policy. (2) If there is applicable insurance available under the first priority: (a) The limit of insurance applicable to the vehicle the "insured" was "occupying", under the policy in the first priority, shall first be exhausted; and

© Insurance Services Office, Inc., 2013

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

Page 3 of 5

Page 80

E. Changes In Conditions

3

1. Other Insurance

2. Duties In The Event Of Accident, Claim, Suit or Loss

3. Transfer of Rights Of Recovery Against Others To Us

4. Two Or More Coverage Forms Issued By Us

5. Conformity To Statute

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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(b) The maximum recovery in the second priority shall not exceed the highest limit for any one vehicle under any one policy in the second priority. b. We will pay only our share of the loss, not to exceed our share of the maximum recovery. Our share is the proportion that our limit of insurance bears to the total of all applicable limits on the same level of priority. c. For "property damage", this insurance is excess to all collectible insurance of any kind. d. Except for "property damage", the reference to "other collectible insurance" applies only to other collectible uninsured motorists insurance. 2. Duties In The Event Of Accident, Claim, m, Suit Or Loss in the Business Auto and Motor Carrier Coverage Forms and Duties ies In The Event Of Accident,, C Claim, Offense, Suit, Loss Or Acts, Errors Or Omissions in the Auto Dealers Coverage Form are changed by adding the following: llowing: a. Promptly notify the police if a hit-andrun driver is involved; ed; and b. Promptly send uss copies of the legal papers if a "suit" is brought. 3. Transfer Of Rights Of Recovery Against Others To Us is rreplaced byy the following: Transfer Off Rights Of O Recovery very Against Others To Us s a. If any person to or for son or organization organiza f whom we make payment under who u r this th Coverage Form Cove rm has rights to recover re damages from another, those rights righ are transferred to uss to the extent of such t t payment that does oes not exceed the minimum limits specified s ecifie by the South Carolina Motor Financial otor Vehicle Veh Responsibility Act. That person or Ac organization must do everything mu necessaryy to secure our rights and se must do nothing after the "accident" or th loss to impair them. b. If an "insured" has prosecuted to judgment any "suit" against anyone responsible, we will be entitled to an assignment of the judgment to the extent of payment under this insurance that does not exceed the minimum limits specified by the South Carolina Motor Vehicle Financial Responsibility Act.

Page 4 of 5

c. We will pay our proportionate part of any reasonable costs and expenses incurred for any recovery, including reasonable attorneys' fees. However, we reserve the right to retain an attorney of our choice to pursue a claim instead of reasonable attorneys' fees. d. If an "insured" making a claim for "property damage" under this insurance is also entitled to insurance or other en compensation for the "property pensati damage", mage" we will not be obligated to pay ay the claim until the "insured" has assigned rights to the igned us the th compensation ensation to the extent of payment under this that does not his insurance ins exceed the minimum limits specified by s the South Carolina Mot Motor Vehicle t Financial Responsibility Fina nsibility Act. Ac 4. Two More Coverage Issued By o Or M age Forms Fo Us Motorists U does oes not apply to Uninsured U Coverage. Co ge. 5. The is added: Th following ng condition condit Conformity To Statute C S This endorsement is intended to be in full conformity with the South Carolina co Insurance Laws. If any provision of this Insu endorsement conflicts with that law, it is endor changed to comply with the law. an F. Additional Definitions Ad As used in this endorsement: 1. "Family member" means a person related to an individual Named Insured by blood, marriage or adoption, who is a resident of such Named Insured's household, including a ward or foster child. 2. "Occupying" means in, upon, getting in, on, out or off. 3. "Property damage" means injury to or destruction of the property of an "insured". 4. "Uninsured motor vehicle" means a land motor vehicle or "trailer": a. For which neither a liability bond or policy nor cash or securities deposited with the State Treasurer provide at least the amounts required by the South Carolina Motor Vehicle Financial Responsibility Act.

© Insurance Services Office, Inc., 2013

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

CA 21 19 12 13

Page 82

F.

Additional Definitions 1.

“Family member” – Residency and relationship, also includes wards of the court and foster children

2.

“Occupying” – Means in, upon, getting in, on, out or off

3.

“Property Damage” – Means injury to or destruction of property of an insured.

4.

“Uninsured Motor Vehicle” a.

Uninsured

b.

Hit and run driver

c.

Company denies coverage or is insolvent

d.

The owner has failed to qualify as a self-insurer

Note: “Uninsured Motor Vehicle” does not include: a.

Self-Insurer

b.

Owned by a governmental unit

c.

Designated for use off public roads while not on public roads

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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b. For which neither the operator nor owner can be identified and that hits or that causes an "accident" resulting in "bodily injury" or "property damage" without hitting an individual Named Insured or a "family member", a vehicle that an individual Named Insured or any "family member" is "occupying", the Named Insured's covered "auto" or any of such Named Insured's property. The facts of the "accident" must be corroborated by competent evidence of an eyewitness other than the owner or operator of the vehicle that an individual Named Insured or any "family member" was "occupying" at the time of the "accident". The eyewitness must sign an affidavit attesting to the truth of the facts of the he "accident" contained in the affidavit. c. For which an insuring or bonding bond company successfully denies denie coverage, is or becomes insolvent, lvent, is in delinquency proceedings, edings, suspension or receivership, or is i proven unable to respond to a judgment.

CA 21 19 12 13

d. For which the owner has not qualified as a self-insurer in accordance with the applicable provisions of the South Carolina Insurance Laws. However, "uninsured motor vehicle" does not include any vehicle: a. Owned or operated by a self-insurer under any applicable motor vehicle law, except exce a self-insurer which is or becomes comes insolvent. b. Owned by any governmental unit or agency unless a cause of action against unit or ainst that governmental go agency by the Tort Claims cy is barred barr Act, South 1986, outh Carolina Laws L Ratification 15n No. 514, Subsection Sub 78-60, or by other applicable statute. applica off public c. Designed for use mainly m roads while not o on public roads.

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Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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Notes

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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Business Auto Coverages Summary Of Learning Objectives You should now be able to 1.

Identify a covered auto when presented the appropriate symbol information. (Page 13)

2.

Determine whether a newly-acquired auto is covered by the Business Auto Coverage Form. (Page 15)

3.

Identify the types of vehicles that are granted liability coverage and considered covered autos for Covered Auto Liability Coverage. (Page 17)

4.

Determine who is and who is not an insured in the Business Auto Coverage Form. (Page 25)

5.

Briefly describe the purpose for each of the endorsements used to modify the Who Is An Insured provision in the Business Auto Coverage Form. (Page 30)

6.

Given a loss situation, explain if any liability exclusions found in the Business Auto Coverage Form apply. (Page 41-49)

7.

Given a loading and unloading situation, determine whether coverage is provided under the BAP or CGL. (Page 43)

8.

Given a pollution incident, understand under what circumstances coverage is excluded and when the exceptions to the Pollution Exclusion apply. (Page 47)

9.

Given a loss situation, apply physical damage exclusions found in the Business Auto Coverage Form. (Page 59)

10.

Briefly explain the coverage afforded under Auto Medical Payments Coverage. (Page 73)

11.

Briefly describe the coverage afforded under Uninsured/Underinsured Motorist Coverage. (Page 77)

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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Forms Index Form Number

Form Name

CA 00 01 10 13

Business Auto Coverage Form

CA 20 01 10 13

Lessor – Additional Insured and Loss Payee

CA 20 48 10 13

Designated Insured

CA 20 54 10 13

Employee Hired Autos

CA 99 33 10 13

Employees as Insureds

Terry L. Tadlock, CPCU, CIC, CRIS BAC (Last updated 08/19/2014)

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COMMERCIAL AUTO CA 00 01 10 13

BUSINESS AUTO COVERAGE FORM Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered. Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations. The words "we", "us" and "our" refer to the company providing this insurance. Other words and phrases that appear in quotation marks have special meaning. Refer to Section V – Definitions. Symbol 1 Any "Auto" 2 Owned "Autos" Only 3

4

5

6

7

8

9

Owned Private Passenger "Autos" Only Owned "Autos" Other Than Private Passenger "Autos" Only Owned "Autos" utos Subject To o No-fault Owne Owned "Autos"" Subjec Subject To A Compulsory Co Uninsured Un Motorists Law Specifically pecifically Described "Autos" Hired "Autos" Only

Non-owned "Autos" Only

SECTION I – COVERED AUTOS Item Two of the Declarations shows the "autos" that are covered "autos" for each of your coverages. The following numerical symbols describe the "autos" that may be covered "autos". The symbols entered next to au a coverage on n the Declarations designate the only "autos" that are covered "autos". cov A. Description ption Of Covered Auto Designation Symbols

Description Of Covered Auto Symbols uto Designation De Symbo Only those "autos" you ou own (and for fo Covered overed Autos Liability ity Coverage Co any wn while attached attache to power units you own). This includes "trailers" you don't own those "autos" you acquire of afterr the policy begins. quire ownership o be ate passenger pas ger "autos" you yo own. This his includes inclu Only the private those private passenger "autos" ownership of after the policy begins. utos" you acquire uire owne s" you own that are no Only those "autos" not of the private passenger type (and for vered Autos Liability Cover "tr Covered Coverage any "trailers" you don't own while attached to ower units you own). This inclu hose "autos" not of the private passenger power includes those type after the policy begins. pe you acquire ownership of afte Only those ose "autos" you own that are required to have no-fault benefits in the state where theyy are licensed or principally garaged. This includes those "autos" you w pr acquire ownership acqu ership of after the policy begins provided they are required to have noin where they are licensed or principally garaged. fault benefits ben n the state s Only those "au "autos"" you own that because of the law in the state where they are licensed or princip principally garaged are required to have and cannot reject Uninsured Motorists Coverage. Coverage This includes those "autos" you acquire ownership of after the policy begins provided they are subject to the same state uninsured motorists requirement. quire Only O y tho those "autos" described in Item Three of the Declarations for which a premium pre ium charge is shown (and for Covered Autos Liability Coverage any "trailers" you don't own while attached to any power unit described in Item Three). Only those "autos" you lease, hire, rent or borrow. This does not include any "auto" On yyou lease, hire, rent or borrow from any of your "employees", partners (if you are a partnership), members (if you are a limited liability company) or members of their households. Only those "autos" you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes "autos" owned by your "employees", partners (if you are a partnership), members (if you are a limited liability company) or members of their households but only while used in your business or your personal affairs.

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Mobile Equipment Subject To Compulsory Or Financial Responsibility Or Other Motor Vehicle Insurance Law Only

Only those "autos" that are land vehicles and that would qualify under the definition of "mobile equipment" under this policy if they were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where they are licensed or principally garaged.

B. Owned Autos You Acquire After The Policy Begins 1. If Symbols 1, 2, 3, 4, 5, 6 or 19 are entered next to a coverage in Item Two of the Declarations, then you have coverage for "autos" that you acquire of the type described for the remainder of the policy period. 2. But, if Symbol 7 is entered next to a coverage age in Item Two of the Declarations, an "auto" you acquire will be a covered "auto" for that at coverage only if: a. We already cover all "autos" thatt you own ow for that coverage or it replaces an "auto" you previously owned that had d that coverage; and b. You tell us within 30 days after you acquire it that you want us to cover it for that coverage. C. Certain Trailers, Mobile Equipment nt And Temporary Substitute tute Autos Auto If Covered Autos Liability bility Coverage Coverag is provided rovided by this Coverage g Form, m, the following types pes of o vehicles are a also covered ered "autos" for Covered vere Autos Liability Liabili Coverage: 1. "Trailers" ailer with a load capacity apacity of 2,000 pounds p or less ess designed primarily prim ly for fo travel on public roads. 2. "Mobile equipment" while carried or whil being be towed by a covered "auto". uto". 3. Any "auto" you do not own while used with the permission of its owner as a temporary own substitute for a covered "auto" you own that is out of service because of its: a. Breakdown; b. Repair; c. Servicing; d. "Loss"; or e. Destruction.

SECTION III – COVERED AUTOS LIABILITY C COVERAGE E A. Coverage We will pay all sums an "insured" legally must pay damages because or "property as da use of "bodily injury" inj damage" amage to which this his insurance applies, caused by an and resulting b n "accident" "acc esulting ffrom the ownership, maintenance "auto". ma nance or use of a covered cove We will w also so pay alll sums an "insured" legally must pay pollution cost or expense" to ay as a "covered overed po which this insurance applies, caused by an whic suran "accident" and resulting from the ownership, "ac maintenance or use of covered "autos". However, ma we will w only pay for the "covered pollution cost or expense" xpense if there is either "bodily injury" or "property perty damage" to which this insurance applies that is caused by the same "accident". th We have the right and duty to defend any "insured" against a "suit" asking for such damages or a "covered pollution cost or expense". However, we have no duty to defend any "insured" against a "suit" seeking damages for "bodily injury" or "property damage" or a "covered pollution cost or expense" to which this insurance does not apply. We may investigate and settle any claim or "suit" as we consider appropriate. Our duty to defend or settle ends when the Covered Autos Liability Coverage Limit of Insurance has been exhausted by payment of judgments or settlements. 1. Who Is An Insured The following are "insureds": a. You for any covered "auto". b. Anyone else while using with your permission a covered "auto" you own, hire or borrow except: (1) The owner or anyone else from whom you hire or borrow a covered "auto". This exception does not apply if the covered "auto" is a "trailer" connected to a covered "auto" you own.

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(2) Your "employee" if the covered "auto" is owned by that "employee" or a member of his or her household. (3) Someone using a covered "auto" while he or she is working in a business of selling, servicing, repairing, parking or storing "autos" unless that business is yours. (4) Anyone other than your "employees", partners (if you are a partnership), members (if you are a limited liability company) or a lessee or borrower or any of their "employees", while moving property to or from a covered "auto". (5) A partner (if you are a partnership) or a member (if you are a limited liability company) for a covered "auto" owned by him or her or a member of his or her household. c. Anyone liable for the conduct of an "insured" described above but only to the extent of that liability. 2. Coverage Extensions a. Supplementary Payments We will pay for the "insured": (1) All expenses we incur. cur. (2) Up to $2,000 forr cost of bail bonds (including bonds for or related traffic law violations) required because of an "accident"" we cover. We e do not have to furnish these hese bonds. bon (3) The costt of bonds to release bon re attachments s in any "suit" against inst the t "insured" we defend, but only for bond "insu bon amounts within amou n our Limit of Insurance. Insuran (4) 4) All reasonable expenses xpenses incurred by the "insured" at our o request, eques including actual loss of earnings earning up to $250 a day because off from ecause of time of rom work. (5) All court costs against the ts taxed xe "insured" in any "suit" against the "insured" we defend. However, these defe payments do not include attorneys' fees or attorneys' expenses taxed against the "insured". (6) All interest on the full amount of any judgment that accrues after entry of the judgment in any "suit" against the "insured" we defend, but our duty to pay interest ends when we have paid, offered to pay or deposited in court the part of the judgment that is within our Limit of Insurance.

These payments will not reduce the Limit of Insurance. b. Out-of-state Coverage Extensions While a covered "auto" is away from the state where it is licensed, we will: (1) Increase the Limit of Insurance for Covered Autos Liability Coverage to meet the limits specified by a compulsory or financial responsibility p law w of the jurisdiction where the covered "auto" is being used. This extension does doe not apply to the limit or limits specified by any law governing motor carriers of passengers or property. pas (2) Provide ovide the minimum amounts and types of other coverages, such as nocoverag fault, required out-of-state vehicles by quired of out-of-s the jurisdiction ction where the th covered "auto" is being used. d We will not pay anyone a o more than once for the same elements of loss because of eleme these extensions. extensions B. Excl Exclusions This insurance does not apply to any of the Th following: follow 1. Expected Or Intended Injury Expe "Bodily Bod injury" or "property damage" expected or intended from the standpoint of the "insured". 2. Contractual Liability assumed under any contract or agreement. But this exclusion does not apply to liability for damages: a. Assumed in a contract or agreement that is an "insured contract", provided the "bodily injury" or "property damage" occurs subsequent to the execution of the contract or agreement; or b. That the "insured" would have in the absence of the contract or agreement. 3. Workers' Compensation Any obligation for which the "insured" or the "insured's" insurer may be held liable under any workers' compensation, disability benefits or unemployment compensation law or any similar law.

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4. Employee Indemnification And Employer's Liability "Bodily injury" to: a. An "employee" of the "insured" arising out of and in the course of: (1) Employment by the "insured"; or (2) Performing the duties related to the conduct of the "insured's" business; or b. The spouse, child, parent, brother or sister of that "employee" as a consequence of Paragraph a. above. This exclusion applies: (1) Whether the "insured" may be liable as an employer or in any other capacity; and (2) To any obligation to share damages with or repay someone else who must pay damages because of the injury. But this exclusion does not apply to "bodily odily injury" to domestic "employees" not entitled to workers' compensation benefits or to lia liability assumed by the "insured" under an n "insured "insur contract". For the purposes of the Coverage Form, a domestic "employee" is a person engaged in household or domestic work performed principally in n connection with a residence premises. 5. Fellow Employee "Bodily injury" to:: a. Any fellow "employee" of the "insured" "employ arising out of and in the ccourse of the fellow f "employee's" employment or while wh performing duties of erform es related to the conduct duct o your bus business; or b. The spouse, child, parent, brother or sister of that tha fellow "employee" yee" as a a consequence off Paragraph a. above. abo 6. Care, Custody ustody Or Control Contro "Property damage" to or "c "covered pollution cost or expense" involving ng property owned or transported by the "in "insured" or in the "insured's" care, custod custody or control. But this exclusion does not apply to liability assumed under a sidetrack agreement. 7. Handling Of Property "Bodily injury" or "property damage" resulting from the handling of property: a. Before it is moved from the place where it is accepted by the "insured" for movement into or onto the covered "auto"; or

b. After it is moved from the covered "auto" to the place where it is finally delivered by the "insured". 8. Movement Of Property By Mechanical Device "Bodily injury" or "property damage" resulting from the movement of property by a mechanical device (other than a hand truck) unless the device is attached to the covered "auto". 9. Operations ations "Bodily or "property damage" arising out dily injury" inj of the e operation of: a. Any equipment listed in Paragraphs 6.b. and 6.c. .c. of the definition of "mobile equipment"; t"; or b. Machinery orr equipment tha that is on, attached to or part of a land vvehicle that would qualify definition of "mobile qualif under the he d equipment" quipment" if it were not subject to a compulsory financial responsibility law or pulsory or fina other motor vehicle insurance law where it veh is licensed ed or principally garaged. 10. Completed Operations "Bodily injury" or "property damage" arising out "B of your work after that work has been y completed or abandoned. comp In this exclusion, your work means: a. Work or operations performed by you or on your behalf; and b. Materials, parts or equipment furnished in connection with such work or operations. Your work includes warranties or representations made at any time with respect to the fitness, quality, durability or performance of any of the items included in Paragraph a. or b. above. Your work will be deemed completed at the earliest of the following times: (1) When all of the work called for in your contract has been completed; (2) When all of the work to be done at the site has been completed if your contract calls for work at more than one site; or (3) When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project.

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Work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete, will be treated as completed. 11. Pollution "Bodily injury" or "property damage" arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants": a. That are, or that are contained in any property that is: (1) Being transported or towed by, handled or handled for movement into, onto or from the covered "auto"; (2) Otherwise in the course of transit by or on behalf of the "insured"; or (3) Being stored, disposed of, treated or processed in or upon the covered d "auto"; b. Before the "pollutants" or any property y in which the "pollutants" are contained are re moved from the place where they are accepted by the "insured" for movement moveme into or onto the covered "auto"; or c. After the "pollutants" or any property perty in which the "pollutants"" are contained are moved from the covered red "auto" to the place where they are finally delivered, disposed of or abandoned by the "insured". sured". Paragraph a. above does not apply to fuels, lubricants, fluids, gases ds, exhaust exha ses or other similar "pollutants" s" that are needed n for or result from the normal al electrical, hydraulic aulic or mechanical anica functioning ning of the covered covere "auto" uto" or o its parts if: (1) 1) The "pollutants"" escape, seep, migrate m or dispersed or released o are discharged, d, disp directly from an "auto" uto" part designed by its manufacturer to hold, store, receive t hold or dispose of such and uch "pollutants"; " ollut (2) The "bodily injury", damage" or y", "property " "covered pollution llution cost or expense" does not arise ou out of the operation of any equipmentt listed in Paragraphs 6.b. and 6.c. of the definition of "mobile equipment".

Paragraphs b. and c. above of this exclusion do not apply to "accidents" that occur away from premises owned by or rented to an "insured" with respect to "pollutants" not in or upon a covered "auto" if: (a) The "pollutants" or any property in which the "pollutants" are contained are upset, overturned or damaged as a result of the maintenance or use of "auto"; and a covered c (b) b) The discharge, dispersal, seepage, migration, release or escape of the m "pollutants" is caused directly by upset, overturn or damage. such upset 12. War "Bodily injury" ry" or "property y damage" arising directly or indirectly dir rectly out of: War, including undeclared or civil war; a. W b. Warli Warlike action by a military force, including m action ction in hindering or defending against an actual attack, by any al or expected expe government, sovereign or other authority nment, so using military itary personnel or other agents; or c. Insurrection, rebellion, revolution, usurped power or action taken by governmental authority in hindering or defending against any of these. a 13. Racing 13 Covered "autos" while used in any professional or organized racing or demolition contest or stunting activity, or while practicing for such contest or activity. This insurance also does not apply while that covered "auto" is being prepared for such a contest or activity. C. Limit Of Insurance Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", the most we will pay for the total of all damages and "covered pollution cost or expense" combined resulting from any one "accident" is the Limit Of Insurance for Covered Autos Liability Coverage shown in the Declarations.

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All "bodily injury", "property damage" and "covered pollution cost or expense" resulting from continuous or repeated exposure to substantially the same conditions will be considered as resulting from one "accident". No one will be entitled to receive duplicate payments for the same elements of "loss" under this Coverage Form and any Medical Payments Coverage endorsement, Uninsured Motorists Coverage endorsement or Underinsured Motorists Coverage endorsement attached to this Coverage Part. SECTION III – PHYSICAL DAMAGE COVERAGE A. Coverage 1. We will pay for "loss" to a covered "auto" or its equipment under: a. Comprehensive Coverage From any cause except: (1) The covered "auto's" collision with another object; or (2) The covered "auto's" overturn. b. Specified Causes Of Loss Coverage erage Caused by: (1) Fire, lightning or explosion; (2) Theft; (3) Windstorm, hail or earthquake; (4) Flood; (5) Mischief or van vandalism; or (6) The sinking, collision or nking, burning, bur derailment of any conveyance onveya transporting the covered "au "auto". c. Collisio Collision Coverage age Caused by: Cau (1) covered "auto's" collision with 1) The T auto' another object; or o (2) The "auto's" ove overturn. e covered "auto' 2. Towing We will pay up to o the limit shown in the Declarations forr towin towing and labor costs incurred each time a covered "auto" of the private passenger type is disabled. However, the labor must be performed at the place of disablement.

3. Glass Breakage – Hitting A Bird Or Animal – Falling Objects Or Missiles If you carry Comprehensive Coverage for the damaged covered "auto", we will pay for the following under Comprehensive Coverage: a. Glass breakage; b. "Loss" caused by hitting a bird or animal; and c. "Loss" caused by falling objects or missiles. cau However, er, you have the option of having glass breakage kage caused by a covered "auto's" collision sion or overturn considered a "loss" under Collision on Coverage. 4. Coverage e Extensions Extensio a. Transportation rtation Expenses We will pay ay up to $20 per day, to a maximum off $600, for temporary ma transportation expense trans xpense incurred by you because of the total t theft of a covered "auto" passenger type. We to" of the private priv will pay ay only for those covered "autos" for which you either Comprehensive or ou carry ca Specified Causes Of Loss Coverage. We will pay for temporary transportation expenses incurred during the period beginning 48 hours after the theft and b ending, regardless of the policy's expiration, e when the covered "auto" is returned to use or we pay for its "loss". b. Loss Of Use Expenses For Hired Auto Physical Damage, we will pay expenses for which an "insured" becomes legally responsible to pay for loss of use of a vehicle rented or hired without a driver under a written rental contract or agreement. We will pay for loss of use expenses if caused by: (1) Other than collision only if the Declarations indicates that Comprehensive Coverage is provided for any covered "auto"; (2) Specified Causes Of Loss only if the Declarations indicates that Specified Causes Of Loss Coverage is provided for any covered "auto"; or

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(3) Collision only if the Declarations indicates that Collision Coverage is provided for any covered "auto". However, the most we will pay for any expenses for loss of use is $20 per day, to a maximum of $600. B. Exclusions 1. We will not pay for "loss" caused by or resulting from any of the following. Such "loss" is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the "loss". a. Nuclear Hazard (1) The explosion of any weapon employing atomic fission or fusion; or (2) Nuclear reaction or radiation, or radioactive contamination, however caused. b. War Or Military Action r; (1) War, including undeclared or civil war; ary force, f (2) Warlike action by a military ering or including action in hindering defending against an actual or expected ereign or attack, by any government, sovereign rsonnel other authority using military personnel or other agents; or ebellion, (3) Insurrection, rebellion, revolution, usurped power or action taken by governmental authorityy in hindering or defending g against again any of these. 2. We will not pay for "loss" to any covered vered "auto" while used in any ny professional professiona or organized organi racing or demolition activity, n contest or stunting stun activity or while pra practicing for or such contest or activity. tivity We will a also not pay for "loss" to any covered cov "auto" to" while that covered vered "auto" is being prepared or activity. pared for such a contest est o 3. We willll not pay for "loss" due ue and a confined to: a. Wear and tear, freezing, freez ng, mechanical or electrical breakdown. n. b. Blowouts, punctures tures or o other road damage to tires. This exclusion does not apply to such "loss" resulting from the total theft of a covered "auto". 4. We will not pay for "loss" to any of the following: a. Tapes, records, discs or other similar audio, visual or data electronic devices designed for use with audio, visual or data electronic equipment.

b. Any device designed or used to detect speed-measuring equipment, such as radar or laser detectors, and any jamming apparatus intended to elude or disrupt speed-measuring equipment. c. Any electronic equipment, without regard to whether this equipment is permanently installed, that reproduces, receives or transmits audio, visual or data signals. d. Any accessories used with the electronic acce equipment ipment described in Paragraph c. above. bove. 5. Exclusions usion 4.c. and an 4.d. do not apply to equipment ment designed to be operated solely by use of the the "auto's" electrical he power from f system that, t, at the time of "loss", is: a. Permanently ly installed in or upon the covered "auto"; c o"; b. Removable from unit which is Rem m a housing ho permanently installed in or upon the ins alle covered vered "auto"; c. c An integral egral part par of the same unit housing any electronic equipment described in ctron Paragraphs a. and b. above; or d. d Necessary for the normal operation of the covered "auto" or the monitoring of the covered "auto's" operating system. co 6. 6 We will not pay for "loss" to a covered "auto" due to "diminution in value". C. Limits Of Insurance 1. The most we will pay for: a. "Loss" to any one covered "auto" is the lesser of: (1) The actual cash value of the damaged or stolen property as of the time of the "loss"; or (2) The cost of repairing or replacing the damaged or stolen property with other property of like kind and quality. b. All electronic equipment that reproduces, receives or transmits audio, visual or data signals in any one "loss" is $1,000, if, at the time of "loss", such electronic equipment is: (1) Permanently installed in or upon the covered "auto" in a housing, opening or other location that is not normally used by the "auto" manufacturer for the installation of such equipment;

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(2) Removable from a permanently installed housing unit as described in Paragraph b.(1) above; or (3) An integral part of such equipment as described in Paragraphs b.(1) and b.(2) above. 2. An adjustment for depreciation and physical condition will be made in determining actual cash value in the event of a total "loss". 3. If a repair or replacement results in better than like kind or quality, we will not pay for the amount of the betterment. D. Deductible For each covered "auto", our obligation to pay for, repair, return or replace damaged or stolen property will be reduced by the applicable deductible shown in the Declarations. Any Comprehensive Coverage deductible shown in the Declarations does not apply to "loss" caused by fire or lightning. SECTION IV – BUSINESS AUTO CONDITIONS The following conditions apply in addition on to the Common Policy Conditions: A. Loss Conditions 1. Appraisal For Physical Damage Loss If you and we disagree on n the amount of "loss", "loss either may demand an appraisal of the "loss". In this event, each party willl select a competent appraiser. The two appraisers ers will select a competent and umpire. The nd impartial im appraisers will state separately the sepa e actual cash value and amount nt of "loss". If they failil to agree, ag they will submit their eir differences to t the umpire. umpi A decision ecision agreed to by any two will be b binding. ding. Each Eac party will: a. Pay its chosen appraiser; and aiser; an b. Bear the other expenses ex nses of the appraisal and d umpire equally. If we submit to an appraisal, pprais , we will still retain our right to deny the claim. aim. 2. Duties In The Event Accident, Claim, Suit nt Of A Or Loss We have no duty to provide coverage under this policy unless there has been full compliance with the following duties: a. In the event of "accident", claim, "suit" or "loss", you must give us or our authorized representative prompt notice of the "accident" or "loss". Include: (1) How, when and where the "accident" or "loss" occurred;

(2) The "insured's" name and address; and (3) To the extent possible, the names and addresses of any injured persons and witnesses. b. Additionally, you and any other involved "insured" must: (1) Assume no obligation, make no payment or incur no expense without our consent, except at the "insured's" own cost. wn co (2) Immediately send us copies of any Imme request, demand, order, notice, req summons or legal paper received concerning the claim or "suit". (3) Cooperate operate with us in the investigation or settlement or defense ment of the claim cla against the "suit". he "su (4) Authorize uss to obtain obta medical records or other pertinent information. ent in (5) Submit to examination, at our expense, exa byy physicians of our choice, as often as we reasonably require. reasona c. If there is "loss" to a covered "auto" or its equipment, you must also do the following: ((1) Promptly notify the police if the covered "auto" or any of its equipment is stolen. (2) Take all reasonable steps to protect the (2 covered "auto" from further damage. Also keep a record of your expenses for consideration in the settlement of the claim. (3) Permit us to inspect the covered "auto" and records proving the "loss" before its repair or disposition. (4) Agree to examinations under oath at our request and give us a signed statement of your answers. 3. Legal Action Against Us No one may bring a legal action against us under this Coverage Form until: a. There has been full compliance with all the terms of this Coverage Form; and b. Under Covered Autos Liability Coverage, we agree in writing that the "insured" has an obligation to pay or until the amount of that obligation has finally been determined by judgment after trial. No one has the right under this policy to bring us into an action to determine the "insured's" liability.

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4. Loss Payment – Physical Damage Coverages At our option, we may: a. Pay for, repair or replace damaged or stolen property; b. Return the stolen property, at our expense. We will pay for any damage that results to the "auto" from the theft; or c. Take all or any part of the damaged or stolen property at an agreed or appraised value. If we pay for the "loss", our payment will include the applicable sales tax for the damaged or stolen property. 5. Transfer Of Rights Of Recovery Against Others To Us If any person or organization to or for whom we make payment under this Coverage Form has as rights to recover damages from another, those ose rights are transferred to us. That person n or organization must do everything necessary to secure our rights and must do nothing thing after "accident" or "loss" to impair them. B. General Conditions 1. Bankruptcy Bankruptcy or insolvency of the "insured" or the th "insured's" estate will not ot relieve us of any obligations under this Coverage rage Form. 2. Concealment, Misrepresentation Mis ation Or Fraud This Coverage Form is void in any case of fraud by you at any time as a it relates ates to this Coverage Form. It is also void if you u or any a other "insured", intentionally ins at any time, in ional conceals ceals or o misrepresents presents a material materia fact fa concerning: ncern a. This Coverage Form;; b. The he covered "auto"; c. Your interest or terest in the covered cov red "auto"; " d. A claim under this Coverage Form. Cove 3. Liberalization If we revise this Coverage Form to provide Cove more coverage without additional premium charge, your policy will automatically provide the additional coverage as of the day the revision is effective in your state. 4. No Benefit To Bailee – Physical Damage Coverages We will not recognize any assignment or grant any coverage for the benefit of any person or organization holding, storing or transporting property for a fee regardless of any other provision of this Coverage Form.

5. Other Insurance a. For any covered "auto" you own, this Coverage Form provides primary insurance. For any covered "auto" you don't own, the insurance provided by this Coverage Form is excess over any other collectible insurance. However, while a covered "auto" which is a "trailer" is connected to another vehicle, the Covered Autos Liability Coverage this Coverage Li Form for the "trailer" is: m provides prov (1)) Excess Exce while it is connected to a motor vehicle you do not own; or ve (2) Primary while it is connected to a covered vered "auto" "auto you own. b. For Hired d Auto Physical Damage Coverage, any covered hire, rent or d "auto" "aut you ou lease, lea borrow is deemed b emed to o be a covered "auto" you own. However, any "auto" that is wever, a leased, hired, rrented nted or borrowed with a driver "auto". ver is not a covered cove c. Regardless c rdless of the th provisions of Paragraph a. above, ve, this Coverage Form's Covered Autos Liability bil Coverage is primary for any liability assumed under an "insured contract". this Coverage Form and any other d. When W Coverage Form or policy covers on the C same basis, either excess or primary, we will pay only our share. Our share is the proportion that the Limit of Insurance of our Coverage Form bears to the total of the limits of all the Coverage Forms and policies covering on the same basis. 6. Premium Audit a. The estimated premium for this Coverage Form is based on the exposures you told us you would have when this policy began. We will compute the final premium due when we determine your actual exposures. The estimated total premium will be credited against the final premium due and the first Named Insured will be billed for the balance, if any. The due date for the final premium or retrospective premium is the date shown as the due date on the bill. If the estimated total premium exceeds the final premium due, the first Named Insured will get a refund. b. If this policy is issued for more than one year, the premium for this Coverage Form will be computed annually based on our rates or premiums in effect at the beginning of each year of the policy.

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7. Policy Period, Coverage Territory Under this Coverage Form, we cover "accidents" and "losses" occurring: a. During the policy period shown in the Declarations; and b. Within the coverage territory. The coverage territory is: (1) The United States of America; (2) The territories and possessions of the United States of America; (3) Puerto Rico; (4) Canada; and (5) Anywhere in the world if a covered "auto" of the private passenger type is leased, hired, rented or borrowed without a driver for a period of 30 days or less, provided that the "insured's" responsibilityy to pay damages is determined in a "suit" on the merits, in the United States of America, the he territories and possessions of the United ted States S of America, Puerto Rico or Canada, a, or in a settlement we agree to. We also cover "loss" to, or "accidents" cidents" involving, a covered "auto" while being bein transported between any of these places. p 8. Two Or More Coverage Forms orms Or Policies Issued By Us If this Coverage e Form and any other Coverage Form or policy issued to you by y us or any company affiliated to the same d with us applies app s "accident", the aggregate ggregate maximum maxim Limit of Insurance alll the Coverage Forms rance under u F ms or o policies cies shall sha not exceed eed the highest applicable appli Limit mit of o Insurance under der any one Coverage Cove Form m or policy. This condition dition does not apply to any Coverage Form or o policy olicy issued by us or an affiliated iated company specifically sp cifica to apply as excess insurance overr this Coverage Form. Cove SECTION V – DEFINITIONS A. "Accident" includess continuous or repeated contin exposure to the same ame cconditions resulting in "bodily injury" or "property damage". B. "Auto" means: 1. A land motor vehicle, "trailer" or semitrailer designed for travel on public roads; or

2. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. However, "auto" does not include "mobile equipment". C. "Bodily injury" means bodily injury, sickness or disease sustained by a person, including death resulting from any of these. D. "Covered pollution ollutio cost or expense" means any cost or expense xpense arising out of: 1. Any request, demand, order or statutory or requ regulatory atory requirement requireme that any "insured" or others test for, monitor, clean up, remove, mo contain, treat, or neutralize, or in any reat, detoxify deto way respond nd to, or assess the effects of, "pollutants"; or "p 2. Any claim or "suit" suit" by or on behalf of a governmental authority overnm ority for damages because of testing for, monitoring, cleaning up, m ni removing, re ng, containing, containing treating, detoxifying or neutralizing, way responding to, or n ng, or in any a assessing the effects of, "pollutants". a he effe "Covered pollution cost or expense" does not "Co include any cost or expense arising out of the inclu actual, alleged or threatened discharge, dispersal, actual seepage, epage migration, release or escape of "pollutants": utan a. That are, or that are contained in any property that is: (1) Being transported or towed by, handled or handled for movement into, onto or from the covered "auto"; (2) Otherwise in the course of transit by or on behalf of the "insured"; or (3) Being stored, disposed of, treated or processed in or upon the covered "auto"; b. Before the "pollutants" or any property in which the "pollutants" are contained are moved from the place where they are accepted by the "insured" for movement into or onto the covered "auto"; or c. After the "pollutants" or any property in which the "pollutants" are contained are moved from the covered "auto" to the place where they are finally delivered, disposed of or abandoned by the "insured".

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Paragraph a. above does not apply to fuels, lubricants, fluids, exhaust gases or other similar "pollutants" that are needed for or result from the normal electrical, hydraulic or mechanical functioning of the covered "auto" or its parts, if: (1) The "pollutants" escape, seep, migrate or are discharged, dispersed or released directly from an "auto" part designed by its manufacturer to hold, store, receive or dispose of such "pollutants"; and (2) The "bodily injury", "property damage" or "covered pollution cost or expense" does not arise out of the operation of any equipment listed in Paragraph 6.b. or 6.c. of the definition of "mobile equipment". Paragraphs b. and c. above do not apply to "accidents" that occur away from premises owned by or rented to an "insured" with respect ect to "pollutants" not in or upon a covered "auto" uto" if: (a) The "pollutants" or any property proper in which the "pollutants" are contained contain are upset, overturned or damaged maged as a result of the maintenance or use of a covered "auto"; and (b) The discharge,, dispersal, seepage, seepage migration, release ase or escape of the "pollutants" is caused directly by such upset, ps overturn n or damage. E. "Diminution in value" the alue" means m he actual or perceived loss in market value valu or resale esale value which results from a direct and accidental "loss". acc "loss F. "Employee" includes worker". ee" s a "leased orker "Employee" does not include a "temporary oyee" d "temp worker". ". G. "Insured" d" means any an person rson or organization qualifying g as an insured in the he Who W Is An Insured provision of the applicable coverage. c verag Except with respect to the Limit of Insurance, Insu nce the coverage afforded applies separatelyy to each insured who is seeking coverage or against agains whom a claim or "suit" is brought. H. "Insured contract" means: 1. A lease of premises; 2. A sidetrack agreement; 3. Any easement or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad; 4. An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality;

5. That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another to pay for "bodily injury" or "property damage" to a third party or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement; or 6. That part of a any contract or agreement entered into, as part of o your business, pertaining to the rental or lease, by you or any of your l "employees", of any "auto". However, such ployee contract ract or agreement agreeme shall not be considered an "insured contract" to the extent that it sured contrac obligates you or a any of your "employees" to pay for "property to any "auto" rented perty damage" d or leased by you ou or any a of your "employees". An "insu "insured contract"" does not in include that part of any contract an contrac or agreement: ent: a. That hat indemnifies a railroad for "bodily injury" or "property da damage" arising out of construction demolition operations, within uction or d 50 feet of any railroad property and affecting any railroad bridge or trestle, tracks, roadbeds, tunnel, underpass or crossing; That pertains to the loan, lease or rental of b. T an "auto" to you or any of your a "employees", if the "auto" is loaned, leased or rented with a driver; or c. That holds a person or organization engaged in the business of transporting property by "auto" for hire harmless for your use of a covered "auto" over a route or territory that person or organization is authorized to serve by public authority. I. "Leased worker" means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm to perform duties related to the conduct of your business. "Leased worker" does not include a "temporary worker". J. "Loss" means direct and accidental loss or damage. K. "Mobile equipment" means any of the following types of land vehicles, including any attached machinery or equipment: 1. Bulldozers, farm machinery, forklifts and other vehicles designed for use principally off public roads; 2. Vehicles maintained for use solely on or next to premises you own or rent; 3. Vehicles that travel on crawler treads;

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4. Vehicles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted: a. Power cranes, shovels, loaders, diggers or drills; or b. Road construction or resurfacing equipment such as graders, scrapers or rollers; 5. Vehicles not described in Paragraph 1., 2., 3. or 4. above that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types: a. Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well-servicing equipment; or b. Cherry pickers and similar devices used to raise or lower workers; or 6. Vehicles not described in Paragraph 1., 2., 3. or 4. above maintained primarily for purposes oses other than the transportation of persons or cargo. However, self-propelled vehicles icles with h the following types of permanentlyy attached attach equipment are not "mobile equipment" t" but will wi be considered "autos": a. Equipment designed primarily for: (1) Snow removal; (2) Road maintenance, but not construction or resurfacing; or (3) Street cleaning; eaning b. Cherry pickers rs and similar simil devices ces mounted on automobile or truck cha chassis and used to d use raise or lower workers; and c. Air com compressors, pumps and generators, gene tor including spraying, inclu ng, welding, building bu cleaning, geophysical clea cal exploration, lighting equipment. or well-servicing eq pmen

However, "mobile equipment" does not include land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered "autos". L. "Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and fum waste. Waste includes materials to be recycled, ste in reconditioned oned or o reclaimed. M. "Property means damage to or loss of ty damage" da use of tangible ngible property. N. "Suit" meanss a civil proceeding in which: pro "bodily injury" or 1. Damages because of "b "property damage"; or "p age"; o 2. A "covered pollution "co on cost or expense"; e to which ch this insurance applies, applie are alleged. "Suit" includes: "Sui udes: a. An arbitration in which such a rbitration proceeding p damagess or "covered pollution costs or expenses" are claimed and to which the "insured" must submit or does submit with our consent; or other alternative dispute resolution b. Any A proceeding in which such damages or p "covered pollution costs or expenses" are claimed and to which the insured submits with our consent. O. "Temporary worker" means a person who is furnished to you to substitute for a permanent "employee" on leave or to meet seasonal or shortterm workload conditions. P. "Trailer" includes semitrailer.

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POLICY NUMBER:

COMMERCIAL AUTO CA 20 01 10 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

LESSOR – ADDITIONAL INSURED AND LOSS PAYEE This endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, the provisions Form apply unless ns of the Coverage Cov modified by the endorsement. This endorsement changes the policy effective on the inception on date dat of the policy cy unless another date is indicated below. Named Insured: Endorsement Effective Date: SCHEDULE SC ULE Insurance Company: Policy Number:

Effective ective Date:

Expiration Date: Named Insured: Address: Additionall Insured (Lessor): (Lessor Address: Designation Or Description iption Of O "Leased Autos":

CA 20 01 10 13

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Coverages Covered Autos Liability Comprehensive

Limit Of Insurance $ Each "Accident" Actual Cash Value Or Cost Of Repair, Whichever Is Less, Minus $ Deductible For Each Covered "Leased Auto"

Collision

Actual Cash Value Or Cost Of Repair, Whichever Is Less, Minus $ Deductible For F Each Covered "Leased Auto"

Specified Causes Of Loss

Whiche Actual Cash Value Or Cost Of Repair, Whichever Is Less, Minus $ Deductible ctible For Each Covered "Leased Auto"

Information required to complete this Schedule, if not shown above, ab will be shown in the Declarations. A. Coverage 1. Any "leased auto" designated or described in the Schedule will be considered a covered ered "auto" you own and not a covered "auto" you hire or borrow. 2. For a "leased auto" designated or described escribed in the Schedule, the Who Is An Insure Insured provision under Covered Autos Liability Coverage is changed to include as an "insured" the lessor named med in the Schedule. Schedul However, the lessor is an "insured" only for fo "bodily injury" or "propertyy damage" resulting from the acts or omissions by: y: a. You; b. Any of your "employees" employees or agents; nts; or c. Any person, except the lessor or any l a "employee" or agent lessor, operating mploy gent of the lessor eratin "leased auto" with the permission of any a "lease an the above. of th 3. The coverages provided under this e c ovide endorsement orsement apply to any "leased auto" described bed in the Schedule Schedu e until unt the expiration date shown in the Schedule, Sch ule, or when the lessor or his or her agent ent takes possession of the "leased auto", whichever chev occurs first. B. Loss Payable Clause se 1. We will pay, as interest may appear, you and the lessor named in this endorsement for "loss" to a "leased auto".

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2. The insurance covers interest of the lessor overs the he inte unless nless the "loss" results sults from fraudulent acts or omissions part. ssions on your p rt payment to the lessor, we will 3. If we make any paym obtain hiss or her rights o righ against any other party. C. Cancellation Can 1. If we cancel the policy, we will mail notice to the lessor in accordance with the Cancellation t Common Policy Condition. Com 2. Iff you cancel the policy, we will mail notice to the lessor. 3. Cancellation ends this agreement. D. The lessor is not liable for payment of your premiums. E. Additional Definition As used in this endorsement: "Leased auto" means an "auto" leased or rented to you, including any substitute, replacement or extra "auto" needed to meet seasonal or other needs, under a leasing or rental agreement that requires you to provide direct primary insurance for the lessor.

© Insurance Services Office, Inc., 2011

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POLICY NUMBER:

COMMERCIAL AUTO CA 20 48 10 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

DESIGNATED INSURED FOR COVERED AUTOS LIABILITY COVERAGE This endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, the of the Coverage Fo Form apply unless he provisions p modified by this endorsement. This endorsement identifies person(s) or organization(s) for Covered s) who are "insureds" "insur ered Autos Liability Coverage under the Who Is An Insured provision of the Coverage This endorsementt does not alter coverage overage Form. For provided in the Coverage Form. This endorsement changes the policy effective on the date of the he inception inc e policy unless another date is indicated below. Named Insured: Endorsement Effective Date: SCHEDULE Orga (s): Name Of Person(s) Or Organization(s):

Information n required requir to complete mplete this Schedule, Schedu iff not no shown above, will be shown in the Declarations. Each person on or organization shown hown in the Schedule Sched is an "insured" Liability Coverage, but d" for Covered Autos A Liab only to the extent that person or organization qualifies orga as an "insured" ed" under the Who ho Is An Insured provision contained in Paragraph raph A.1. of Section II – Covered Autos Liability Coverage in the Business vera Auto and Motor Carrierr Coverage Forms and Cov Paragraph D.2. of Section I – Covered Autos Coverages of the Auto Dealers Coverage Form. l

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COMMERCIAL AUTO CA 20 54 10 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

EMPLOYEE HIRED AUTOS

3

This endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, the provisions Form apply unless ons of the Coverage Cov modified by the endorsement. A. Changes In Covered Autos Liability Coverage The following is added to the Who Is An Insured Provision: An "employee" of yours is an "insured" while operating an "auto" hired or rented underr a contract or agreement in an "employee's" s name, e with your permission, while performing duties ng du related to the conduct of your business.

covered "auto" hired or rented by your 2. Any A "employee" under in an "em nder a contract co "employee's" name, "emplo me, with your permission, while performing duties to the conduct hile pe ies related re of o your ur business. bus However, any "auto" that How th is leased, hired, rented driver is not a covered "auto". or borrowed bo with a dri

B. Changes In General Conditions Paragraph 5.b. of the Other Insurance Condition ndition in the Business Auto and Auto uto Dealers Coverage Coverag Forms and Paragraph 5.f. off the Other Insurance – Primary And Excess Insurance urance Provisions Condition in the Motor Carrier Coverage overage Form are replaced by the following: owing For Hired Auto Physical Coverage, ysical Damage Dam overage, the following are deemed "autos" d to be covered cove utos" you own: 1. Any covered covere "auto" you lease, hire, rrent nt or borrow; row; and

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COMMERCIAL AUTO CA 99 33 10 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

EMPLOYEES AS INSUREDS This endorsement modifies insurance provided under the following: BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, the provisions ions of the Coverage Form apply unless modified by the endorsement. The following is added to the Section II – Covered Autos Liability Coverage, Paragraph A.1. Who Is An Insured provision: Any "employee" of yours is an "insured" while e using a covered "auto" you don't own, hire e or borrow in your business or your personal onal affairs.

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COMMERCIAL AUTO CA 01 50 12 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

SOUTH CAROLINA CHANGES

3

For a covered "auto" licensed or principally garaged in, or "auto dealer operations" conducted in, South Carolina, this endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, the provisions of the Coverage Coverag Form apply unless modified by the endorsement. A. Changes In Covered Autos Liability Coverage 1. Paragraph 2.b.(4) of the Who Is An Insured provision in the Auto Dealers Coverage Form is replaced by the following: (4) Your customers. However, those customers are "insureds" up to the th compulsory or financial responsibility nsibility law limits where the covered "auto" to" is principally garaged. 2. The Expected Or Intended Injury njury Exclusion is replaced by the following: "Bodily injury" or "property damage" amage" expected expect or intended from the standpoint point of the "insured". However, er, this thi exclusion n does not apply for amounts up to the limits of liab liability required by the South uth Carolina Motor Vehicle Vehicl Financial Responsibility ty Act. 3. The Limit mit Of Insurance ce provision under the e Business and Motor ess Auto A tor Carrier Coverage Coverag Forms is rreplaced by the following: ollowing Regardless "autos", less of the number numbe of covered co "insureds", claims made or ", premiums paid, paid claim vehicles involved in the "accident", accid nt", the most we will pay for the total off all a damages and "covered pollution cost or expense" combined ex resulting from any one is the Limit Of ne "accident" "accid Insurance for Covered Liability Coverage d Autos Au shown in the Declarations. All "bodily injury", "property damage" and "covered pollution cost or expense" resulting from continuous or repeated exposure to substantially the same conditions will be considered as resulting from one "accident".

No one on will be entitled ntitled to receive receiv duplicate payments of "loss" yment for the same elements eleme under un r this Coverage Form orm and any Uninsured Motorists Coverage endorsement or Mot ts e Underinsured Motorists Coverage Unde red Moto endorsement ndo t attached tto this Coverage Part. Insurance – Covered Autos 4. The Limit Of Insu Liability provision under the Auto Dealers Lia Coverage Form is replaced by the following: Cove For resulting from the ownership, or "accidents" "ac maintenance or use of covered "autos", the ntena following applies: fo Regardless of the number of covered "autos", Re "insureds", premiums paid, claims made or vehicles involved in the "accident", the most we will pay for the total of all damages and "covered pollution cost or expense" combined resulting from any one "accident" involving a covered "auto" is the Limit Of Insurance for Covered "Autos" Liability Coverage shown in the Declarations. Damages and "covered pollution cost or expense" payable under the Limit of Insurance for Covered "Autos" Liability Coverage are not payable under any applicable Limits of Insurance under Section II – General Liability Coverages or Section III – Acts, Errors Or Omissions Liability Coverage. All "bodily injury", "property damage" and "covered pollution cost or expense" resulting from continuous or repeated exposure to substantially the same conditions will be considered as resulting from one "accident".

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No one will be entitled to receive duplicate payments for the same elements of "loss" under this Coverage Form and any Uninsured Motorists Coverage endorsement or Underinsured Motorists Coverage endorsement attached to this Coverage Part. B. Changes In Physical Damage Coverage No deductible applies to auto safety glass. All other Physical Damage Coverage provisions will apply.

C. Changes In Conditions The Concealment, Misrepresentation Or Fraud Condition does not apply to Covered Autos Liability Coverage.

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CA 01 50 12 13

COMMERCIAL AUTO CA 02 30 10 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

SOUTH CAROLINA CHANGES – CANCELLATION AND NONRENEWAL

3

This endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to the coverage provided by this endorsement, the provisions of the Coverage Form apply unless Cover modified by the endorsement. A. The Cancellation Common Policy Condition is amended as follows: 1. Paragraph 2. is replaced by the following: We will mail or deliver to you and your agent g the th written notice of cancellation, stating resses reason(s) for cancellation, at the addresses shown in the policy, at least: a. 15 days before the effective date of llation for cancellation if cancellation is nonpayment of premium; orr ffective date of b. 30 days before the effective cancellation if cancellation iss for any other reason. ded to Paragraph Parag 2. The following is added 4.: celled during tthe first st 60 If this policy is cancelled d is n newal or a continuation contin ion days, and not a renewal canc policy, the cancellation will be effective only on er the th 61st day of the policy period. perio or after ver, if this policy is cancelled for However, ment of premium, the e cancellation ca nonpayment will become effective only on or after the 31st day of the policy period.

b. Mater Material misrepresentation sentation of fact, which if known nown to us would have ccaused us not to issue e the policy; p c. S Substantial ntial change iin the risk assumed, except to the extent ex exte that we should have reasonably foreseen the change or re fore contemplated the risk in writing the policy; Substantial breach of contractual duties, d. S conditions or warranties; or cond e. Loss oss of our reinsurance covering all or a significant part of the particular risk insured, or where continuation of the policy would imperil our solvency or place us in violation of the laws of South Carolina. B. Nonrenewal B If we decide not to renew or continue this policy, we will mail to you and your agent written notice, stating the reason(s) for nonrenewal, at the addresses shown in the policy, at least 30 days before the end of the policy period.

3. The following is added: If this policy has been for more than een in effect eff 90 days, we may cancel ncel this th policy only for the following reasons: a. Nonpayment of premium;

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POLICY NUMBER:

COMMERCIAL AUTO CA 21 19 12 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

SOUTH CAROLINA UNINSURED MOTORISTS COVERAGE For a covered "auto" licensed or principally garaged in, or "auto dealer operations" conducted in, South Carolina, this endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, the provisions of the Form apply unless he Coverage Cover modified by the endorsement. This endorsement changes the policy effective on the inception date e of the th policy unless ess another date is indicated below. Named Insured: Endorsement Effective Date: SCHEDULE SCHEDU Limit Of Insurance:

$

Each "Accident"

Information required to complete this Schedule, chedule, iff not shown above, will w be shown in the Declarations. A. Coverage We will pay in accordance e with the South Sout Carolina olina Uninsured Motorists is Motoris Law all sums the "insured" "insur legally entitled titled to recover as damages from the th owner or driver driv of an "uninsured sured motor vehicle". vehicle The damages ages must result from rom "bodily injury" sustained by an "insured" or "property damage" prop caused by an "accident". The owner's owner' or driver's liability for these damages must from the mus result res ownership, maintenance or use of the "uninsured motor vehicle". B. Who Is An Insured If the Named Insured is designated in the Declarations as: 1. An individual, then the following are "insureds": a. The Named Insured and any "family members". b. Anyone else "occupying" a covered "auto" or a temporary substitute for a covered "auto". The covered "auto" must be out of service because of its breakdown, repair, servicing, "loss" or destruction.

c. Anyone for damages he or she is entitled to recover because of "bodily injury" sustained by another "insured". 2. A partnership, limited liability company, corporation or any other form of organization, then the following are "insureds": a. Anyone "occupying" a covered "auto" or a temporary substitute for a covered "auto". The covered "auto" must be out of service because of its breakdown, repair, servicing, "loss" or destruction. b. Anyone for damages he or she is entitled to recover because of "bodily injury" sustained by another "insured". c. The Named Insured for "property damage" only. C. Exclusions This coverage does not apply to any of the following: 1. Any claim settled without our consent.

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2. The direct or indirect benefit of any insurer or self-insurer under any workers' compensation, disability benefits or similar law. 3. Anyone using a vehicle without a reasonable belief that the person is entitled to do so. 4. The first $200 of the amount of "property damage" to the property of each "insured" as the result of any one "accident". 5. That part of "property damage" for which an "insured" has been compensated by insurance or otherwise. 6. "Bodily injury" or "property damage" arising directly or indirectly out of: a. War, including undeclared or civil war; b. Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or c. Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against agains any of these. D. Limit Of Insurance 1. Regardless of the number of covered "autos", os", "insureds", premiums paid, claims made or vehicles involved in the "accident", dent", the most we will pay for all damages resulting ing from any one o "accident" is the limit of Uninsured ured Motorists Coverage shown in Iff the "bodily n the Schedule. S injury" or "property damage" is sustained ned by an individual Named Insured or any "family "famil member" while "occupying" pying" a covered covere "auto", uto", our limit is the ssum of: a. The e Limit Lim Of Insurance ance shown in the th Schedule hedu for this coverage age as applicable to a covered overed "auto"; and b. That part of the limit for this that his coverage c applies to each additional "auto" itiona covered cov that does not exceed the limit of insurance applicable to the covered vered "auto" involved in the "accident".

2. Subject to the maximum limit of insurance for all damages: a. Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", the most we will pay for "bodily injury" or "property damage" sustained in an "accident" by an "insured" other than an individual Named Insured or any "family member" is that "insured's" pro rata share of the limitt shown in the Schedule for this sh coverage ge that applies to the vehicle that "insured" was "occupying" at the time of the red" wa "accident". dent" b. The individual Named Insured or any dividual Nam "family member" who sustains "bodily injury" or "property damage" in that damag "accident" will also be entitled to "ac t a pro rata share of the limit described in Paragraph a. above. bove. A person's rata p on's pro p ata share shall be the proportion that that person's damages bear to ropo perso the total damages by all "insureds". he to ages sustained sust 3. Regardless of the Reg e number of covered "autos", "insureds", premiums paid, claims made or "in vehicles involved in the "accident", if "bodily vehic injury" jury" or o "property damage" is sustained by an individual vidua Named Insured or any "family member" while not "occupying" any "auto", the m most mo we will pay for all damages resulting from that tha "accident" is the sum of: a. The highest limit of insurance for this coverage applicable to any one of such Named Insured's covered "autos"; and b. That part of the limit for this coverage that applies to each additional covered "auto" that does not exceed the limit of insurance applicable to the covered "auto" involved in the "accident".

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4. Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", if "bodily injury" or "property damage" is sustained in an "accident" by an individual Named Insured or any "family member" while "occupying" a vehicle not owned by that Named Insured or any "family member", the most we will pay for all damages resulting from the "accident" will be the highest limit of insurance for this coverage that applies to any one of such Named Insured's covered "autos". 5. Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", if "bodily injury" or "property damage" is sustained by an "insured" other than an individual Named Insured or any "family member" in an "accident" in which neither such Named Insured nor any "family member" sustained "bodily injury" or "property damage", the most we will pay for all damages resulting from that "accident" is the Limit Of Insurance shown in the Schedule for this coverage that applies plies to t the vehicle that "insured" was "occupying" ing" at the time of the "accident". 6. No one will be entitled to receive duplicate cate payments for the same elements ements of "loss" under this Coverage Form and any Liability Coverage form or Underinsured nsured Motorists Moto Coverage endorsement attached ached to this Coverage Part. We will not make a duplicate duplica payment ent under un this coverage for any element of "loss" oss" for fo which payment has been made by orr for anyone who is legally responsible. esponsible.

E. Changes In Conditions The Conditions are changed for Uninsured Motorists Coverage as follows: 1. Other Insurance in the Auto Dealers and Business Auto Coverage Forms and Other Insurance – Primary And Excess Insurance Provisions in the Motor Carrier Coverage Form are replaced by the following: a. If an "insured" sustains "bodily injury" while "occupying" g a vehicle not owned by that person or while not "occupying" any vehicle, the following llowing priorities of coverage apply:

First Priority rity

Second Priority rity

The Uninsured e policy affording a Motorists to the vehicle the rists Coverage Cove "insured" "occupying" at the time d" was "occupying of the "accident". cident" Any policy affording Uninsured A Motorists Coverage Mot erage to a Named Insured member", if the Insure or a "family "fa Named amed Insured sured is i an individual. ((1) If there is no applicable insurance available under the first priority, the maximum recovery under all policies in the th second priority shall not exceed the highest applicable limit for any one hi vehicle under any one policy. (2) If there is applicable insurance available under the first priority: (a) The limit of insurance applicable to the vehicle the "insured" was "occupying", under the policy in the first priority, shall first be exhausted; and

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(b) The maximum recovery in the second priority shall not exceed the highest limit for any one vehicle under any one policy in the second priority. b. We will pay only our share of the loss, not to exceed our share of the maximum recovery. Our share is the proportion that our limit of insurance bears to the total of all applicable limits on the same level of priority. c. For "property damage", this insurance is excess to all collectible insurance of any kind. d. Except for "property damage", the reference to "other collectible insurance" applies only to other collectible uninsured motorists insurance. 2. Duties In The Event Of Accident, Claim, Suit Or Loss in the Business Auto and Motor Carrier Coverage Forms and Duties In The Event Of Accident, Claim, Offense, Suit, Loss Or Acts, Errors Or Omissions in the th Auto Dealers Coverage Form are changed ged by adding the following: a. Promptly notify the police if a hit-and-run -run driver is involved; and b. Promptly send us copies of the legal papers if a "suit" is brought. 3. Transfer Of Rights Of Recovery very Against Others To Us is replaced eplaced by the following: owing Transfer Of Rights Of Recovery Recover Against nst Others To Us a. If anyy person perso or organization anization to or for whom w om we make payment under this Coverage Coverag Form rm has rights to recover cover damages from fro another, to us other, those rights righ are re transferred tra to the payment e extent of such pa ment that does not exceed the minimum limits by the limi specified spe South Carolina Motor Financial or Vehicle V hic Responsibility Act. That person or Th organization mustt do everything necessary eve to secure our rights ghts and an must do nothing after the "accident" or loss to impair them. b. If an "insured" has prosecuted to judgment any "suit" against anyone responsible, we will be entitled to an assignment of the judgment to the extent of payment under this insurance that does not exceed the minimum limits specified by the South Carolina Motor Vehicle Financial Responsibility Act.

c. We will pay our proportionate part of any reasonable costs and expenses incurred for any recovery, including reasonable attorneys' fees. However, we reserve the right to retain an attorney of our choice to pursue a claim instead of reasonable attorneys' fees. d. If an "insured" making a claim for "property damage" under this insurance is also entitled to insurance or other compensation for the "property damage", we will not be rope obligated pay the claim until the "insured" ed to pa has assigned us the rights to the assig compensation the extent of payment pensation to th under this insurance that does not exceed the minimum mum limits specified by the South Carolina Motor Vehicle Financial Moto Responsibility Act. Re 4. Two wo Or More Coverage age Forms IIssued By Us does not apply to Uninsured Motorists do Uninsu Coverage. Cov ge. 5. The following f ng condition is added: Conformity To Statute Conf o Statu This endorsement is intended to be in full conformity with the South Carolina Insurance con Laws. If any provision of this endorsement conflicts nflicts with that law, it is changed to comply with the law. F. Additi Additional Definitions As used in this endorsement: 1. "Family member" means a person related to an individual Named Insured by blood, marriage or adoption, who is a resident of such Named Insured's household, including a ward or foster child. 2. "Occupying" means in, upon, getting in, on, out or off. 3. "Property damage" means injury to or destruction of the property of an "insured". 4. "Uninsured motor vehicle" means a land motor vehicle or "trailer": a. For which neither a liability bond or policy nor cash or securities deposited with the State Treasurer provide at least the amounts required by the South Carolina Motor Vehicle Financial Responsibility Act.

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b. For which neither the operator nor owner can be identified and that hits or that causes an "accident" resulting in "bodily injury" or "property damage" without hitting an individual Named Insured or a "family member", a vehicle that an individual Named Insured or any "family member" is "occupying", the Named Insured's covered "auto" or any of such Named Insured's property. The facts of the "accident" must be corroborated by competent evidence of an eyewitness other than the owner or operator of the vehicle that an individual Named Insured or any "family member" was "occupying" at the time of the "accident". The eyewitness must sign an affidavit attesting to the truth of the facts of the "accident" contained in the affidavit. c. For which an insuring or bonding company successfully denies coverage, is or becomes insolvent, is in delinquency proceedings, suspension or receivership, p or is proven unable to respond to a judgment. ment.

d. For which the owner has not qualified as a self-insurer in accordance with the applicable provisions of the South Carolina Insurance Laws. However, "uninsured motor vehicle" does not include any vehicle: a. Owned or operated by a self-insurer under any applicable motor vehicle law, except a self-insurer which is or becomes insolvent. b. Owned by any governmental unit or agency unless a cause of action against that cau governmental nmenta unit or agency is barred by the Tort Claims Act, South Carolina Laws C 1986, Ratification No. No 514, Subsection 1578-60, orr by other applicable statute. ap c. Designed for or use mainly off public roads while not on public roads. ro

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POLICY NUMBER:

COMMERCIAL AUTO CA 21 88 12 13

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

SOUTH CAROLINA UNDERINSURED MOTORISTS COVERAGE

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For a covered "auto" licensed or principally garaged in, or "auto dealer operations" conducted in, South Carolina, this endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, the provisions of the Form apply unless prov e Coverage Cove modified by the endorsement. This endorsement changes the policy effective on the inception of the policy unlesss another date ion date d dat is indicated below. Named Insured: Endorsement Effective Date: SCHEDULE SCHEDUL Limit Of Insurance: $

Each "Accident"

Information required to complete mpl this Schedule, hedule, iff not shown above, will be shown in the Declarations. A. Coverage 1. We will pay in accordance rdance with the South uth Carolina Underinsured Motorists Law all sums a Under su the "insured" nsure is legally entitled to recover as damages es from the owner er or driver of an "underinsured damages nsured motor vehicle". veh e". The T must resultlt from "bodily injury" by an inju " sustained sus "insured" or "property damage" by an amag " caused ca "accident". The owner's or driver's liability for d these damages mustt arise out of the ari ownership, maintenance nance or use of the "underinsured motor vehi vehicle". 2. We will pay under this coverage only after any liability bonds or policies have been exhausted by payment of judgments or settlements. B. Who Is An Insured If the Named Insured is designated in the Declarations as: 1. An individual, then the following are "insureds": a. The Named Insured and any "family members".

b. Anyone else "occupying" a covered "auto" or a temporary substitute for a covered "auto". The covered "auto" must be out of service because of its breakdown, repair, servicing, "loss" or destruction. c. Anyone for damages he or she is entitled to recover because of "bodily injury" sustained by another "insured". 2. A partnership, limited liability company, corporation or any other form of organization, then the following are "insureds": a. Anyone "occupying" a covered "auto" or a temporary substitute for a covered "auto". The covered "auto" must be out of service because of its breakdown, repair, servicing, "loss" or destruction. b. Anyone for damages he or she is entitled to recover because of "bodily injury" sustained by another "insured". c. The Named Insured for "property damage" only.

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C. Exclusions This coverage does not apply to any of the following: 1. The direct or indirect benefit of any insurer or self-insurer under any workers' compensation, disability benefits or similar law. 2. Anyone using a vehicle without a reasonable belief that the person is entitled to do so. 3. That part of "property damage" for which an "insured" has been compensated by insurance or otherwise. 4. "Bodily injury" or "property damage" sustained by: a. An individual Named Insured while "occupying" or when struck by any vehicle owned by that Named Insured that is not a covered "auto" for Underinsured Motorists Coverage; or b. Any "family member" while "occupying" or when struck by any vehicle owned by that "family member" that is not a covered "auto" for Underinsured Motorists Coverage.. 5. "Bodily injury" or "property damage" arising directly or indirectly out of: a. War, including undeclared or civil war; b. Warlike action by a military ary force, including action in hindering or defending fending against again an actual or expected attack, tack, by any government, sovereign or other ver ther authority using military personnel ersonne or other agents; agents or c. Insurrection, rebellion, usurped bellion, revolution, revol usurpe power, or action taken by gov governmental mental authority ority in hindering ng or defending against a nst any of these. these D. Limit Of Insurance nsu 1. Regardless "autos", less of the number numbe of covered co "insureds", claims made or s", premiums paid, paid claim vehicles involved "accident", ved in the "accid nt", the most we will pay for all damages resulting from any one esul "accident" is the limit of Underinsured Motorists nde Coverage shown in the Schedule. If the "bodily Sche injury" is sustained by any "insured" while "occupying" a covered "auto", or if the Named Insured's covered "auto" sustains "property damage" in an "accident", our limit is the sum of: a. The Limit Of Insurance shown in the Schedule for this coverage applicable to a covered "auto"; and

b. That part of the limit for this coverage that applies to each additional covered "auto" that does not exceed the limit of insurance applicable to the covered "auto" involved in the "accident". 2. Subject to the maximum limit of insurance for all damages: a. Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", the mostt we will pay for "bodily injury" sustained ned in an "accident" by an "insured" otherr than an individual Named Insured or any "family family member" is that "insured's" pro rata share hare of the limit shown in the Schedule for this coverage that applies to c the vehicle that was "occupying" hat "insured" "in at the time of the "accident". e "acc ". b. An individual Named ind ed Insured or any "family member" injury" or ember" who sustains ains "bodily " "property erty damage" in that "accident" will also al be entitled to a pro rata share of the limit a. above. lim described ibed in Paragraph Pa A person's pro p o rata share shall be the proportion that that person's damages bear to pro the total to damages sustained by all "insureds". 3. Regardless 3 egardle of the number of covered "autos", "insureds", reds premiums paid, claims made or vehicles involved in the "accident", if "bodily ve injury" is sustained by an individual Named inju Insured or any "family member" while not "occupying" any "auto", the most we will pay for all damages resulting from that "accident" is the sum of: a. The highest limit of insurance for this coverage applicable to any one of such Named Insured's covered "autos"; and b. That part of the limit for this coverage that applies to each additional covered "auto" that does not exceed the limit of insurance applicable to the covered "auto" involved in the "accident". 4. Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", if "bodily injury" is sustained in an "accident" by an individual Named Insured or any "family member", while "occupying" a vehicle not owned by that Named Insured or any "family member", the most we will pay for all damages resulting from that "accident" will be the highest limit of insurance for this coverage that applies to any one of such Named Insured's covered "autos".

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5. No one will be entitled to receive duplicate payments for the same elements of "loss" under this Coverage Form and any Liability Coverage form or Uninsured Motorists Coverage endorsement attached to this Coverage Form. We will not make a duplicate payment under the Coverage Form for any element of "loss" for which payment has been made by or for anyone who is legally responsible. We will not pay for any element of "loss" if a person is entitled to receive payment for the same element of loss under any workers' compensation, disability benefits or similar law. E. Changes In Conditions The Conditions are changed for Underinsured Motorists Coverage as follows: 1. Other Insurance in the Auto Dealers and Business Auto Coverage Forms and Other Insurance – Primary And Excess Insurance Provisions in the Motor Carrier Coverage Form are replaced by the following: a. If an "insured" sustains "bodily injury"" while "occupying" a vehicle not owned byy that person or while not "occupying" any vehicle, hicle, the following priorities of coverage apply: First Priority

Second Priority

The policy affording Underinsured nderinsured Motorists Coverage to the e vehicle the "insured" was "occupying" at the time of o the "accident". t". Any policy affording ording Underinsured Under d rage to a Named Name Insured ured Motorists Coverage or a "family fam member", ber", if the Named Insured nsured is an individual. idua (1) If there th is no applicable pplica insurance available the first priority, the vailable under th maximum ximum recovery under u der all a policies in the second priorityy shall sha not exceed the highest applicable limit lim for any one vehicle under any one policy. (2) If there is applicable licable insurance available under the first priority: (a) The limit of insurance applicable to the vehicle the "insured" was "occupying", under the policy in the first priority, shall first be exhausted; and (b) The most we will pay in the second priority shall not exceed the highest limit for any one vehicle under any one policy in the second priority.

b. We will pay only our share of the loss, not to exceed our share of the maximum recovery. Our share is the proportion that our limit of insurance bears to the total of all applicable limits on the same level of priority. c. For "property damage", this insurance is excess to all collectible insurance of any kind. d. For "bodily injury", this insurance is excess to any other othe collectible Underinsured Motorists sts Coverage. Cov 2. Duties In n The Event Of Accident, Claim, Suit Or Loss in the Business Auto and Motor Busine Carrier Coverage erage Forms Form and Duties In The Event Of Accident, Ev cident, Claim, Offense, Suit, Loss Or Acts, Errors Or Omissions in the Omiss Auto Dealers Coverage D rage Form are changed by adding ing the following: Promptly copies of the Pro tly send us copie t legal papers if a "suit" "su is brought. broug 3. Transfer Off Rights Of Recovery Against Trans Others not apply to Underinsured Othe To Us does n Motorists Coverage. Mot 4. Two Or More Coverage Forms Issued By Us does not n apply to Underinsured Motorists Coverage. verag provision is added: 5. The T following ll Conformity To Statute Co This endorsement is intended to be in full conformity with the South Carolina Insurance Laws. If any provision of this endorsement conflicts with that law, it is changed to comply with the law. F. Additional Definitions As used in this endorsement: 1. "Family member" means a person related to an individual Named Insured by blood, marriage or adoption, who is a resident of such Named Insured's household, including a ward or foster child. 2. "Occupying" means in, upon, getting in, on, out or off. 3. "Property damage" as used in this endorsement means injury to or destruction of the Named Insured's covered "auto". However, "property damage" does not include damage to property owned by the "insured" while contained in the Named Insured's covered "auto".

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4. "Underinsured motor vehicle" means a land motor vehicle or "trailer" of any type to which a liability bond or policy applies at the time of the "accident" in limits equal to or greater than the minimum limit for liability specified by the South Carolina Motor Vehicle Financial Responsibility Act, but the limits of that bond or policy provide a limit that is less than the amount the "insured" is legally entitled to recover as damages caused by the "accident".

However, "underinsured motor vehicle" does not include any vehicle or equipment designed for use mainly off public roads while not on public roads.

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The Society of Certified Insurance Counselors a proud member of The National Alliance for Insurance Education & Research

SECTION 4

Workers Compensation and Employers Liability

James T. Harrison, J.D., CIC, CPCU, CLU, ChFC Tallahassee, FL

www.TheNationalAlliance.com © 2016. The National Alliance for Insurance Education & Research. All Rights Reserved. This outline or any part thereof may not be reproduced in any form or by any means or stored in any information retrieval system without the express written consent of the author. This publication includes copyrighted material of Insurance Services Office, Inc., with its permission.

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WORKERS COMPENSATION

James T. Harrison, Jr. 1327 North Adams Street Tallahassee, FL 32303 [email protected]

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THIS PAGE IS INTENTIONALLY LEFT BLANK

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WORKERS COMPENSATION LEARNING OBJECTIVES After completing this session the participant will be able to respond to questions concerning the following key learning objectives: 1.

Understand the common law defenses of the employer in the employer-employee relationship

2.

To explain the legal obligations of the employer in the employeremployee relationship

3.

To explain how the worker compensation system modifies the legal concepts of the common law.

4.

To describe the major characteristics of the benefits provided in state workers compensation laws.

5.

Explain the general employment exemptions and potential solutions to provide coverage.

6.

Identify the Monopolistic states and explain how WC/EL coverage is provided in those states.

7.

Discuss the impact of the employer being the statutory employer and the importance of the distinction between employee and independent contractor.

8.

Identify and explain how benefits are triggered by parts I, II, and III of the Workers Compensation Policy

9.

To describe the three coverage areas in the Workers Compensation Policy

10.

Explain recovery from others and how it applies to suits against third parties

11.

To understand the necessity of Employers Liability coverage

12.

Identify and describe four coverages in Part II of the Workers Compensation Policy.

13.

Describe how coverage in Part III is activated, limited and can be an error and omission problem.

14.

Explain the uses and coverages of major Workers Compensation and Employer Liability endorsements.

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I.

II.

INTRODUCTION TO THE POLICY COVERAGE A.

Workers Compensation Insurance Purpose: To provide benefits for those who suffer an occupational injury or disease

B.

Employers Liability Insurance Purpose: To provide coverage for an employer’s liability where recovery is permitted by law for bodily Injury arising arising out of and in the course of an injured employee’s employment not covered by Workers Compensation.

C.

Governed by statutory law – state and federal

D.

Policy Form is only 6 pages long

E.

Information Page

Concepts of Workers Compensation-Why Workers Compensation Statutes Were Enacted A.

Historical perspective 1.

Increase in on the job accidents during Industrial Revolution.

2.

Early English common law made the master responsible for injuries to the servant that were a result of the negligence of the master. Under common law, an employee who was injured on the job was forced to prove negligence on the employer's part in order to collect for damages.

COMMON LAW DEFENSES OF THE EMPLOYER IN THE EMPLOYEREMPLOYEE RELATIONSHIP 3.

Harrison WC 02/2016

Common law defenses for negligence a.

Fellow Servant Doctrine-It is possible that the injury was due to the negligence of the fellow worker. Ex., employee turns on machine while other employee is in machine.

b.

Assumption of Risk-The employee is aware of the danger involved in the job, so the employer should not be liable. Employee's voluntary exposure to danger. Worker agrees to work on steeply pitched roof.

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c.

Contributory Negligence-Employer is not responsible if the employee was guilty of some negligence that contributed to the injury. Worker fails to wear employer furnished face shield. These three defenses provided an excellent means for employers to avoid negligence. The employer had a definite legal advantage over employees and the most commonly used and successful defense was assumption of risk.

LEGAL OBLIGATIONS OF THE EMPLOYER IN THE EMPLOYEREMPLOYEE RELATIONSHIP 4.

Because of the concerns about on the job injuries, in the late 1800's many states passed Employers Liability Laws requiring that employers fulfill certain duties to employees. If the employer failed to meet one or more of these duties they were stripped of their common law defenses. The five duties or "reasonables," under which an employee could recover damages from the employer were that the employer had a duty to provide: 1) 2) 3) 4) 5)

a reasonably safe place to work, reasonably safe tools and equipment, reasonable fit and competent fellow workers, reasonably enforceable safety rules, and a reasonable warning of any hidden workplace dangers.

TO EXPLAIN HOW THE WORKER COMPENSATION SYSTEM MODIFIES THE LEGAL CONCEPTS OF THE COMMON LAW. B.

Workers Compensation is a no-fault system designed to protect the worker and benefit society, and provides a replacement for the common law tort remedy. The "Doctrine of Sole Remedy" removes the tort remedy for on the job injuries. Each state in the United States passed WC laws beginning with Wisconsin in 1911. Mississippi was the last state in 1949. The District of Columbia passed a WC law in 1982.

C.

Under the "Doctrine of Sole Remedy" the EMPLOYEE loses right to sue, but gains definite amount of recovery (Sole Remedy).

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III.

Overview of Workers Compensation Laws A.

Statutory enacted legislation.

B.

Social insurance

C.

1.

Mandatory benefit schedule

2.

Coverage is mandatory.

3.

Cost borne by employer, cannot be passed on to the employee.

Compensates employee for: 1.

Work-related injury, "accident" a. b.

2.

Arising out of employment (origin of injury), and In the course of employment. How about driving to and from work? Stopping at a bar on the way home? Washing your car? Real question: Does it arise out of (cause or origin of accident) and in the course of (time, place, and circumstances) employment?

Occupational disease. The risk of a particular disease must be greater to this occupation than to the public at large. a. b.

Arising out of employment, and Due to causes characteristic of the particular occupation. Black lung (mines), brown lung (cotton mills), asbestosis, HIV/AIDS.

Occupational disease does not include ordinary diseases of life to which we are all exposed are not occupational disease (flu, Lyme disease). TO DESCRIBE THE MAJOR CHARACTERISTICS OF THE BENEFITS PROVIDED IN STATE WORKERS COMPENSATION LAWS. IV.

Workers Compensation Benefits A.

Medical: 100% coverage. The medical care is to be rendered immediately. Some states pay for prayer, spiritual treatment and Christian Science treatment.

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B.

Disability. 1.

Types a.

2.

Temporary total. Example: back strain. Most cases involve this disability - Employee is unable to work while benefits are payable, but is expected to return to work. (1) Benefit amount. Percentage of AWW. Subject to state maximum. (2) Time limit.

b.

Temporary partial. Example: broken arm. Able to work, but in reduced capacity different type of job. (1) Benefit amount. Percentage of difference between pre-injury and post-injury wage. Subject to state maximum. (2) Time limit

c.

Permanent partial. Percentage of AWW times number weeks in schedule. Subject to state maximum. (1) Scheduled benefits. Example: loss of hand. (2) Nonscheduled benefits. Example: back injury.

d.

Permanent total. Example: quadriplegic. Employee is permanently and totally unable to perform gainful employment. (1) Benefit amount. Percentage of AWW. Subject to state maximum. (2) Time limit. Generally for life.

Benefit amount. a. b. c.

Thirty-five states pay 66 2/3s of injured worker's average weekly wage subject to a state set maximum. Amount paid ranges from 60% to 90%. Maximum is set annually and based on the average weekly wage of all employees.

3.

Waiting period/retroactive date. If waiting period reaches the retroactive date benefits are payable from the date of injury.

4.

Reduction in benefits provision. Set by each state.

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a.

Injury caused by drug or alcohol use.

b.

Failure to use safety device or appliance

c.

Self-inflicted

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4

d. 5. C.

D.

V.

Non-disclosed

COBRA impact. Federal law that mandates a maximum 80% of injured worker's AWW when SS and WC are combined.

Death 1.

Funeral Benefits. Amount vary by state.

2.

Survivor Benefits. a.

Paid to dependents. (If no dependents, no payment, or paid to estate, or an amount is paid to the state.) (1) Spouse for specific time or amount. Benefits may cease upon remarriage of spouse. (2) Minor until reaching age of majority, or age 22, 23, 24 if full time student.

b.

Amount paid. (1) Calculated as a percentage (usually 66 2/3s) of the deceased worker's AWW. (2) Some states have different percentages for different sets of dependents such as spouse only versus spouse and children and children only.

Rehabilitation benefits. (Separate amounts in some states.) 1.

Physical

2.

Educational

Overview of Workers Compensation Statutes A.

Type of law 1.

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Compulsory. Forty-eight states and DC. a.

All employers covered by law must comply and provide benefits.

b.

Failure to comply may result in fines, injunction ceasing operations, and imprisonment.

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2.

Elective. New Jersey and Texas a.

Employer may accept or reject.

b.

If elect to reject, cannot be fined. If sued for on the job injury, lose common law defenses.

EXPLAIN THE GENERAL EMPLOYMENT EXEMPTIONS AND POTENTIAL SOLUTIONS TO PROVIDE COVERAGE. B.

C.

Covered employments 1.

Most laws exclude domestic, casual, and farm.

2.

In some states the coverage is elective if less than a certain number of employees. a.

Less than three. AR, GA, MI, NM, NC, VA

b.

Less than four. FL, SC

c.

Less than five. AL, MS, MO, TN

3.

In some states, sole proprietors, partners, and executive officers are not covered and may elect into the system.

4.

In other states executive officers and/or partners are covered but may elect out.

Endorsements

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4

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY 4th Reprint

WC 00 03 08

Effective April 1, 1984

Standard

PARTNERS, OFFICERS AND OTHERS EXCLUSION ENDORSEMENT The policy does not cover bodily injury to any person described in the Schedule. The premium basis for the policy does not include the remuneration of such persons. You will reimburse us for any payment we must make because of bodily injury to such persons. Schedule Partners

Officers Others

Partners, Officers, and Others Exclusion (WC 00 03 08) - Excludes these persons when coverage is automatic under the particular law(s). This endorsement is used when an individual has elected not to be covered by the law and to exclude employers liability coverage for persons that are exempt from the application of the workers compensation law.

Note: 1.

2.

3.

4.

5.

Use this endorsement in a state where an Individual has elected pursuant to the workers compensation law not to be covered by the law and to exclude employers liability coverage where the insured is statutorily exempt from workers compensation coverage. Individuals may be designated in this endorsement only when it is proper to do so under the workers compensation law. Individuals may be designated by naming them or by describing them, as, for example: a. all partners; b. all executive officers except the president; c. each person named in Item 4 of the Information Page. This endorsement may be used in Missouri to exclude members of a limited liability company who have rejected workers compensation and employers liability insurance in accordance with Missouri Department of Insurance Bulletin 96-02. Use this endorsement in the state of Missouri to exclude family members, as allowed by Section 287.035.6(2), RSMo. The family members should be individually named (a general statement of “all family members” is not acceptable) within this endorsement and updated annually to avoid any possible disputes over which family members intend to be excluded. In addition, for purposes of Section 287.035.6.(1), RSMo, family members within the third degree of affinity or consanguinity shall mean the following: st Parents or child of the employer, or of the employer’s current living spouse. 1 Degree 2nd Degree Grandparents, grandchildren, brothers or sisters of the employer or of the employer’s current living spouse. 3rd Degree Great grandparents, great grandchildren, aunts, uncles, nieces or nephews of the employer or of the employer’s current living spouse. In the commonwealth of Massachusetts, this endorsement can be used only to identify corporate officers or directors who own at lease 25% of the issued and outstanding sock of a corporation and who have elected to exclude themselves from coverage in accordance with Massachusetts General Law, Chapter 152, Section 1(4), as amended, and Regulation 452 CMR 8.00. All excluded corporate officers and directors must be individually named on this endorsement. ¤ 1996-2003 National Council on Compensation Insurance, Inc.

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WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY 1st Reprint

Effective April 1, 1984

WC 00 03 10 Standard

SOLE PROPRIETORS, PARTNERS, OFFICERS AND OTHERS COVERAGE ENDORSEMENT An election was made by or on behalf of each person described in the Schedule to be subject to the workers compensation law of the state named in the Schedule. The premium basis for the policy includes the remuneration of such persons.

Schedule

Persons

State

Sole Proprietor: Partners: Officers: Others:

Sole Proprietors, Partners, Officers and Others Coverage (WC 00 03 10) - Includes these persons when coverage is elective under the particular law(s). Individuals may be designated in this endorsement when it is allowed that the person may come under the state workers compensation law.

Notes: 1.

Individuals may be designated in this endorsement only when it is proper to do so under the workers compensation law. Individuals may be designated by naming them or by describing them, as, for example: a. all partners; b. all executive officers except the president; c. each person named in Item 4 of the Information Page.

2.

In the commonwealth of Massachusetts, this endorsement can be used only to identify sole proprietors who have elected to obtain coverage for themselves as employees on this policy in accordance with Massachusetts General Law, Chapter 152. Section 1(4), as amended, and Regulation 452 CMR 8.00. All included sole proprietors and partners must be individually named on this endorsement. ¤ 1983-2003 National Council on Compensation Insurance.

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4

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY th

5

Reprint

Effective August 1, 1991

WC 00 03 11 A Standard

VOLUNTARY COMPENSATION AND EMPLOYERS LIABILITY COVERAGE ENDORSEMENT This endorsement adds Voluntary Compensation Insurance to the policy. A. How This Insurance Applies This insurance applies to bodily injury by accident or bodily injury by disease. Bodily injury includes resulting death. 1. The bodily injury must be sustained by an employee included in the group of employees described in the Schedule. 2. The bodily injury must arise out of and in the course of employment necessary or incidental to work in a state listed in the schedule. 3. The bodily injury must occur in the United States of America, its territories or possessions, or Canada, and may occur elsewhere if the employee is a United States or Canadian citizen temporarily away from those places. 4. Bodily injury by accident must occur during the policy period. 5. Bodily injury by disease must be caused or aggravated by the conditions of your employment. The employee’s last day of last exposure to the conditions causing or aggravating such bodily injury by disease must occur during the policy period. B. We Will Pay We will pay an amount equal to the benefits that would be required of you if you and your employees described in the Schedule were subject to the workers compensation law shown in the Schedule. We will pay those amounts to the persons who would be entitled to them under the law. C. Exclusions This insurance does not cover: 1. any obligation imposed by a workers compensation or occupational disease law, or any similar law. 2. bodily injury intentionally caused or aggravated by you. D. Before We Pay Before we pay benefits to the persons entitled to them, they must: 1. Release you and us, in writing, of all responsibility for the injury or death. 2. Transfer to us their right to recover from others who may be responsible for the injury or death. 3. Cooperate with us and do everything necessary to enable us to enforce the right to recover from others. If the personal entitled to the benefits of this insurance fail to do those things, our duty to pay ends at once. If they claim damages from you or from us for the injury or death, our duty to pay ends at once. E. Recovery From Others If we make a recovery from others, we will keep an amount equal to our expenses of recovery and the benefits we paid. We will pay the balance to the persons entitled to it. If the persons entitled to the benefits of this insurance make a recovery from others, they must reimburse us for the benefits we paid them. F. Employers Liability Insurance Part Two (Employers Liability Insurance) applies to bodily injury covered by this endorsement as though the state of Employment shown in the Schedule were shown in Item 3.A. of the Information Page.

1 of 2 ¤1991, 2002 National Council on Compensation Insurance

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WC 00 03 11 A WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY

Standard

5th Reprint

Effective August 1, 1991 Schedule

Employees

State of Employment

Designated Workers Compensation Law

4

Voluntary Compensation and Employers Liability Coverage (WC 00 03 11 A) - Extends coverage on a voluntary basis to employees indicated on the endorsement for benefits of the state indicated (also similar form for Homeowners policy). Use this endorsement to afford voluntary compensation coverage pursuant to Rules II and VII of the Basic Manual.

Notes: 1. 2. 3. 4. 5.

Use this endorsement to afford voluntary compensation coverage pursuant to the Basic Manual User’s Guide. Use Voluntary Compensation Maritime Endorsement to provide Voluntary Compensation Coverage under Program II as described in the Basic Manual User’s Guide. . Work in a monopolistic state fund state should not be included in the Schedule unless employers liability coverage is provided in that state by the Employers Liability Coverage Endorsement. This endorsement may only be used in accordance wit the provisions of MS 176.041 in Minnesota. Various uses of this endorsement are illustrated below. Schedule

Employees

State of Employment

Designated Workers Compensation Law

All officers and employees not subject to workers compensation law.

Any state shown in Item 3.A. of the Information Page.

The state where the injury takes place

All domestics, farm and agricultural Workers

Utah

Utah

All partners of the insured partnership.

Kansas

Kansas

2 of 2 ¤ 1991, 2002 National Council on Compensation Insurance

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VI.

Methods of funding the WC obligation. A.

Private insurers - an admitted insurer in the state(s)

B.

Competitive state funds. AZ, CA, CO, HI, ID, KY, LA, ME, MD, MO, MN, MT, NM, NY, OK, OR, PA, RI, TX, UT

IDENTIFY THE MONOPOLISTIC STATES AND EXPLAIN HOW WC/EL COVERAGE IS PROVIDED IN THOSE STATES. C.

D.

VII.

Monopolistic state funds: ND, OH, WA, and WY (and Puerto Rico). 1.

Require WC purchase through state fund

2.

Cannot extend policies in other states to cover exposure

Self-insurance 1.

Currently allowed in 48 states (ND, WY)

2.

Individual - normally, large companies meeting state requirements to be a qualified self-insurer

3.

Homogeneous Groups.

Penalties. (Vary by state. Some are in statute, others in common law.) A.

Late reporting of injury. 1.

Reduced benefits if injured employee fails to report timely.

2.

Employers must report injury or death to state within certain times. Late reporting results in fines and penalties.

B.

Failure to provide benefits. Fines, penalties and increased benefits.

C.

Illegally employed minor. 1.

Fines, penalties (multiple of benefits as added compensation).

2.

If added benefits are due, the policy pays the regular benefits and the employer must pay the excess.

3.

The EL portion of the policy will excludes punitive damages and any suit by worker illegally employed with knowledge of the insured or an executive officer.

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DISCUSS THE IMPACT OF THE EMPLOYER BEING THE STATUTORY EMPLOYER AND THE IMPORTANCE OF THE DISTINCTION BETWEEN EMMPLOYEE AND INDEPENDENT CONTRACTOR. VIII. Who is an "employee?" A.

Regular employees

B.

Leased employees

C.

Temporary employee

D.

One problem - independent contractor or employee?

4

1.

Employee: a person who acts for another under a contract for hire for wages or other forms of remuneration, subject to the terms, conditions, hours, and rules promulgated by the employer. The employer has the right to control and direct the activities of the employee who performs the services, not only as to the result to be accomplished, but also as the methods and means by which the result is obtained.

2.

Common law criteria for determination for independent contractor status: a. Control. Did the contractor control the means, manner, and method of getting the job done? b. Skill c. Pay. By the task or by the hour? d. Nature of relationship they believe they have e. Who supplies the tools? f. Can person be hired or fired? Was the contract terminable at the will of either party without liability? g. Can person work for others?

3.

Courts are also influenced by a twenty point test used by the IRS.

4.

States of AZ, CA, CO, DE, FL, GA, ID, IL, IN, LA, MN, ME, MS, MT, NV, NH, PA, RI, TN, TX, UT, VT, WV, and WI have laws defining independent contractors versus employees; others are determined by court decision

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E.

IX.

Compensation Liability of Principals & Contractors 1.

Principal or contractor responsible for compensation benefits to employees of subcontractors that fail to provide coverage.

2.

States with principals or contractors liable - AK, AZ, AR, CT, CO, DC, FL*, GA, HI*, ID*, IL, IN*, KS*, KY*, LA*, MD*, MA*, ME, MI*, MN*, MS, MO*, MT*, NE, NV, NH*, NJ*, NM, NY*, NC, ND, OH, OK, OR, PA*, SC*, SD*, TN*, UT, VT, VA*, WA*, WV, WI*, and WY*. (* permits principal or contractor to recover amounts paid from the uninsured sub.)

Insuring leased employees. A.

When, under the terms of the contract, the client is responsible for purchasing coverage. 1.

Client's Policy

Labor Contractor Endorsement (WC 00 03 20 A) or PEO Extension Endorsement (WC 00 03 20 B) This endorsement is a form of additional insured endorsement drafted specifically for employee leasing arrangements to extend coverage to the leasing company for any liability it may have arising out of injuries to employees it leases to clients. Consistent with the intention of the parties, it also waives the insurer's right of subrogation against the leasing company. 2.

Leasing Company's Policy

Employee Leasing Client Endorsement (WC 00 03 19) OR Labor Contractor Exclusion Endorsement (WC 00 03 21) OR PEO Exclusion Endorsement (WC 00 03 21 A) The primary difference between the employee leasing client endorsement and the labor contractor exclusion endorsement is that the former provides contingent coverage for the leasing company's liability to leased employees in the event the client fails to provide the coverage. The labor contractor exclusion endorsement is an absolute exclusion of coverage. Therefore, the employee leasing client endorsement is the preferred endorsement since it fills a potential gap in coverage, generally at no additional cost unless the coverage is activated.

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WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY st 1 Reprint

WC 00 03 20 A

Effective February 25, 1992

Standard

LABOR CONTRACTOR ENDORSEMENT This endorsement applies only with respect to bodily injury to your leased employees in the state named in Item 2 of the Schedule when provided by a labor contractor named in Item 1 of the Schedule. This endorsement does not apply with respect to bodily injury to workers provided to you on a temporary basis. Certain words and phrases in this endorsement are defined as follows: Labor contractor means the entity furnishing some or all of the workers to another entity. Client means the entity using the services of a labor contractor to obtain some or all of its workers. Temporary worker means a worker who is furnished to an entity to substitute for a permanent employee on leave or to meet seasonal or short-term workload conditions. Part One (Workers Compensation Insurance) and Part Two (Employers Liability Insurance) will apply as though the labor contractor is an insured. If an entry is shown in Item 3 of the Schedule, the insurance afforded by this endorsement applies only to work you perform under the contract or at the project named in the Schedule. Under Part One we will reimburse the labor contractor named in the Schedule for the benefits required by the workers compensation law if we are not permitted to pay the benefits directly to the persons entitled to them. The insurance afforded by this endorsement is not intended to satisfy the labor contractor’s duty to secure its obligations under the workers compensation law. We will not file evidence of this insurance on behalf of the labor contractor with any government agency. We will not ask any other insurer of the labor contractor to share with us a loss covered by this endorsement. Premium will be charged for your leased employees while provided by the labor contractor. You must obtain from the labor contractor and furnish to us a complete payroll record of your leased employees provided by the labor contractor to satisfy your obligations under Part Five (Premium), C.2. The policy may be cancelled according to its terms or for violation of rules applicable to employee leasing operations provided that the labor contractor has been provided a reasonable opportunity to cure the violation. If the policy is canceled, we will send notice of such cancellation to the labor contractor. Part Four (Your Duties If Injury Occurs) applies to you and the labor contractor. The labor contractor will recognize our right to defend under Parts One and Two and our right to inspect under Part Six (Conditions). Schedule 1.

Labor Contractor

2.

State Where Work Performed

3.

Contract or Project

Notes 1. 2.

Address

This endorsement may be used in the voluntary market. The endorsement is attached to the client policy. This endorsement must be attached to policies in the workers compensation insurance plan. The endorsement is attached to the client policy. ¤ 1992 National Council on Compensation Insurance, Inc.

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4

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Original Printing

Effective January 1, 2006

WC 00 03 20 B Standard

PROFESSIONAL EMPLOYER ORGANIZATION (PEO) EXTENSION ENDORSEMENT This endorsement applies only with respect to bodily injury to your leased workers in the state named in Item 2 of the Schedule when provided by a PEO named in Item 1 of the Schedule. This endorsement does not apply with respect to bodily injury to workers provided to you on a temporary basis. Certain words and phrases in this endorsement are defined as follows: Professional Employer Organization (PEO) is an entity or group of entities who are or were formally related by common management or ownership that provides workers to its client(s) through a PEO arrangement for a fee, pursuant to an agreement, written or otherwise. Without limitation, a PEO may also be referred to as a labor contractor, employee leasing company, lessor, or other similarly administered arrangement. Client is an entity that obtains all or part of its workforce for a fee, pursuant to an agreement, written or otherwise, from another entity through a professional employer organization (PEO) arrangement or that employs the services of an entity through a PEO arrangement. Without limitation, a client may also be referred to as a lessee. Temporary worker means a worker who is furnished to an entity for a finite period of time, including but not limited to one or more of the following work situations: x x x x x

Replace an absent worker who will return, such as during an authorized leave of absence, vacation, jury duty, or illness Fill a short-term temporary professional skill shortage Staff a seasonal workload Staff a special assignment or project where the worker will be terminated or assigned to another temporary project upon completion Satisfy the requirements of the employer’s overall employment program, such as probationary period before new workers are granted permanent employee status

Part One (Workers Compensation Insurance) and Part Two (Employers Liability Insurance) will apply as though the PEO is an insured. If an entry is shown in Item 3 of the Schedule, the insurance afforded by this endorsement applies only to work you perform under the contract or at the project named in the Schedule. Under Part One we will reimburse the PEO named in the Schedule for the benefits required by the workers compensation law if we are not permitted to pay the benefits directly to the persons entitled to them. The insurance afforded by this endorsement is not intended to satisfy the PEO’s duty to secure its obligations under the workers compensation law. We will not file evidence of this insurance on behalf of the labor contractor PEO with any government agency. We will not ask any other insurer of the PEO to share with us a loss covered by this endorsement. Premium will be charged for your leased workers while provided by the PEO. You must obtain from PEO and furnish to us a complete payroll record of your leased workers provided by the PEO to satisfy your obligations under Part Five (Premium), C.2. You are jointly liable with the PEO for the contributions, premiums, forfeits, or interest attributable to the wages of the workers leased to you by the PEO. The policy may be cancelled according to its terms or for violation of rules applicable to PEO arrangements, provided that the PEO has been provided a reasonable opportunity to cure the violation. If the policy is canceled, we will send notice of such cancellation to the PEO and provide you with a notice regarding the status of your coverage. Part Four (Your Duties If Injury Occurs) applies to you and the PEO. The PEO will recognize our right to defend under Parts One and Two and our right to inspect under Part Six (Conditions).  2005 National Council on Compensation Insurance, Inc. ¤

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WC 00 03 20 B

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY

Standard

Effective January 1, 2006

Original Printing

Schedule

1.

PEO

2.

State Where Work Performed

3.

Contract or Project

4

Address

 2005 National Council on Compensation Insurance, Inc. ¤

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WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY 1st Reprint

Effective April 1, 1991

WC 00 03 19 Standard

EMPLOYEE LEASING CLIENT ENDORSEMENT

This endorsement applies only to the insurance provided by the policy when you enter into a contract or have an existing contract or contracts to lease workers to others. Part Six (Conditions) is changed by adding these conditions. Each entity to which you lease workers is called the Client. You must provide us the following information in writing for each Client within 30 days of the effective date of the leasing contract: 1.

Contract effective date and term.

2.

Client’s name.

3.

Client’s Federal Employer Identification Number.

4.

Client’s mailing address

5.

Number of workers you leased to your Client, description of duties of each, and work location of each.

Your Clients are obligated to maintain workers compensation coverage for their direct and leased employees. You must submit to us a certificate of insurance from your Client’s insurer or other proof that the Client has lawfully secured its workers compensation obligations for the leased workers. If you do not submit the certificate of insurance or other proof, you must pay premium for the leased employees. If your Client has not obtained the lawful coverage, we may cancel the policy as provided in Part Six (Conditions), Section D. Cancellation, of the policy.

Notes: 1. 2.

3.

This endorsement may be used when the insured is a voluntary risk in the labor contracting business. See Special conditions or Operations that Affect Coverage in the Basic Manual User’s Guide. This endorsement must be used when the insured obtains insurance through a Workers Compensation Insurance Plan in a state that has approved Assigned Risk Special Conditions or Operations that Affect Coverage, as described in the Basic Manual User’s Guide, and is in the labor contracting business. This endorsement does not apply to bodily injury to workers provided to clients on a temporary basis. Workers provided on a temporary basis include workers furnished to substitute for a permanent employee on leave or to meet seasonal or short-term workload conditions.

¤1991, 2002 National Council on Compensation Insurance.

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WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Original Printing

WC 00 03 21

Effective February 25, 1992 LABOR CONTRACTOR EXCLUSION ENDORSEMENT

As used in this endorsement, “employee leasing” shall mean an arrangement whereby an entity utilizes the services of a third party to provide its workers for a fee or other compensation. The third party providing employee leasing services shall be referred to a “labor contractor.” The entity receiving the services shall be referred to as a “client.” This endorsement applies only with respect to workers provided by you to a client under an employee leasing arrangement to engage in work for the client. Your policy does not provide coverage for workers you lease to the clients listed below. Schedule Address

Client

Notes: 1. 2. 3. 4.

This endorsement may be attached to a policy issued to a labor contractor in the voluntary market. This endorsement may be attached to such a policy in the workers compensation insurance plan. This endorsement excludes coverage for workers leased to others on other than a temporary basis. The endorsement requires that coverage for leased workers be secured by the client ¤ 1992 National Council on Compensation insurance.

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4

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Original Printing

WC 00 03 21 A

Effective January 1, 2006

Standard

PROFESSIONAL EMPLOYER ORGANIZATION (PEO) EXCLUSION ENDORSEMENT

As used in this endorsement, a PEO arrangement is an arrangement under contract or agreement, written or otherwise, whereby one entity obtains or leases any or all of its workers from another entity for a fee or other compensation. The third party providing PEO services will be referred to as a “PEO.” The entity receiving the services will be referred to as a “client.” This endorsement is used to exclude workers you lease to specified clients from your policy, which only covers your direct (non-leased) workers. Your policy, to which this endorsement is attached, does not provide coverage for workers you lease to any clients listed below or others added subsequent to policy issuance even if not endorsed on the policy. Any changes to such information must be reported to the carrier immediately. Schedule

Client

Address

¤ 2005 National Council on Compensation lnsurance.

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B.

If the leasing company is purchasing the coverage in its name, the following endorsements should be used. 1.

Client's Policy

Employee Leasing Client Exclusion Endorsement (WC 00 03 22) OR PEO Client Exclusion Endorsement (WC 00 03 22 A) Coverage for leased employees is deleted from the client's policy by attaching the employee leasing client exclusion endorsement WC 00 03 22 which is an absolute exclusion of coverage for liability to employees leased from the company named on the endorsement. Consequently, it is imperative that the client obtain proof that the leasing company has procured the appropriate coverage and attached the alternate employer endorsement, naming the client as an alternate employer. 2.

Leasing Company's

Alternate Employer Endorsement (WC 00 03 01) Extends coverage to the client for any liability it may have for injuries to leased employees under the workers compensation law or common law. This is a form of additional insured endorsement, and as such, contains a waiver of the insurer's right to subrogate against the client.

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4

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Original Printing

WC 00 03 22

Effective February 25, 1992 EMPLOYEE LEASING CLIENT EXCLUSION ENDORSEMENT

As used in this endorsement, “employee leasing” shall mean an arrangement whereby an entity utilizes the services of a third party to provide its workers for a fee or other compensation. The third party providing employee leasing services shall be referred to a “labor contractor.” The entity receiving the services shall be referred to as a “client.” This endorsement applies only with respect to your leased workers engaged in any work provided under an employee leasing arrangement. Your policy does not provide coverage for workers you lease from labor contractors listed below. Schedule Labor Contractor

Address

Notes:

This endorsement may be attached to a policy issued to a client when it is intended that coverage under the policy be limited to employees not leased from others. ¤ 1992 National Council on Compensation lnsurance.

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WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Original Printing

January 1, 2006

WC 00 03 22 A Standard

PROFESSIONAL EMPLOYER ORGANIZATION (PEO) CLIENT EXCLUSION ENDORSEMENT

As used in this endorsement, a PEO arrangement is any arrangement under contract or agreement, whether written or otherwise, whereby one entity obtains or leases any or all of its workers from another entity for a fee or other compensation. The third party providing PEO services will be referred to as a “PEO.” The entity receiving the services will be referred to as a “client.” This endorsement is used to exclude leased workers from your policy, which only covers your direct (non-leased) workers. Your policy, to which this endorsement is attached, does not provide coverage for workers you lease from any PEO(s) listed below or others added subsequent to policy issuance even if not endorsed on the policy. Any changes to such information must be reported to the carrier immediately. Schedule

Labor Contractor

Address

¤ 2005 National Council on Compensation lnsurance.

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4

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY 1st Reprint

WC 00 03 01 A

Effective February 15, 1989

Standard

ALTERNATE EMPLOYER ENDORSEMENT

This endorsement applies only with respect to bodily injury to your employees while in the course of special or temporary employment by the alternate employer in the state named in Item 2 of the Schedule. Part One (Workers Compensation Insurance) and Part Two (Employers Liability Insurance) will apply as though the alternate employer is insured. If an entry is shown in Item 3 of the Schedule he insurance afforded by this endorsement applies only to work you perform under the contract or at the project named in the Schedule. Under Part One (Workers Compensation Insurance) we will reimburse the alternate employer for the benefits required by the workers compensation law if we re not permitted to pay the benefits directly to the persons entitled to them. The insurance afforded by this endorsement is not intended to satisfy the alternate employer’s duty to secure its obligations under the workers compensation law. We will not file evidence of this insurance on behalf of the alternate employer with any government agency. We will not ask any other insurer of the alternate employer to share with us a loss covered by this endorsement. Premium will be charged for your employees while in the course of special or temporary employment by the alternate employer. The policy may be canceled according to its terms without sending notice to the alternate employer. Part Four (Your Duties If Injury Occurs) applies to you and the alternate employer. The alternate employer will recognize our right to defend under Parts One and Two and our right to inspect under Part Six. Schedule 1.

Alternate Employer

2.

State of Special or Temporary Employment

3.

Contract or Project

Notes: 1.

2. 3. 4.

5. 6.

Address

This endorsement may be used when the insured named in Item 1 of the Information Page has agreed to provide insurance against workers compensation and employers liability claims made by employees of the insured against a special or temporary employer named in the endorsement Schedule This endorsement may be used only if the state of temporary or special employment is a state shown in Item 3.A. of the Information Page. If the insured is in the business of providing temporary workers for others, the insurer may show the alternate employer in the Schedule by the words “all” or “any.” Three uses of this endorsement are illustrated here: a. Use this endorsement if the policy is issued to a contractor (the insured) who is required by an oil company (as alternate or special employer to provide workers compensation and employers liability insurance to protect the oil company from claims brought by the contractor’s employees. b. Use this endorsement if the policy is issued to a business that operates and manages property for others (the insured) who is required by the property owner (the alternate employer) to provide this insurance to protect the owner from claims brought by employees of the operator/manager. c. Use this endorsement if the policy is issued to a supplier of temporary office help (the insured) who is required by its customer (the user of the temporary office help - the alternate employer) to provide this insurance to protect the customer from claims brought by the insured’s employees against the alternate employer. Show an appropriate entry to Item 3 to limit the endorsement to apply only to specific jobs or contracts of the insured. This endorsement may not be used to limit coverage to specific jobs or contracts in Wisconsin. If this endorsement is used because of temporary or special employment in Illinois, the carrier must send a written notice of cancellation to all Illinois Alternate Employers shown in the Schedule. ¤1984, 1988 National Council on Compensation Insurance.

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X.

WHICH STATE LAW APPLIES? - EXTRATERRITORIALITY PROVISIONS A.

Most state WC laws provide benefits for resident workers who are temporarily outside of the state, including out of the country. All except DC, MD, NV, NJ, NY, RI, & WV cover out of state injury if contract for employment made in state. All except CA, HI, ME, MI, NJ, NV, NY, OK, RI, VT, & WV cover out of state injury if employment is principally located in that state.

B.

State benefits may be to available to nonresidents working and injured in the state, if the requirements of the state law are met. Jurisdictions that cover all in-state injuries (AL, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MO, NE, NJ, NM, NC, PA, SC, VT, WI, & DC). 5 states are silent (AR, ME, MI, OK). 4 states have special limits (AZ, IL, MN, and ND). States exclude if covered in another state (AK, CA, DC, MD, MS, MT, NV, NH, ND, OH, OR, RI, UT, WA, WV, & WY). OH bars claims by those temporarily in state. NY fact specific. All other states leave it up to the courts to determine whether or not there are sufficient grounds to apply that state's law.

XI.

C.

Employee injured outside of their state of residence has selection of remedies. The question is whether the other state will allow the employee to recover compensation benefits. The extraterritorial provision of each state law will have an impact in determining who the ultimate payor will be.

D.

The various criteria that may apply to the situation include: 1. State of hire 2. State of residence 3. State of primary employment 4. State of pay 5. State of injury 6. State in agreement between employer and employee. Allowed in a limited number of states.

The Workers Compensation and Employers Liability Policy A.

Introduced countrywide 4/1/92

B.

Revised in 1984 and 2011 and 2015 .

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4

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Original Printing

WC 00 00 01 B

Effective July 1, 1996

Standard

INFORMATION PAGE POLICY NO. Blank Insurance Company PRIOR POLICY NO.

Employer Registration No. NCCI Company No. 1.

2. 3.

The Insured: Mailing address: Other workplaces not shown above:

____ Individual ____ Partnership ____ Corporation or _________________________

The policy period is from ________________________ to __________________________ at the insured’s mailing address. A. Workers Compensation Insurance: Part One of the policy applies to the Workers' Compensation Law of the states listed here: B.

Employers Liability insurance: Part Two of the policy applies to mark in each state listed in Item 3.A The limits of our liability under Part Two are: Bodily Injury by Accident $_______________ each accident Bodily Injury by Disease $_______________ policy limit Bodily Injury by Disease $_______________ each employee C. Other States lnsurance: Part Three of the policy applies to the states, if any, listed here: D. This policy includes these endorsements and schedules: 4.

The premium for this policy will be determined by our Manuals of Rules, Classifications, Rates and Rating Plan. AlI information required below is subject to verification and change by audit. Classifications

Code No.

Premium Basis Total Estimated

Rate Per

Estimated $100 of

Annual Annual Remuneration

Minimum Premium $______________________

Remuneration

Premium

Total Estimated Cost $__________________________________

Deposit Premium ________________________ Name of Producer _________________________________ Countersigned by _______________________________ Servicing Office ____________________________________________________ Date ______________________ © Compensation Rating and Inspection Bureau

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Page 27

IDENTIFY AND EXPLAIN HOW BENEFITS ARE TRIGGERED BY PARTS I, II, AND III OF THE WORKERS COMPENSATION POLICY C.

Information Page 1.

Part 1-The Insured. Named entity only.

2.

Part 3A-Workers Compensation Insurance

3.

4.

4

a.

List all states in which insured has operations known or expected.

b.

Activates Compensation Laws for those states.

c.

Cannot list monopolistic states.

Part 3B-Employers Liability Insurance. a.

Applies for those states listed under item 3A.

b.

Limits (May Be Increased) Accident -- $100,000/Accident Disease -- $500,000/Aggregate Disease -- $100,000/Person

Part 3C-Other States Insurance. Suggested wording: "All states and U.S. territories except North Dakota, Ohio, Washington, Wyoming, Puerto Rico, the U.S. Virgin Islands, and states designated in Item 3.A. of the Information Page" a.

List all states in which the insured may begin operations during the year.

b.

Covers operations of an insured at new locations when the exposure develops after policy inception. Policy only covers WC obligations of states listed in 3A or 3C. If not listed here, there is no coverage.

To be able to provide WC benefits required by a state that state must be listed under 3.A or 3.C. This only provides state benefits. Federal benefits only provided by the appropriate endorsement.

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Page 28

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY

WC 00 00 00 C

Effective January 1, 2015

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY In return for the payment of the premium and subject to all terms of this policy, we agree with you as follows: GENERAL SECTION A.

The Policy This policy includes at its effective date the Information Page and all endorsements and schedules listed there. It is a contract of insurance between you (the employer named in Item 1 of the Information Page) and us (the insurer named on the Information Page). The only agreements relating to this insurance are stated in this policy. The terms of this policy may not be changed or waived except by endorsement issued by us to be part of this policy.

B.

Who Is Insured You are insured if you are an employer named in Item 1 of the Information Page. If that employer is a partnership, and if you are one of its partners, you are insured, but only in your capacity as an employer of the partnership's employees.

C.

Workers Compensation Law Workers Compensation Law means the workers or workmen's compensation law and occupational disease law of each state or territory named in Item 3.A. of the Information Page. It includes any amendments to that law which are in effect during the policy period. It does not include any federal workers or workmen's compensation law, any federal occupational disease law or the provisions of any law that provide nonoccupational disability benefits.

D. State State means any state of the United States of America, and the District of Columbia. E.

Locations This policy covers all of your workplaces listed in Items 1 or 4 of the Information Page; and it covers all other workplaces in Item 3.A. states unless you have other insurance or are self-insured for such workplaces.

PART ONE - WORKERS COMPENSATION INSURANCE A. How This Insurance Applies This workers compensation insurance applies to bodily injury by accident or bodily injury by disease. Bodily injury includes resulting death.

B.

1.

Bodily injury by accident must occur during the policy period.

2.

Bodily injury by disease must be caused or aggravated by the conditions of your employment. The employee's last day of last exposure to the conditions causing or aggravating such bodily injury by disease must occur during the policy period.

We Will Pay We will pay promptly when due the benefits required of you by the workers compensation law.

C.

We Will Defend We have the right and duty to defend at our expense any claim, proceeding or suit against you for benefits payable by this insurance. We have the right to investigate and settle these claims, proceedings or suits. We have no duty to defend a claim, proceeding or suit that is not covered by this insurance.

D.

We Will Also Pay We will also pay these costs, in addition to other amounts payable under this insurance, as part of any claim, proceeding or suit we defend: 1.

reasonable expenses incurred at our request, but not loss of earnings;

2.

premiums for bonds to release attachments and for appeal bonds in bond amounts up to the amount payable under this insurance;

3.

litigation costs taxed against you;

4.

interest on a judgment as required by law until we offer the amount due under this insurance; and

5.

expenses we incur.

Page 1 of 6 © Copyright 2013 National Council on Compensation Insurance, Inc. All Rights Reserved

.

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Page 29

D.

General section 1.

The Policy. Information Page, endorsements and schedules.

2.

Who Is Insured. Entity named.

Joint Venture as Additional Insured (WC 00 03 05) - Extends coverage to members of a joint venture if that is the entity named in Item 1 of the Information Page. 3.

Workers Compensation Law. Includes any amendments during policy period and excludes any Federal Law.

4.

State. Coverage is for fifty states and the District of Columbia. Need Foreign Coverage Endorsement for U. S. Territories and Possessions.

5.

Locations - coverage is statewide for all 3.A. states. Can exclude a location with WC 00 03 02 Designated Workplace Exclusion. Used when the insured is working on a project covered by an OCIP or if there is a high risks operation of the insured that has to be in a specialty market.

TO DESCRIBE THE THREE COVERAGE AREAS IN THE WORKERS COMPENSATION POLICY E.

Part One - Workers Compensation Insurance 1.

How this insurance applies (triggers) a. b.

Bodily injury by accident during policy period Bodily injury by disease on last day of last exposure

2.

We will pay benefits required by the WC law in a state listed in 3.A. There is no dollar limitation on the amount the insurer must pay on the insured's behalf; the amount payable is entirely dependent on applicable state law. No attempt made to enumerate or describe the types of benefits that may be payable since these are dependent on state law.

3.

We will defend - duty to defend is broader than the duty to indemnify

4.

We will also pay

5.

Other insurance

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Page 30

4

WC 00 00 00 C

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Effective January 1, 2015

E.

Other Insurance We will not pay more than our share of benefits and costs covered by this insurance and other insurance or selfinsurance. Subject to any limits of liability that may apply, all shares will be equal until the loss is paid. If any insurance or self-insurance is exhausted, the shares of all remaining insurance will be equal until the loss is paid.

F.

Payments You Must Make You are responsible for any payments in excess of the benefits regularly provided by the workers compensation law including those required because: 1.

of your serious and willful misconduct;

2.

you knowingly employ an employee in violation of law;

3.

you fail to comply with a health or safety law or regulation; or

4.

you discharge, coerce or otherwise discriminate against any employee in violation of the workers compensation law.

If we make any payments in excess of the benefits regularly provided by the workers compensation law on your behalf, you will reimburse us promptly. G. Recovery From Others We have your rights, and the rights of persons entitled to the benefits of this insurance, to recover our payments from anyone liable for the injury. You will do everything necessary to protect those rights for us and to help us enforce them. H.

Statutory Provisions These statements apply where they are required by law. 1.

As between an injured worker and us, we have notice of the injury when you have notice.

2.

Your default or the bankruptcy or insolvency of you or your estate will not relieve us of our duties under this insurance after an injury occurs.

3.

We are directly and primarily liable to any person entitled to the benefits payable by this insurance. Those persons may enforce our duties; so may an agency authorized by law. Enforcement may be against us or against you and us.

4.

Jurisdiction over you is jurisdiction over us for purposes of the workers compensation law. We are bound by decisions against you under that law, subject to the provisions of this policy that are not in conflict with that law.

5.

This insurance conforms to the parts of the workers compensation law that apply to:

6.

a.

benefits payable by this insurance;

b.

special taxes, payments into security or other special funds, and assessments payable by us under that law.

Terms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that law.

Nothing in these paragraphs relieves you of your duties under this policy. PART TWO - EMPLOYERS LIABILITY INSURANCE A.

How This Insurance Applies This employers liability insurance applies to bodily injury by accident or bodily injury by disease. Bodily injury includes resulting death.

B.

1.

The bodily injury must arise out of and in the course of the injured employee’s employment by you.

2.

The employment must be necessary or incidental to your work in a state or territory listed in Item 3.A. of the Information Page.

3.

Bodily injury by accident must occur during the policy period.

4.

Bodily injury by disease must be caused or aggravated by the conditions of your employment. The employee’s last day of last exposure to the conditions causing or aggravating such bodily injury by disease must occur during the policy period.

5.

If you are sued, the original suit and any related legal actions for damages for bodily injury by accident or by disease must be brought in the United States of America, its territories or possessions, or Canada.

We Will Pay We will pay all sums that you legally must pay as damages because of bodily injury to your employees, provided the bodily injury is covered by this Employers Liability Insurance. Page 2 of 6

© Copyright 2013 National Council on Compensation Insurance, Inc. All Rights Reserved

Harrison WC 02/2016

Page 31

6.

Payments you must make. There is no coverage for payments required of the insured beyond the benefits "regularly provided" by the applicable workers compensation law. Special penalties imposed on the insured for wrongdoing are the responsibility of the insured, even when these penalty costs are prescribed in the applicable workers compensation law. Carrier will not pay, and if forced to pay by law will collect from the insured for claims arising out of: a. Willful conduct b. Knowingly employing someone in violation of the law. c. Failure to comply with OSHA and similar laws. d. Employee discrimination damages.

EXPLAIN RECOVERY FROM OTHERS AND HOW IT APPLIES TO SUITS AGAINST THIRD PARTIES 7.

Recovery from others. a. Must protect insurer's rights. b. Cannot waive prior to or following loss without insurer permission.

Waiver of Our Right to Recover From Others (WC 00 03 13) - Waives recovery rights against 3rd parties responsible for employee injuries or disease. 8. Statutory provisions This section of the policy incorporates six provisions required by the workers compensation laws of at least one state, which apply only with respect to claims subject to the law of a state requiring the provision. 1. States that an injured worker's notice of injury to the employer will be considered notice to the insurer. 2. States that the policy will remain in effect and its coverage will remain unchanged for a bankrupt or insolvent insured. 3. Grants what is known as the right of "direct action" to workers compensation claimants, when required by state law. In other words, a claimant can sue the insurer directly instead of the employer. 4. States that the insurer is bound by the workers compensation law in the same manner as the insured. Therefore, any decisions against the insured under that law will also bind the insurer. 5. States that the policy conforms to statutory requirements with regard to not only payment of benefits but also taxes and other assessments payable by the insurer. 6. Where required by law, any policy terms that are in conflict with applicable law are changed to conform to the law.

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Page 32

4

TO UNDERSTAND THE NECESSITY OF EMPLOYERS LIABILITY COVERAGE

TYPES OF CLAIMS COVERED 1.

Employee rejects benefits (if allowed by law). If employee goes outside of the WC law there is no immunity for employer or benefits due to employee.

2.

Exempt employments. Compensation not required by the statute in the jurisdiction. Whenever an employee is specifically excluded by a state compensation act and/or the employee has not elected to come under or be brought under the act by an employer, the employer is subject to liability in the event of injury or death of the employee due to employer's negligence.

3.

Spouse and family members. Loss of companionship, loss of consortium.

4.

Third-party-over or Action Over Indemnity. Employee has claim against a third party and the third party tries to recover all or part of the claim from the employee's employer.

5.

Consequential bodily injury. Injury to spouse or family member that directly results from the employee's injury.

6.

Dual capacity. Employee sues employer for injuries caused by employer's role of other than employer. Employer is said to have two legal personalities. Generally involves manufacturers or professional liability cases.

7.

Gross negligence. Intentional act leading to unintended result. Modify safety feature on machine.

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Page 33

Section II Employers Liability A. How This Insurance Applies This employers liability insurance applies to bodily injury by accident or bodily injury by disease. Bodily injury includes resulting death. 1. The bodily injury must arise out of and in the course of the injured employee’s employment by you. 2. The employment must be necessary or incidental to your work in a state or territory listed in Item 3.A. of the Information Page. 3. Bodily injury by accident must occur during the policy period. 4. Bodily injury by disease must be caused or aggravated by the conditions of your employment. The employee’s last day of last exposure to the conditions causing or aggravating such bodily injury by disease must occur during the policy period. 5. If you are sued, the original suit and any related legal actions for damages for bodily injury by accident or by disease must be brought in the United States of America, its territories or possessions, or Canada. IDENTIFY AND DESCRIBE FOUR COVERAGES IN PART TWO OF THE WORKERS COMPENSATION POLICY. F.

Part Two - Employers Liability insurance (Legal liability policy) 1.

How this insurance applies. a.

BI arising out of and in the course of employment

b.

Employment necessary or incidental to work in 3.A. state

Employers Liability Coverage (WC 00 03 03 B) - (Often referred to as "Stop Gap.") Extends EL only to states not covered for WC (Part One), including monopolistic fund states and provinces of Canada. Use the WC 34 03 01 C for Ohio.

Harrison WC 02/2016

c.

Accident during policy period

d.

Disease when last day of exposure is during policy period

e.

Original suit in U.S., territories, possessions, or Canada

Page 34

4

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY 3rd Reprint

Effective April 1, 1992

WC 00 03 03 B Advisory

EMPLOYERS LIABILITY COVERAGE ENDORSEMENT This endorsement applies only to work in the states shown in the Schedule. A.

Part One (Workers Compensation Insurance) does not apply to work in a state shown in the Schedule.

B.

Part Two (Employers Liability Insurance) applies to work in states shown in the Schedule as though they were shown in Item 3.A. of the Information Page.

C.

Part Two (Employers Liability Insurance), C. Exclusions is changed by adding these exclusions.

This insurance does not cover: 13.

bodily injury to any member of the flying crew of any aircraft;

14.

bodily injury to an employee when you are deprived of common law defenses or are subject to penalty because of your failure to secure your obligations under the workers compensation law of any state shown in the Schedule or otherwise fail to comply with that law.

Schedule

States

Notes: I.

Use this endorsement to afford employers liability insurance in any state, including monopolistic state fund states, with the exception of Ohio, where the policy does not provide workers compensation insurance. The states are to be listed in the Schedule. Use the Ohio Employers Liability Coverage Endorsement (WC 34 03 01 B) to afford employers liability insurance in Ohio.

2.

The endorsement may be used in a National Council state only if (1) all employees are excluded from the workers compensation law or all employees have elected not to be subject to the law, and (2) there is no state law or regulation making the use of this endorsement illegal. (See the Basic Manual User’s Guide-Reference Tables-Workers Compensation and Employers Liability Coverage ¤ 1991, 2002 National Council on Compensation lnsurance.

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Page 35

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY

WC 34 03 01 C

Effective March 1, 2010 OHIO EMPLOYERS LIABILITY COVERAGE ENDORSEMENT

This endorsement applies only to work in Ohio.

4

A. Part One (Workers Compensation Insurance) does not apply to work in Ohio. B. Part Two (Employers Liability Insurance) applies to work in Ohio as though it were shown in Item 3.A. of the Information Page. C. Part Two (Employers Liability Insurance), C. Exclusions is changed by adding these exclusions. C.

Exclusions This insurance does not cover: 5. bodily injury intentionally caused or aggravated by you, or bodily injury resulting from an act which is determined to have been committed by you with the belief that an injury is substantially certain to occur; 13. bodily injury to an employee when you are deprived of common law defenses or are subject to penalty because of your failure to secure your obligations under the workers compensation law of Ohio or otherwise fail to comply with that law.

Note: Use this endorsement to afford employers liability insurance in Ohio, where the policy cannot provide workers compensation insurance. © Copyright 1985, 1988, 1991, 2010 National Council on Compensation lnsurance, Inc. All Rights Reserved.

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Page 36

B.

We Will Pay We will pay all that sums you legally must pay as damages because of bodily injury to your employees, provided the bodily injury is covered by this Employers Liability Insurance. The damages we will pay, where recovery is permitted by law, include damages: 1.

for which you are liable to a third party by reason of a claim or suit against you by that third party to recover the damages claimed against such third party as a result of injury to your employee;

2.

for care and loss of services; and

3.

for consequential bodily injury to a spouse, child, parent, brother or sister of the injured employee; provided that these damages are the direct consequence of bodily injury that arises out of and in the course of the injured employee’s employment by you; and 4.

Harrison WC 02/2016

because of bodily injury to your employee that arises out of and in the course of employment, claimed against you in a capacity other than as employer.

Page 37

2.

Harrison WC 02/2016

We will pay "damages" including a.

Third party (actions over)

b.

Loss of services

c.

Consequential bodily injury

d.

Dual capacity

4

Page 38

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY

WC 00 00 00 C

Effective January 1, 2015

The damages we will pay, where recovery is permitted by law, include damages:

C.

1.

For which you are liable to a third party by rea-son of a claim or suit against you by that third party to recover the damages claimed against such third party as a result of injury to your employee;

2.

For care and loss of services; and

3.

For consequential bodily injury to a spouse, child, parent, brother or sister of the injured employee; provided that these damages are the direct consequence of bodily injury that arises out of and in the course of the injured employee’s employment by you; and

4.

Because of bodily injury to your employee that arises out of and in the course of employment, claimed against you in a capacity other than as employer.

Exclusions This insurance does not cover: 1.

Liability assumed under a contract. This exclusion does not apply to a warranty that your work will be done in a workmanlike manner;

2.

Punitive or exemplary damages because of bodily injury to an employee employed in violation of law;

3.

Bodily injury to an employee while employed in violation of law with your actual knowledge or the actual knowledge of any of your executive officers;

4.

Any obligation imposed by a workers compensation, occupational disease, unemployment compensation, or disability benefits law, or any similar law;

5.

Bodily injury intentionally caused or aggravated by you;

6.

Bodily injury occurring outside the United States of America, its territories or possessions, and Canada. This exclusion does not apply to bodily injury to a citizen or resident of the United States of America or Canada who is temporarily outside these countries;

7.

Damages arising out of coercion, criticism, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination against or termination of any employee, or any personnel practices, policies, acts or omissions;

8.

Bodily injury to any person in work subject to the Longshore and Harbor Workers’ Compensation Act (33 U.S.C. Sections 901 et seq.), the Nonappropriated Fund Instrumentalities Act (5 U.S.C. Sections 8171 et seq.), the Outer Continental Shelf Lands Act (43 U.S.C. Sections 1331 et seq.), the Defense Base Act (42 U.S.C. Sections 1651– 1654), the Federal Mine Safety and Health Act (30 U.S.C. Sections 801 et seq. and 901–944), any other federal workers or workmen’s compensation law or other federal occupational disease law, or any amendments to these laws;

9.

Bodily injury to any person in work subject to the Federal Employers’ Liability Act (45 U.S.C. Sections 51 et seq.), any other federal laws obligating an employer to pay damages to an employee due to bodily injury arising out of or in the course of employment, or any amendments to those laws;

10. Bodily injury to a master or member of the crew of any vessel, and does not cover punitive damages related to your duty or obligation to provide transportation, wages, maintenance, and cure under any applicable maritime law; 11. Fines or penalties imposed for violation of federal or state law; and 12. Damages payable under the Migrant and Seasonal Agricultural Worker Protection Act (29 U.S.C. Sections 1801 et seq.) and under any other federal law awarding damages for violation of those laws or regulations issued thereunder, and any amendments to those laws. D.

We Will Defend We have the right and duty to defend, at our expense, any claim, proceeding or suit against you for damages payable by this insurance. We have the right to investigate and settle these claims, proceedings and suits. We have no duty to defend a claim, proceeding or suit that is not covered by this insurance. We have no duty to defend or continue defending after we have paid our applicable limit of liability under this insurance.

E.

We Will Also Pay We will also pay these costs, in addition to other amounts payable under this insurance, as part of any claim, proceeding, or suit we defend: 1.

Reasonable expenses incurred at our request, but not loss of earnings;

2.

Premiums for bonds to release attachments and for appeal bonds in bond amounts up to the limit of our liability under this insurance; Page 3 of 6

© Copyright 2013 National Council on Compensation Insurance, Inc. All Rights Reserved

Harrison WC 02/2016

Page 39

3.

Exclusions a.

Contractual. This is covered under the give back in the employee’s liability exclusion in the CGL and BAP.

b.

Punitive damages

c.

Illegally employed individuals

d.

Workers Compensation or similar obligations

e.

Intentional bodily injury

f.

Injury outside policy territory. Gives back while temporarily outside of territory.

g.

Damages from illegal coercion, discharge or discrimination

h.

LHWCA and similar Federal laws

i.

Obligations under FELA

j.

BI to master or member of crew of vessel (Jones Act obligation).

k.

Fines or penalty for violation of Federal or state law.

l.

Damages payable under Migrant and Seasonal Workers Act.

4.

We will defend

5.

We will also pay. Supplemental payments.

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4

Page 40

WC 00 00 00 C

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Effective January 1, 2015

F.

3.

Litigation costs taxed against you;

4.

Interest on a judgment as required by law until we offer the amount due under this insurance; and

5.

Expenses we incur.

Other Insurance We will not pay more than our share of damages and costs covered by this insurance and other insurance or selfinsurance. Subject to any limits of liability that apply, all shares will be equal until the loss is paid. If any insurance or selfinsurance is exhausted, the shares of all remaining insurance and self-insurance will be equal until the loss is paid.

G. Limits of Liability Our liability to pay for damages is limited. Our limits of liability are shown in Item 3.B. of the Information Page. They apply as explained below. 1.

Bodily Injury by Accident. The limit shown for “bodily injury by accident—each accident” is the most we will pay for all damages covered by this insurance because of bodily injury to one or more employees in any one accident.

2.

Bodily Injury by Disease. The limit shown for “bodily injury by disease—policy limit” is the most we will pay for all damages covered by this insurance and arising out of bodily injury by disease, regardless of the number of employees who sustain bodily injury by disease. The limit shown for “bodily injury by disease—each employee” is the most we will pay for all damages because of bodily injury by disease to any one employee.

A disease is not bodily injury by accident unless it results directly from bodily injury by accident.

Bodily injury by disease does not include disease that results directly from a bodily injury by accident. 3. H.

We will not pay any claims for damages after we have paid the applicable limit of our liability under this insurance.

Recovery From Others We have your rights to recover our payment from anyone liable for an injury covered by this insurance. You will do everything necessary to protect those rights for us and to help us enforce them.

I.

Actions Against Us There will be no right of action against us under this insurance unless: 1.

You have complied with all the terms of this policy; and

2.

The amount you owe has been determined with our consent or by actual trial and final judgment.

This insurance does not give anyone the right to add us as a defendant in an action against you to determine your liability. The bankruptcy or insolvency of you or your estate will not relieve us of our obligations under this Part. PART THREE - OTHER STATES INSURANCE A.

How This Insurance Applies 1.

This other states insurance applies only if one or more states are shown in Item 3.C. of the Information Page.

2.

If you begin work in any one of those states after the effective date of this policy and are not insured or are not selfinsured for such work, all provisions of the policy will apply as though that state were listed in Item 3.A. of the Information Page.

3.

We will reimburse you for the benefits required by the workers compensation law of that state if we are not permitted to pay the benefits directly to persons entitled to them.

4.

If you have work on the effective date of this policy in any state not listed in Item 3.A. of the Information Page, coverage will not be afforded for that state unless we are notified within thirty days.

B. Notice Tell us at once if you begin work in any state listed in Item 3.C. of the Information Page. PART FOUR - YOUR DUTIES IF INJURY OCCURS Tell us at once if injury occurs that may be covered by this policy. Your other duties are listed here. 1.

Provide for immediate medical and other services required by the workers compensation law.

2.

Give us or our agent the names and addresses of the injured persons and of witnesses, and other information we may need.

3.

Promptly give us all notices, demands and legal papers related to the injury, claim, proceeding or suit.

4.

Cooperate with us and assist us, as we may request, in the investigation, settlement or defense of any claim, proceeding or suit. Page 4 of 6

© Copyright 2013 National Council on Compensation Insurance, Inc. All Rights Reserved

Harrison WC 02/2016

Page 41

6.

Other insurance. Equal shares.

7.

Limits of liability a. Each accident b. Disease: Per employee/Aggregate

8.

Recovery from others

9.

Actions against us

4

DESCRIBE HOW COVERAGE IN PART III IS ACTIVATED, LIMITED AND CAN BE AN ERROR AND OMISSION PROBLEM. G.

Part Three - Other States Insurance. This coverage is designed to provide coverage for unknown or incidental exposures. This will not cover monopolistic states, and some carriers will not extend to certain states because of license restrictions and underwriting restrictions. 1.

2.

H.

How this insurance applies a.

Applies only if shown in item 3C. Not monopolistic fund states (no private insurance allowed)

b.

Applies if you begin work

c.

Company will reimburse if they cannot directly pay

d.

Must notify within 30 days of the effective date of this policy for states where work already exists and that state is not listed in item 3A. This makes it imperative that the insured be contacted before renewal to list the correct states listed in 3A.

Notice. Must tell at once if begin work in a 3.C. state. No coverage for workers regularly outside of the territory. (They can be protected under Foreign Voluntary Compensation.)

Part Four - Your Duties if Injury Occurs

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Page 42

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY

WC 00 00 00 C

Effective January 1, 2015

5.

Do nothing after an injury occurs that would interfere with our right to recover from others.

6.

Do not voluntarily make payments, assume obligations or incur expenses, except at your own cost.

PART FIVE—PREMIUM A.

Our Manuals All premium for this policy will be determined by our manuals of rules, rates, rating plans and classifications. We may change our manuals and apply the changes to this policy if authorized by law or a governmental agency regulating this insurance.

B.

Classifications Item 4 of the Information Page shows the rate and premium basis for certain business or work classifications. These classifications were assigned based on an estimate of the exposures you would have during the policy period. If your actual exposures are not properly described by those classifications, we will assign proper classifications, rates and premium basis by endorsement to this policy.

C.

Remuneration Premium for each work classification is determined by multiplying a rate times a premium basis. Remuneration is the most common premium basis. This premium basis includes payroll and all other remuneration paid or payable during the policy period for the services of:

D.

1.

All your officers and employees engaged in work covered by this policy; and

2.

All other persons engaged in work that could make us liable under Part One (Workers Compensation Insurance) of this policy. If you do not have payroll records for these persons, the contract price for their services and materials may be used as the premium basis. This para-graph 2 will not apply if you give us proof that the employers of these persons lawfully secured their workers compensation obligations.

Premium Payments You will pay all premium when due. You will pay the premium even if part or all of a workers compensation law is not valid.

E.

Final Premium The premium shown on the Information Page, schedules, and endorsements is an estimate. The final premium will be determined after this policy ends by using the actual, not the estimated, premium basis and the proper classifications and rates that lawfully apply to the business and work covered by this policy. If the final premium is more than the premium you paid to us, you must pay us the balance. If it is less, we will refund the balance to you. The final premium will not be less than the highest minimum premium for the classifications covered by this policy. If this policy is canceled, final premium will be determined in the following way unless our manuals provide otherwise:

F.

1.

If we cancel, final premium will be calculated pro rata based on the time this policy was in force. Final premium will not be less than the pro rata share of the minimum premium.

2.

If you cancel, final premium will be more than pro rata; it will be based on the time this policy was in force, and increased by our short-rate cancelation table and procedure. Final premium will not be less than the minimum premium.

Records You will keep records of information needed to compute premium. You will provide us with copies of those records when we ask for them.

G. Audit You will let us examine and audit all your records that relate to this policy. These records include ledgers, journals, registers, vouchers, contracts, tax reports, payroll and disbursement records, and programs for storing and retrieving data. We may conduct the audits during regular business hours during the policy period and within three years after the policy period ends. Information developed by audit will be used to determine final premium. Insurance rate service organizations have the same rights we have under this provision. PART SIX—CONDITIONS A.

Inspection We have the right, but are not obliged to inspect your workplaces at any time. Our inspections are not safety inspections. They relate only to the insurability of the workplaces and the premiums to be charged. We may give you reports on the conditions we find. We may also recommend changes. While they may help reduce losses, we do not undertake to perform the duty of any person to provide for the health or safety of your employees or the public. We do not warrant that Page 5 of 6

© Copyright 2013 National Council on Compensation Insurance, Inc. All Rights Reserved

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I.

Part Five - Premium 1.

Our manuals

2.

Classifications. Subject to change based on what the insured employer's business actually does.

3.

Remuneration a.

Payroll records

b.

Other remuneration

c.

Verifying subcontractor exposures

4.

Premium payments

5.

Final premium

6.

Records

7.

Audit * Policy is auditable. * Insured must allow company to audit.

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Page 44

WC 00 00 00 C

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Effective January 1, 2015

your workplaces are safe or healthful or that they comply with laws, regulations, codes or standards. Insurance rate service organizations have the same rights we have under this provision. B.

Long Term Policy If the policy period is longer than one year and sixteen days, all provisions of this policy will apply as though a new policy were issued on each annual anniversary that this policy is in force.

C.

Transfer of Your Rights and Duties Your rights or duties under this policy may not be transferred without our written consent. If you die and we receive notice within thirty days after your death, we will cover your legal representative as insured.

D.

E.

Cancelation 1.

You may cancel this policy. You must mail or deliver advance written notice to us stating when the cancelation is to take effect.

2.

We may cancel this policy. We must mail or deliver to you not less than ten days advance written notice stating when the cancelation is to take effect. Mailing that notice to you at your mailing address shown in Item 1 of the Information Page will be sufficient to prove notice.

3.

The policy period will end on the day and hour stated in the cancelation notice.

4.

Any of these provisions that conflict with a law that controls the cancelation of the insurance in this policy is changed by this statement to comply with the law.

Sole Representative The insured first named in Item 1 of the Information Page will act on behalf of all insureds to change this policy, receive return premium, and give or receive notice of cancelation.

Page 6 of 6 © Copyright 2013 National Council on Compensation Insurance, Inc. All Rights Reserved

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J.

Part Six - Conditions 1.

Inspection. OSHA disclaimer. a.

Insurer privilege

b.

Waiver of liabilities

2.

Long term policy

3.

Transfer of your rights & duties

4.

Cancellation

5.

Sole representative

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Page 46

TO BE ABLE TO DESCRIBE USES AND COVERAGES OF MAJOR WORKERS COMPENSATION AND EMPLOYER LIABILITY ENDORSEMENTS XII.

Federal Compensation and Liability Acts and the endorsements to cover them. A.

Longshoremen's and Harbor Workers' Compensation Act Coverage (WC 00 01 06A) - This federal act enacted in 1927 provides uniform and scheduled benefits to any employee who is not a seaman, for injuries sustained on navigable waters or adjoining piers, wharves, dry docks, terminal buildings, marine railways, or other adjoining areas. Endorsement provides coverage for this federal law to employees when working on or over navigable water. Coverage for WC and EL is extended to work subject to LHWCA in any state named on the endorsement. There are two basic criteria for coverage under this act. The injured worker must be an employee in a maritime occupation (Status). The injury must have occurred upon navigable waters of the U.S. (Situs). Both tests must be met for the employee to be covered under the act. LHWCA not applicable to: 1. Master or member of crew of any vessel. 2. Any person engaged by the master to load or unload or repair any small vessel under 18 tons net. 3. Individuals employed exclusively to perform office, clerical, secretarial, security or data processing work. 4. Individuals employed by a club, camp, recreational operation, restaurant, museum or retail outlet. 5. Individuals who are employed by a marina and who are not engaged in construction, replacement, or expansion of such marina (except for routine maintenance). 6. Individuals who a. are employed by suppliers, transporters, or vendors, b. are temporarily doing business on the premises of an employer c. are not engaged in work normally preformed by employees of that employer under this Act. 7. Aquaculture workers 8. Individuals employed to build any recreational vessels under sixty-five feet in length, or individuals employed to repair any recreational vessel or dismantle any part of a recreational vessel in connection with such repair.

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9.

Individuals employed at a facility engaged in the business of building, repairing or dismantling small commercial vessels, providing: a. the facility is used exclusively for work on small commercial vessels. b. The faculty is not on a land area adjoining the navigable waters used for launching, hauling, lifting, or dry docking. c. the work is not upon the navigable waters.

The endorsement amends the definition of workers compensation law to include the Longshore and Harbor Workers' Compensation Act and any amendments to the Act in effect during the policy period. The exclusionary language eliminating coverage for all other federal workers compensation laws remains. In fact, the endorsement contains a statement not found in any of the other federal coverage endorsements, stipulating that no coverage is provided for benefits owed under the Nonappropriated Fund Instrumentalities Act, the Defense Base Act, or the Outer Continental Shelf Lands Act; all three of these federal laws extend the LHWCA to apply to additional types of employees not otherwise eligible for benefits under the LHWCA. The endorsement makes exclusion 8 to the employers liability portion of the policy inapplicable to work that is subject to the LHWCA. B.

Outer Continental Shelf Lands Act. The Outer Continental Shelf Lands Act extends the benefits established in the Longshore and Harbor Workers Compensation Act (LHWCA) to those employed in operations conducted on the outer continental shelf of the United States for purposes of exploration, development, or removal of natural resources of the subsoil and seabed. The term "outer continental shelf" is very precisely defined in the Act, but a brief working definition might be: submerged lands lying seaward of the boundaries of the various states that are subject to the jurisdiction of the United States. The endorsement amends the definition of workers compensation law in the policy to include the Outer Continental Shelf Lands Act. The endorsement also makes exclusion 8 to the employers liability portion of the policy inapplicable to work that is subject to the Outer Continental Shelf Lands Act.

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4

C.

Defense Base Act. The Defense Base Act extends the provisions of the Longshore and Harbor Workers' Compensation Act to the following workers. x

Employees working on military bases and on lands occupied or used by the United States for military purposes in any U.S. territory or possession outside the continental United States.

x

Work on contracts approved and funded by the U.S. under the Foreign Assistance Act, which among other things provides for cash sale of military equipment, materials, and services to its allies, if the contract is performed outside of the United States;

x

Employees of contractors and subcontractors engaged in public works contracts for the U.S. government outside the continental United States.

x

Those employed outside the continental United States by an American employer providing welfare or similar services for the benefit of the Armed Forces as authorized by the Secretary of Defense. The American Red Cross is an example of such an employer.

The Act has been broadly interpreted by the courts to apply to a wide range of overseas contracts between the U.S. government and civilian contractors. It is not necessarily limited in its application to construction contract employees only, nor to national defense projects only. D.

Nonappropriated Fund Instrumentalities Act. This Act extends the benefits established in the Longshore and Harbor Workers' Compensation Act to civilian employees of "instrumentalities of the United States under the jurisdiction of the armed forces conducted for the comfort, pleasure, contentment, and mental and physical improvement of the armed forces" who are compensated from "nonappropriated funds." The term "nonappropriated funds" means funds that are not appropriated by Congress, and nonappropriated fund instrumentalities are organizations that generate the funds needed for operations from their own income. Examples are military exchange stores, military base day care centers, movie theaters, and bowling alleys.

E.

Federal Employees Compensation Act. Act covering civilian employees of the Federal government. The Federal government self-insurers this exposure.

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F.

Federal Employers Liability Act. The Federal Employers Liability Act gives employees of interstate railroads a right of action for damages against the railroad employer for on-the-job injury, without having to overcome employer defenses of assumption of the risk or fellow servant liability. Contributory negligence of the employee does not bar recovery, but recovery is reduced by the proportion of negligence attributable to the employee. This endorsement clearly deletes the FELA exclusion (exclusion 9) in the employers liability coverage part of the policy form. FELA is an employers liability law rather than a workers compensation law.

G.

Maritime Coverage (WC 00 02 01 B) Clarifies the EL portion of the policy as to the extent of coverage for Maritime exposures. This exposure can also be covered by Protection and Indemnity (P&I) insurance on a marine policy. This endorsement requires additional premium for Transportation, Wages, Maintenance, and Cure. These coverages are not automatic and must be specified. Applies to master or members of a crew of any vessel on navigable waters. Makes coverage comply with the Jones Act. The Jones Act (Merchant Marine Act of 1920) was a congressional act passed permitting seamen (the master or crew of a vessel) employed on American vessels a tort remedy to recover for injuries or disease sustained by them by virtue of the negligence of their employer or someone for whom their employer is responsible (such as fellow crew members). Jury awards, in absence of a schedule of uniform benefits, can be substantial as in any civil action before a jury. Generally speaking, coverage for Jones Act exposures to a blue-water vessel is provided by P&I provisions; but coverage for inland or coastal vessels is provided by this endorsement to a WC policy. Maritime Employers Liability covers marine workers that fall between the WC and the LHWCA. Such workers might include the employee of a marine contractor standing on a barge while painting or building a dock or bridge. It might also include the shipyard or repair operator who sends personnel on a vessel while it is underway. This coverage could also encompass the carpenter or plumber or other person whose employment takes them aboard vessels while underway. A further concern should be the circumstance where the limitations under LHWCA, such as size of vessel, do not apply in the Jones Act or the Death on the High Seas Act. Unfortunately the simplest workfloat may be held to be a vessel and under this coverage.

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4

Admiralty law applies to sailors, masters, and crew of vessels. General maritime law—the common law of the sea holds that vessel owners owe "transportation, wages, maintenance, and cure" to masters or members of a crew of a vessel in the event of injury or illness during the voyage, regardless of whether the injury or illness is work related. Also, seamen can sue the vessel owner for damages resulting from the unseaworthiness of the ship. Employers can obtain coverage by purchasing a maritime coverage endorsement (WC 00 02 01). Death on the High Seas Act establishes a cause of action against those responsible for beneficiaries of persons (including seamen) killed on the high seas. Employers can obtain coverage by purchasing a maritime coverage endorsement (WC 00 02 01). Remedies (benefits) available to the injured seaman include wages (to the end of the voyage), maintenance ($16.00 per day until MMI), cure (100% medical until MMI), transportation (to port of origin or to end of voyage), sue employer for negligence, and sue shipowner for "unseaworthiness." Note: The United States Supreme Court has recently ruled that a person is not precluded from "seaman" status because of the failure to perform a transportation related function on board the vessel. To be a seaman is not determined by the work but by the location of the injury. LHWCA provides relief for land-based maritime workers and the Jones Act applies to the master and members of a crew of any vessel. (The covered worker was on a boat that was sandblasting and painting drilling platforms.) 1. 2. 3.

State Act or USLH or Maritime? Injury on or alongside navigable water? No. State WC act. Yes. Was the injury on board or in the “service” of a vessel? If not on a vessel, USLH applies unless occupation excluded. If excluded, state act applies. If on a vessel, is the employee a captain or member of the crew of the vessel? If yes, the remedy is Maritime coverage. If no, is vessel in navigable waters or sailing between to U. S. ports? If yes, can chose between USLH and Maritime. If no, Maritime is the remedy.

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H.

Foreign Workers' Compensation and Employers' Liability Coverage - Extends coverage to provide repatriation expense (if selected) and coverage for endemic disease. This endorsement deals with the risks posed to U.S. nationals when working abroad on a more or less permanent basis. They must be hired or assigned by the insured to work in the countries stated on the Information Page. Compensation, medical, and other benefits specified in the policy will apply to these overseas employees as if they were covered under the WC and Occupational Disease Law of their state of origin, or the state stipulated in the voluntary compensation endorsement extending this coverage. This endorsement includes expense for the person's return to the country and state of birth, citizenship, or allegiance. This is an optional coverage for the insured under the Worker's Compensation policy and if specified, the insured is reimbursed for additional expenses as reasonably may be incurred over and above normal transportation costs for repatriation of the insured's sick or diseased employees from the overseas operation to the destination in the U.S. The repatriation expense on the endorsement is limited by a specified dollar sum. Included automatically in the endorsement (unlike repatriation expense) is the endemic disease portion of the endorsement. It provides compensation for death or injury due to a disease prevalent or indigenous to a particular nation, region, local or group, even though not included in the WC or Occupational Disease law of the applicable state designated in the information page.

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4

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY 2nd Reprint Effective April 1, 1992

WC 00 01 06 A Standard

LONGSHORE AND HARBOR WORKERS' COMPENSATION ACT COVERAGE ENDORSEMENT This endorsement applies only to work subject to the Longshore and Harbor Workers Compensation Act in a state shown in the Schedule. The policy applies to that work as though that state were listed in Item 3.A. of the Information Page. General Section C. Workers Compensation Law is replaced by the following: C. Workers Compensation Law Workers Compensation Law means the workers or workmen's compensation law and occupational disease law of each state or territory named in Item 3.A. of the Information Page and the Longshore and Harbor Workers' Compensation Act (33 USC Sections 901-950). It includes any amendments to those laws that are in effect during the policy period. It does not include any other federal workers or workmen's compensation law, other federal occupational disease law or the provisions of any law that provide nonoccupational disability benefits. Part Two (Employers Liability Insurance), C. Exclusions., exclusion 8, does not apply to work subject to the Longshore and Harbor Workers' Compensation Act. This endorsement does not apply to work subject to the Defense Base Act, the Outer Continental Shelf Lands Act, or the Nonappropriated Fund Instrumentalities Act. Schedule State Workers' Percentage

Longshore and Harbor Compensation Act Coverage

The rates for classifications with code numbers not followed by the letter "F* are rates for work not ordinarily subject to the Longshore and Harbor Workers' Compensation Act. If this policy covers work under such classifications, and if the work is subject to the Longshore and Harbor Workers' Compensation Act, those non-F classification rates will be increased by the Longshore and Harbor Workers' Compensation Act Coverage Percentage shown in the Schedule. Notes: 1.

2. 3. 4. 5.

The Longshore and Harbor Workers' Compensation Act is a federal workers compensation law that applies to workers in maritime employments, including longshore, harborworkers, shipbuilders, shipbreakers and ship repairers. It does not apply to masters or crews vessels. See the Basic Manual User's Guide for additional details. Use this endorsement to provide workers compensation insurance and employers liability insurance for work subject to the Longshore and Harbor Workers' Compensation Act in any stale, including a monopolistic state fund state. Coverage is provided in a state by naming the state in the Schedule. The following entry may be typed or printed in the Schedule to provide coverage in Item 3.A. states: "Each state named in Item 3.A. of the Information Page." The following entry may be typed or printed in the Schedule to provide coverage in item 3.A. and 3.C. states: "Each state named in Item 3.A. or 3.C. of the Information Page."

© 1983, 1991, 2002 National Council on Compensation Insurance.

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WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY

WC 00 01 09 C

Effective January 1, 2015

OUTER CONTINENTAL SHELF LANDS ACT COVERAGE ENDORSEMENT This endorsement applies only to the work described in Item 4 of the Information Page or in the Schedule as subject to the Outer Continental Shelf Lands Act. The policy will apply to that work as though the location shown in the Schedule were a state named in Item 3.A. of the Information Page. General Section C. Workers Compensation Law is replaced by the following: C. Workers Compensation Law Workers Compensation Law means the workers or workmen's compensation law and occupational disease law of each state or territory named in Item 3.A. of the Information Page and the Outer Continental Shelf Lands Act (43 U.S.C Sections 1331 et seq.). It includes any amendments to those laws that are in effect during the policy period. It does not include any other federal workers or workmen's compensation law, other federal occupational disease law or the provisions of any law that provide nonoccupational disability benefits. Part Two (Employers Liability Insurance), C. Exclusions., exclusion 8, does not apply to work subject to the Outer Continental Shelf Lands Act. Schedule Description and Location of Work

1 of 1 ¤ Copyright 2013 National Council on Compensation Insurance, Inc. All Rights Reserved.

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4

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY 1st Reprint

Effective April 1, 1992

WC 00 01 01 A Standard

DEFENSE BASE ACT COVERAGE ENDORSEMENT This endorsement applies only to the work described in the Schedule or described on the Information Page as subject to the Defense Base Act. The policy applies to that work as though the location included in the description of the work were a state named in Item 3.A. of the Information Page. General Section C. Workers' Compensation Law is replaced by the following: C. Workers' Compensation Law Workers' Compensation Law means the workers or workmen's compensation law and occupational disease law of each state or territory named in Item 3.A. of the Information Page and the Defense Base Act (42 USC Sections 1651-1654). It includes any amendments to those laws that are in effect during the policy period. It does not include any other federal workers or workmen's compensation law, other federal occupational disease law or the provisions of any law that provide nonoccupational disability benefits. Part Two {Employers Liability Insurance), C. Exclusions., exclusion 8, does not apply to work subject to the Defense Base Act. Schedule Description of Work

Notes: 1.

2. 3.

The Defense Base Act makes the Longshore and Harbor Workers' Compensation Act apply to contractors performing work at overseas military bases, whether in a territory or possession of the United States or in a foreign country, and to various public works contracts performed outside the continental United States. Use this endorsement to provide workers compensation insurance and employers liability insurance for work subject to the Defense Base Act extension of the Longshore and Harbor Workers' Compensation Act. The description of the work must include the location where the work is to be performed.

© 1991 National Council on Compensation Insurance

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WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY lst Reprint

Effective April 1, 1992

WC 00 01 08 A Standard

NONAPPROPRATED FUND INSTRUMENTALITIES ACT COVERAGE ENDORSEMENT This endorsement applies only to the work described in the Schedule or described on the Information Page as subject to the Nonappropriated Fund Instrumentalities Act. The policy applies to that work as though the location shown in the Schedule were a state named in Item 3.A. of the Information Page. General Section C. Workers Compensation Law is replaced by the following: C. Workers Compensation Law Workers Compensation Law means the workers or workmen's compensation law and occupational disease law of each state or territory named in Item 3.A. of the Information Page and the Nonappropriated Fund Instrumentalities Act (5 USC Sections 8171-8173). It includes any amendments to those laws that are in effect during the policy period. It does not include any other federal workers or workmen's compensation law, other federal occupational disease law or the provisions of any law that provide nonoccupational disability benefits. Part Two (Employers Liability Insurance), C. Exclusions., exclusion 8, does not apply to work subject to the Nonappropriated Fund Instrumentalities Act. Schedule Description and Location of Work

Notes: 1.

The Nonappropriated Fund Instrumentalities Act makes the Longshore and Harbor Workers' Compensation Act apply to civilian employees of certain instrumentalities such as the Army and Air Force Exchange Service, Army and Air Force Motion Picture Service, Navy Ship’s Stores Ashore, Navy, Marine and Coast Guard Exchanges and other instrumentalities of the United States under jurisdiction of the Armed Forces conducted for the pleasure and improvement of Armed Forces Personnel.

2.

Use this endorsement to provide workers compensation insurance and employers liability insurance for work subject to the Nonappropriated Fund Instrumentalities Act.

 ¤ 1991 National Council on Compensation Insurance.

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4

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Original

WC 00 01 04 A

Effective October 1, 2004

Standard

FEDERAL EMPLOYERS’ LIABILITY ACT COVERAGE ENDORSEMENT This endorsement applies only to work subject to the Federal Employers’ Liability Act (45 USC Sections 51-60) and any amendment to that Act that is in effect during the policy period. G. Limits of Liability of Part Two (Employers Liability Insurance) is replaced by the following: G. Limits of Liability Our liability to pay for damages is limited. Our limits of liability are shown in the Schedule. They apply as explained below: 1.

Bodily Injury by Accident. The limit shown for “bodily injury by accident – each accident” is the most we will pay for all damages covered by this insurance because of bodily injury to one or more employees in any one accident. A disease is not bodily injury by accident unless it results directly from bodily injury by accident.

2.

Bodily injury by Disease. The limit shown for “bodily injury by disease – aggregate” is the most we will pay for all damages covered by this insurance because of bodily injury by disease to one or more employees. The limit applies separately to bodily injury by disease arising out of work in each state shown in Item 3.A. of the Information page or in the schedule. Bodily injury by disease does not include disease that results directly from bodily injury by accident.

3.

We will not pay any claims for damages after we have paid the applicable limit of our liability under this insurance.

If any state is named in Item 2 of the Schedule, Part Two (Employers Liability Insurance) applies in that state to work subject to the Federal Employers’ Liability Act as though that state were listed in Item 3.A. of the Information Page. Part One (Workers Compensation Insurance) does not apply in a state shown in the Schedule. Part Two (Employers Liability Insurance), C. Exclusions, exclusion 9, does not apply to work subject to the Federal Employers’ Liability Act. Schedule 1.

2.

Limits of Liability Bodily Injury by Accident

$ ________________

each accident

Bodily Injury by Disease

$ ________________

aggregate

State

Notes: 1.

The Federal Employers’ Liability Act makes an interstate railroad liable for bodily injuries sustained by an employee.

2.

Use this endorsement when providing Federal Employers’ Liability Act coverage under Program I or II as described in the Basic Manual User’s Guide.

3.

Item 2 of the Schedule may be used to extend FELA coverage to a state not listed in Item 3.A. of the Information Page.

¤ 2004 National Council on Compensation Insurance, Inc.

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WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY

WC 00 02 01 B

Effective January 1, 2015

MARITIME COVERAGE ENDORSEMENT This endorsement changes how insurance provided by Part Two (Employers Liability Insurance) applies to bodily injury to a master or member of the crew of any vessel. A.

How This Insurance Applies is replaced by the following: A.

How This Insurance Applies This insurance applies to bodily injury by accident or bodily injury by disease. Bodily injury includes resulting death.

C

1.

The bodily injury must arise out of and in the course of the injured employee's employment by you.

2.

The employment must be necessary or incidental to work described in Item 1 of the Schedule of the Maritime Coverage Endorsement.

3.

The bodily injury must occur in the territorial limits of, or in the operation of a vessel sailing directly between the ports of, the continental United States of America, Alaska, Hawaii or Canada.

4.

Bodily injury by accident must occur during the policy period.

5.

Bodily injury by disease must be caused or aggravated by the conditions of your employment. The employee’s last day of last exposure to the conditions causing or aggravating such bodily injury by disease must occur during the policy period.

6.

If you are sued, the original suit and any related legal actions for damages for bodily injury by accident or by disease must be brought in the United States of America, its territories or possessions, or Canada.

Exclusions is changed by removing exclusion 10 and by adding exclusions 13 and 14. This insurance does not cover: 13. Bodily injury covered by a Protection and Indemnity Policy or similar policy issued to you or for your benefit. This exclusion applies even if the other policy does not apply because of another insurance clause, deductible or limitation of liability clause, or any similar clause. 14. Your duty or obligation to provide transportation, wages, maintenance, and cure. This exclusion does not apply if a premium entry is shown in Item 2 of the Schedule, except that punitive damages related to your duty or obligation to provide transportation, wages, maintenance, and cure under any applicable maritime law are excluded even if a premium is paid for transportation, wages, maintenance, and cure coverage.

D. We Will Defend is changed by adding the following statement: We will treat a suit or other action in rem against a vessel owned or chartered by you as a suit against you. G. Limits of Liability Our liability to pay for damages is limited. Our limits of liability are shown in the Schedule. They apply as explained below. 1.

Bodily Injury by Accident. The limit shown for “bodily injury by accident-each accident" is the most we will pay for all damages covered by this insurance because of bodily injury to one or more employees in any one accident.

2.

Bodily Injury by Disease. The limit shown for “bodily injury by disease-aggregate” is the most we will pay for all damages covered by this insurance because of bodily injury by disease to one or more employees. The limit applies separately to bodily injury by disease arising out of work in each state shown in Item 3.A. of the Information Page. Bodily injury by disease will be deemed to occur in the state of the vessel's home port.

3.

We will not pay any claims for damages after we have paid the applicable limit of our liability under this insurance.

A disease is not bodily injury by accident unless it results directly from bodily injury by accident.

Bodily injury by disease does not include disease that results directly from a bodily injury by accident.

I of 2 ¤ Copyright 2013 National Council on Compensation Insurance. All Rights Reserved.

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4

WC 00 02 01 B

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Effective January 1, 2015 Schedule

1.

Description of work:

2.

Transportation, Wages, Maintenance, and Cure Premium $ Exclusion: This insurance does not cover punitive damages related to your duty or obligation to provide transportation, wages, maintenance, and cure under any applicable maritime law even if a premium is paid for transportation, wages, maintenance, and cure coverage.

3.

Limits of Liability Bodily Injury by Accident

$______________

each accident

Bodily Injury by Disease

$______________

aggregate

Notes: 1. Use this endorsement to afford maritime coverage under Program I or II, as described in the Basic Manual User’s Guide in which the employer has maritime exposure and no Protection and Indemnity policy, or has a Protection and Indemnity policy that does not cover all its operations. 2. Use Item 1 of the Schedule to describe the maritime operations that are to be insured by this endorsement. The description may include limitations by size, ownership or name of vessel and limitations by names of waterways to be used by the vessels. 3. Show a premium charge or other appropriate entry in Item 2 to provide coverage for transportation, wages, maintenance, and cure. The premium charge for the exposure shall be determined by the carrier from its evaluation of the exposure presented by the risk. 4. In Arizona, any associated premium charge must be filed and approved by the Arizona Department of Insurance prior to use. 2 of 2 ¤ Copyright 2013 National Council on Compensation Insurance, Inc. All Rights Reserved.

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WC 48 06 03 Advisory

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Effective November 20,1987 Original Printing

We will pay those amounts to the persons who would be entitled to them under the law. If this is not possible, we will reimburse you for amounts you are required to pay. The following provisions apply to this insurance: A.

In no event will our liability under this section exceed the amount we or you would have been obligated to pay if the employment and injury had been subject to the workers compensation law designated in Item I of the -Schedule of this endorsement. The only exception to this is as provided for in Section 6 - Excess Repatriation Expenses.

B.

We have the option to request you to pay sums due directly to persons entitled to them on our behalf. We will reimburse you for these payments when you provide us with satisfactory proof of payment.

C.

Before we are required to make any payment or reimburse you, the persons entitled or paid must: 1. Release you and us in writing from all responsibility for the bodily injury or death. 2. Transfer to us their right to recover from others who may be responsible for the injury or death to the extent of our payment or reimbursement. 3. Cooperate with us and do everything necessary to enable us to enforce the right to recover from others. If a person entitled to payment under this section refuses to accept voluntary payments offered, we may, at our discretion, withdraw the offer to pay compensation benefits. If this happens, we will notify you and the employee that we will no longer be bound by the provisions in this section.

D.

Under this or any other policy we have issued to you, it is possible that the provisions of a workers compensation law, plan or any similar law or plan may hold you or us legally liable for any injury where payments have been made or would otherwise be made under Section 4 of this endorsement. If this happens, we agree that we will make no further payments under Section 4 if Section 5 of this endorsement applies.

Section 5. Legal Liability Under Workers Compensation Law A.

If benefits are payable under a workers compensation or occupational disease law of any state, country or subdivision of a country other than the United States of America, its territories or possessions, or Canada, we will reimburse you up to but not in excess of the cost of benefits which would have been payable under the workers compensation law of the state designated in Item 1 of the Schedule of this endorsement,

B.

We will not be liable for any loss for which you had other valid and collectible insurance.

C.

We assume no obligation to defend any suit or proceeding against you outside of the United States of America, its territories or possessions, or Canada.

D.

The coverage this Section 5 affords does not cover fines or penalties imposed on you for failure to comply with the requirements of any workers compensation or occupational disease law of any state, country or subdivision of a country. 2 of 5

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WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Original Printing

WC 48 06 03

Effective November 20, 1987

Advisory

Section 6. Excess Repatriation Expenses This section only applies to coverage provided for in Sections 4 and 5 of this endorsement. Medical expenses include additional expenses of repatriation to the United States of America Incurred as a result of bodily injury to employees. In the event an employee is injured, our liability is limited to the amount by which these expenses exceed the normal cost of returning the employee. In the event of an employee's death, our liability is limited to the amount by which the expenses of returning the body exceed the normal cost of returning an employee who is alive and in good health. Our liability will never exceed the amount indicated in Item 2 of the Schedule of this endorsement for one covered employee or accident. The policy does not afford coverage for repatriation expenses unless a specific limit of liability for each covered employee and accident appears in Item 2 of the Schedule of this endorsement. Section 7. Employers Liability The following agreement replaces Section B of Part Two--Employers Liability of the policy: B.

We Will Pay We will pay on your behalf all sums which you become legally obligated to pay as damages because of bodily injury by accident or disease, including resulting death, sustained in any state or country or subdivision of a country other than the United States of America, its territories or possessions, or Canada by any of your employees arising out of and in the course of employment by you.

The following provisions apply to Section 7 of this endorsement: A. We will reimburse you for all reasonable expenses you incur including attorneys' fees in defending any suit against you alleging injury and seeking damages on account of any insurance this section of this endorsement affords. We assume no obligation to defend any suit or any proceeding brought against you outside of the United States of America, its territories or possessions, or Canada. B.

The limit of our liability under Part Two will be in accordance with the following provisions: The words "damages because of bodily injury by accident or disease, including death at any time resulting therefrom," in Part Two include damages for care and loss of services. These words also include damages for which you are liable because of suits or claims others bring against you to recover the damages obtained from such others because of bodily injury your employees sustain arising out of and in the course of their employment. The limit of liability in Item 3 of the Schedule of this endorsement which applies to bodily injury by accident is the total limit of our liability for all damages because of bodily injury by accident including resulting death that one or more employees sustain The limit of liability in Item 3 of the Schedule of this endorsement which applies to bodily injury by disease is the total limit of our liability for all damages because of bodily injury by disease including resulting death that one or more employees sustain in any one state, country or subdivision of a country outside the United States, its territories or possessions, or Canada listed in Item 1 of the Schedule of this endorsement. The limits of liability designated in this endorsement supersede and are not cumulative with any limit(s) of liability elsewhere in the policy. The inclusion of more than one insured does not increase the limits of our liability. 3 of 5

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WC 48 06 03

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY

Advisory

Effective November 20, 1987

Original Printing

Section 8. Premium In addition to the provisions of Part V of the policy, the following provisions will apply to this endorsement: A.

We will compute the premium for this coverage in accordance with Part V of the policy, upon all remuneration paid to employees while traveling or temporarily residing outside the United $tales of America, its territories or possessions, or Canada for a period of no longer than ninety days. Remuneration includes overtime, bonuses and cash allowances for cost of living and board and lodging,

B.

We will determine the premium for this coverage on the basis of the workers compensation rules, classifications and rates in accordance with the manuals we use for the state workers compensation law designated in Item 1 of the Schedule of this endorsement.

C.

You must maintain payroll records for any employees covered by the provisions of this endorsement.

Section 9. Other lnsurance The following provision replaces Section E. of Part One and Section F. of Part Two of the policy with respect to the coverage this endorsement provides. The insurance for a loss covered by this endorsement will be excess insurance over and above any other insurance except with respect to insurance provided under Section S. The limits of liability for this insurance will be reduced by an amount equal to the limits of liability other insurance affords.

4 of 5

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Page 62

4

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Original Printing

Effective November 20, 1987

WC 43 06 03 Advisory

Schedule

1. Name(s) of Employees

State or Country of Operations

Designated Workers Compensation Law

2. Limits of Liability for Excess Repatriation Expenses $ $

Each Employee Each Accident

3. Limits of Liability for Part Two--Employers Liability Bodily Injury By Accident $

Bodily Injury By Disease $ $

Policy Limit Each Employee

4. Premium State of Designated Workers Compensation

Premium Basis Estimated Total Annual Remuneration

Rates Per $100 of Remuneration

Advance Premiums

Total Advance Premium Notes: 1.

This endorsement applies only to the insurance provided by the policy because multiple states, including Wisconsin, are shown in Item 3.A. of the information Page.

2.

This endorsement is not needed if Wisconsin is the only state shown in Item 3.A. of the Information Page.

3.

A company using this Advisory form in states other than Wisconsin, whether changed or not, is responsible for obtaining approval from the proper authority.

4.

It Wisconsin is the state shown 'in the Schedule as the Designated Workers Compensation Law, no premium charge should be shown in Item 4. of the Schedule.

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Page 63

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY 1st Reprint

Effective April 1, 1984

WC 00 03 13 Advisory

WAIVER OF OUR RIGHT TO RECOVER FROM OTHERS ENDORSEMENT We have the right to recover our payments from anyone liable for an injury covered by this policy. We will not enforce our right against the person or organization named in the Schedule. (This agreement applies only to the extent that you perform work under a written contract that requires you to obtain this agreement from us.) This agreement shall not operate directly or indirectly to benefit anyone not named in the Schedule.

Schedule

Note: 1.

Use this endorsement to waive the company’s right of subrogation against named third parties who may be responsible for an injury.

2.

the sentence in ( ) is optional with the company. It limits the endorsement to apply only to specific jobs of the insured, and only to the extent that the insured is required to obtain this waiver.

3.

The following entry must be added to the endorsement when used in Hawaii: “The premium charge for the endorsement is $_________________________.”

4.

The endorsement does not apply to policies in Missouri where the employer is in the construction group of code classifications. According to Section 287.150(6) of the Missouri statutes, a contractual provision purporting to waive subrogation rights is against public policy and void where one party to the contract is an employer in the construction group of code classifications.

5.

In most states, including Florida, any associated premium charge must be filed and approved prior to use.

¤ 1983 National Council on Compensation Insurance.

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4

WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Original Printing

Effective April 1, 1984

WC 00 03 05 Standard

JOINT VENTURE AS INSURED ENDORSEMENT If the employer named in Item 1 of the Information Page is a joint venture, and if you are one of its members, you are insured, but only in your capacity as an employer of the joint venture’s employees.

Note: 1.

Use this endorsement to insure the members of a joint venture named in Item 1 of the Information Page.

¤ 1983 National Council on Compensation Insurance, Inc.

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&&&fnj$Notebooks$20160617SCCC$20160617SCCC_SH_5fn&&& **StartTab+1**

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**CardStock**

The Society of Certified Insurance Counselors a proud member of The National Alliance for Insurance Education & Research

SECTION 5

Cyber Liability

James T. Harrison, J.D., CIC, CPCU, CLU, ChFC Tallahassee, FL

www.TheNationalAlliance.com © 2016. The National Alliance for Insurance Education & Research. All Rights Reserved. This outline or any part thereof may not be reproduced in any form or by any means or stored in any information retrieval system without the express written consent of the author. This publication includes copyrighted material of Insurance Services Office, Inc., with its permission.

5

CYBER LIABILITY

James T. Harrison, Jr. [email protected]

The following material includes information on the ISO 2014 edition of the Information Security Protection Policy.

5

LEARNING OBJECTIVES 1.

List the common cyber liability exposures to loss (page 4)

2.

Distinguish the type of business that may need Technology E&O Insurance versus Cyber Liability Insurance. (page 8)

3.

Identify and explain the types of Cyber Liability insurance coverages that are available. (page 10)

4.

Identify and explain the types of Cyber Insurance coverage that are available for first party losses. (page 12)

5.

Understand the basic characteristics and provisions of a Cyber Liability Insurance Policy. (page 15)

Harrison Cyber Liability May 2, 2016

Page 1

I.

EVOLUTION OF THE CYBER EXPOSURE A.

Access. Have access to the Internet and use e-mail. Risks are misuse by employees.

B.

Presence. Have a domain name and a website to promote its jams and jellies. Has exposure for PI issues and intellectual property issues.

C.

Integration. Connects with others but still does not sell its goods and services directly over the Internet. Increased exposure to loss to property (BI).

D.

E-commerce. Orders placed and payment received over the Internet. Major property and liability exposures and increased advertising and personal injury exposures.

E.

Every company has a “cyber” exposure?

Cyber Transaction Examples Business to Business (B2B): Manufacturer Doctor’s Office

Wholesalers, distributors or retailers Labs, hospitals, pharmacies, insurance companies

Insurance Agency

Insurance Company

Architect/Engineer

General Contractor

Business to Consumer (B2C) Online Sales

Consumer

Doctor’s Office

Consumer

Insurance Agency

Consumer

Contractor/Service or Repair

Consumer

Business to Government (B2G) Law Office Insurance Company Contractors

Harrison Cyber Liability May 2, 2016

Court System Department of Insurance City/State/Federal Offices

Page 2

5

Learning Objective 1: List the common cyber liability exposures to loss

II.

THE NEED FOR CYBER LIABILITY COVERAGE A.

Harrison Cyber Liability May 2, 2016

Exposures 1.

Employees make mistakes and send emails and data to others they did not intend to.

2.

Employees intentionally or unintentionally send emails to others. Sometimes the emails contain incorrect, damaging information, or information that violates the privacy of others.

3.

Businesses create websites that contain unauthorized use (infringement) of images, music, documents belonging to others. Copyright (including innocent or contributing) , trademark, patent

4.

Businesses create web pages, bulletin boards, chatrooms, post testimonials with content that defames others

5.

Businesses may transmit information that contain a virus that may cause damage to another’s computer system

6.

Employees lose laptops, PDA’s, smart phones and other electronic devices that contain personal information or confidential client information.

7.

Hackers can break into a computer system and may cause damage, steal data, and/or distribute information that may hurt other people/businesses. Commonly known as cyber attack.

8.

Rogue employees or employees with unauthorized access may cause damage, steal data, and/or distribute information that may hurt other people/businesses.

9.

Denial of service attacks where hackers send the website so many requests for information that legitimate customers cannot access the site. DoS attacks can also be caused by a virus.

10.

Bad programming or incorrect data entry may cause the loss of information that could hurt others or trigger the release of private information

Page 3

11.

Security breaches can result in costly notifications, defense expenses, costs to investigate the source of the breach, cost of public relations, business interruption, costs to repair and replace data, etc.

12.

Statutes create exposures Examples:

B.

a.

Health Insurance Portability and Accountability (HIPAA) Act

b.

The Health Information Technology for Economic and Clinical Health (HITECH) Act.

c.

Fair Credit Reporting Act

Limited Coverage Under The CGL CGL was not designed for cyber related exposures 1.

Coverage A – Bodily Injury and Property Damage Liability a.

Does not provide coverage for property damage to intangible property such as electronic data.

b.

Electronic Data exclusion

SECTION I – COVERAGES COVERAGE A – BODILY INJURY AND PROPERTY DAMAGE LIABILITY 2. Exclusions This insurance does not apply to: p. Electronic Data Damages arising out of the loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate electronic data. However, this exclusion does not apply to liability for damages because of "bodily injury". As used in this exclusion, electronic data means information, facts or programs stored as or on, created or used on, or transmitted to or from computer software, including systems and applications software, hard or floppy disks, CD-ROMs, tapes, drives, cells, data processing devices or any other media which are used with electronically controlled equipment.

2.

Electronic Data Liability Coverage Form CG 00 65 covers what is excluded by exclusion p. The Insuring Agreement: a.

Harrison Cyber Liability May 2, 2016

Policy agrees to pay (1) to pay sums the insured is legally obligated to pay as damages because of "loss of electronic Page 4

5

data" and (2) to defend the insured against suits seeking such damages.

3.

b.

Coverage applies to "loss of electronic data" which is defined as damage to, loss of, loss of use of, corruption of, inability to access, or inability to properly manipulate, "electronic data."

c.

A "loss of electronic data" is covered when caused by an "electronic data incident."

e.

“Electronic data incident” is the causational prerequisite for coverage like an "occurrence" is required for CGL bodily injury or property damage coverage. An "electronic data incident" is a broader concept than an "occurrence," in that it may be either an accident (as an occurrence does); or a negligent act, error, or omission; or a series of accidents, negligent acts, errors, or omissions. Coverage for losses caused by an error or omission avoids coverage disputes based on the intentionality of the act that caused the loss, or the fortuity of the loss given a particular act. Like professional liability insurance (which it is not [see exclusion c.]), it provides coverage over a wider spectrum of causal events than the CGL concept of "occurrence" does.

f.

Exclusion c. Coverage is excluded for negligent acts, errors, or omissions committed by the insured in providing "computer products or services." “Computer products and services is defined to include products and services such as the manufacture, installation, or repair of computer equipment and software; handling or storage of electronic data for others; and providing of Internet services; but also the manufacture or repair of any "communications or broadcasting equipment" and the providing of any communication services to others, including television and radio.

Coverage B –Personal and Advertising Injury Liability a.

Only provides coverage for defined offenses

b.

Sixteen Exclusions, including but not limited to the following: 1)

Harrison Cyber Liability May 2, 2016

Infringement Of Copyright, Patent, Trademark Or Trade Secret

Page 5

III.

IV.

V.

2)

Insureds in Media and Internet Type Businesses

3)

Electronic Chatrooms Or Bulletin Boards

WHAT WE WON’T BE COVERING IN DETAIL TODAY A.

Electronic Equipment Breakdown Coverage Form

B.

Electronic Data Processing Coverage Form

C.

Commercial Crime Coverage Form

D.

Employment Practices Liability Coverage Form

5

WHAT WE WILL BE COVERING TODAY A.

Third party liability coverage resulting from a cyber-related loss

B.

First party coverage resulting from a cyber-related events

VARIOUS CYBER POLICY NAMES A.

Even though ISO developed a policy(ies) designed to provide coverage for businesses with an Internet exposure, many insurers prefer to use their own policy forms with their own brand names and specific coverages 1.

2.

Harrison Cyber Liability May 2, 2016

ISO Policies x

Information Security Protection Policy (EC 00 10)

x

Financial Institution Information Security Protection Policy (EC 00 11)

x

Media and Information Security Protection Policy (EC 00 12 Media Liability is on an occurrence basis) (EC 00 13 Media Liability is on a claims made basis)

Examples of insured’s cyber policy names a.

CyberEdge (AIG)

b.

CyberSecurity (Chubb) Page 6

3.

c.

CNA NetProtect (CNA)

d.

CyberChoice (Hartford

e.

CyberRisk (Travelers)

f.

E-RiskEdge (Zurich)

For purposes of this course, we will refer to cyber related liability coverage as Cyber Liability Insurance

B.

While there are stand-alone Cyber Liability Insurance Policies, many companies have developed package policies where one or more insuring agreements related to cyber coverages can be purchased

C.

Specialized Cyber Policy Types While there are various Cyber Liability policy types, many insurers have specialized policies, such as Technology Errors and Omissions that are designed specifically for Technology Service Providers and Technology Product Providers.

Learning Objective 2: Distinguish the type of business that may need Technology E&O Insurance versus Cyber Liability Insurance.

VI.

TECHNOLOGY ERRORS AND OMISSIONS (E&O) VERSUS CYBER LIABILITY INSURANCE A.

Technology E &O Insurance Primarily designed for Technology Service Providers and Technology Product Providers 1.

Technology Service Providers Coverage for entities that generally provide some type of Internet or programing service that has an errors and omissions exposure.

Harrison Cyber Liability May 2, 2016

a.

Internet Service/Access Providers

b

Information Technology (IT) Service and/or Consulting Firms (installation, testing, repairing, maintenance)

c.

Internet/Web hosting services (for others) Page 7

2.

d.

Web designers and consultants

e.

Data storage facility/sites

f.

Companies that develop and provide Internet commerce i.e. shopping carts, charge card processing, etc.

g.

Other

5

Technology Product Providers a.

Computer manufacturers

b.

Software/computer application developers/manufacturers

Note: Both of the above still have the same other cyber liability issues as other businesses that are not technology service and product providers. Most Technology E&O Insurance Policies offer Cyber Liability Insurance coverages options to their policies. B.

Cyber Liability Insurance 1.

Users of the Internet and other technology Coverage intended for entities that use the Internet or other computer technology to conduct their business. This includes but is not limited to entities that advertise on the internet, conduct business via the internet, use emails, etc.

2.

Harrison Cyber Liability May 2, 2016

Almost all business use the Internet or other computer technology to conduct business or share/distribute data a.

Wholesalers/Retailers

b.

Financial institutions

c.

Medical, healthcare industry

d.

Manufacturers

e.

Offices - Attorneys, Engineers, Accountants, etc.

f.

Hospitality Industry –hotels, conference centers, restaurants.

g.

Construction, Repair, Service providers.

Page 8

3.

Many insurers will exclude Errors and Omissions due to programming, consulting, and related services. Also some Cyber Liability coverage will be limited to specific Internet activities. Best to purchase a Technology E&O policy.

VII. TYPES OF CYBER COVERAGE AVAILABLE Learning Objective 3: Identify and explain the types of Cyber Liability insurance coverages that are available. A.

Cyber Liability Insurance Liability coverage varies by insurers but many insurers offer coverage in one or more of three areas plus coverage for expenses related to cyber events. 1.

Content Liability (also known as website publishing liability) a.

Liability due to any actual or alleged error, misstatement or misleading statement posted or published by an insured.

b.

Broader protection than that provided by Coverage B – Personal and Advertising Injury Liability of the CGL

c.

Coverage may include one or more of the following: 1)

Infringement or violation of another's copyright, title, slogan, trademark, trade name, trade dress, service mark or service name x

2)

Disparagement or defamation, x

2.

Example: Negative comments are posted on the insured’s website about a competitor’s product.

Privacy Liability a.

Harrison Cyber Liability May 2, 2016

Example: Unauthorized use of images or music when creating on a web site

Liability due to the release of personal information in violation of person’s right to privacy Page 9

b.

3.

Coverage may also include liability due to the release of confidential corporate information x

Example: Employee accidentally emails personal information to wrong individual(s).

x

Example: Employee loses laptop containing confidential corporate information.

5

Security Breach Liability (also known as Information Security Liability or Network Breach Liability). Liability due to any actual or alleged neglect, breach of duty or omission by an insured that could results in the following: a.

Security breach of a computer system x

b.

Transmittal, by e-mail or other means, a virus to another person or organization x

c.

Example: Unauthorized user transmits a malicious code that infects the insured’s computer system and spreads to other computer systems

Denial of Service Attack x

4.

Example: Unauthorized user gains access to credit card information.

Example: Hackers cause authorized users from gaining access to the insured’s computer system. Without access those authorized user’s own operations/service may fail or suffer.

Security Breach Expense (also known as Privacy Notification Expense) The costs to notify parties affected by a security breach Example: The costs to notify parties affected by a security breach. Example: The costs to investigate the cause of security breach (may be referred to as Forensic Investigation Costs)

Harrison Cyber Liability May 2, 2016

Page 10

Learning Objective 4: Identify and explain the types of coverages that are available for first party losses due to a cyber-related event. B.

First- Party Losses related to Cyber-related Event Name and coverage varies by insurers but typically is intended to cover first party or peripheral losses suffered by the named insured due to a covered cyber-related event. Some insurers may include as part of their Cyber Liability Insurance Policy or offer separately as an optional coverage. 1.

2.

Harrison Cyber Liability May 2, 2016

Business Income and Extra Expense x

Example: An online retailer’s computer system is down due to denial of service attack and there is loss of revenue.

x

Example: Insured’s computer system is shut down for repairs due to damage of files by a virus and there is a loss of revenue

Extortion Threat, Ransom Payment or Rewards Payment x

Example: Hacker demands money in return for not releasing stolen bank account information

x

Example: An outside person or organization threatens to shut down the insured’s computer system if the insured does not comply with their demands.

x

Kidnap/Ransom and Extortion CR 00 41 -

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A. Insuring Agreements Coverage is provided under the following Insuring Agreements for which a Limit of Insurance is shown in the Declarations: 1. Kidnap/Ransom And Extortion – Direct Loss a. We will pay for loss of "property" surrendered as a ransom payment resulting directly from the "kidnap" or alleged "kidnap" of an "insured person". b. We will pay for loss of "property" surrendered as an extortion payment resulting directly from an extortion threat communicated to you: (1) To do bodily harm to an "insured person"; (2) To do damage to "premises" or "property"; (3) To introduce a virus or other malicious instruction into your computer system designed to damage, destroy or corrupt data or computer programs stored within your computer system; 3.

4.

Harrison Cyber Liability May 2, 2016

Public Relations Expense (also known as Crisis Management Expense) x

Example: Hotel offers discounted rates and provides $1 million in Identity Theft Protection insurance to customers who have been affected by a computer security breach.

x

Example: A retail store offers free credit monitoring for a year to customers who have been affected by a computer security breach

Replacement or Restoration of Electronic Data x

Typically pays for the insured’s loss of electronic data resulting directly from a cyber-related event

x

CR 04 13 – Destruction Of Electronic Data or Records covers cost to restore when damage is by virus or vandalism done by third party or employee.

Page 12

5

INFORMATION SECURITY PROTECTION POLICY SECTION I – INSURING AGREEMENTS Coverage is provided under the following Insuring Agreements for which an Aggregate Limit Of Insurance is shown in the Declarations: 1. Web Site Publishing Liability We will pay for both "loss" that the "insured" becomes legally obligated to pay and "defense expenses" as a result of a "claim" first made against the "insured" during the "policy period" or during the applicable Extended Reporting Period, for a "wrongful act" or a series of "interrelated wrongful acts" taking place on or after the Retroactive Date, if any, shown in the Declarations and before the end of the "policy period". 2. Security Breach Liability a. We will pay for both "loss" that the "insured" becomes legally obligated to pay and "defense expenses" as a result of a "claim" first made against the "insured" during the "policy period" or during the applicable Extended Reporting Period, for a "wrongful act" or a series of "interrelated wrongful acts" taking place on or after the Retroactive Date, if any, shown in the Declarations and before the end of the "policy period". b. We will pay for both "loss" and "defense expenses" as a result of a "claim" in the form of a "regulatory proceeding" first made against the "insured" during the "policy period" or during the applicable Extended Reporting Period, in response to a "wrongful act" or a series of "interrelated wrongful acts" covered under Paragraph 2.a. 3. Programming Errors And Omissions Liability We will pay for both "loss" that the "insured" becomes legally obligated to pay and "defense expenses" as a result of a "claim" first made against the "insured" during the "policy period" or during the applicable Extended Reporting Period, for a "wrongful act" or a series of "interrelated wrongful acts" taking place on or after the Retroactive Date, if any, shown in the Declarations and before the end of the "policy period". 4. Replacement Or Restoration Of Electronic Data We will pay for "loss" of "electronic data" or "computer programs" stored within the "computer system" resulting directly from an "e-commerce incident" sustained during the "policy period". 5. Extortion Threats We will pay for "loss" resulting directly from an "extortion threat" communicated to you during the "policy period". However, we will not pay for "extortion expenses" or "ransom payments" which are part of a series of related threats that began prior to the "policy period". 6. Business Income And Extra Expense We will pay for "loss" due to an "interruption" resulting directly from an "e-commerce incident" sustained during the "policy period" or an "extortion threat" communicated to you during the "policy period". 7. Public Relations Expense We will pay for "loss" due to "negative publicity" resulting directly from an "e-commerce incident" or a "security breach" sustained during the "policy period". 8. Security Breach Expense We will pay for "loss" resulting directly from a "security breach" sustained during the "policy period".

EC 00 10 01 14

Harrison Cyber Liability May 2, 2016

© Insurance Services Office, Inc., 2013

Partial copy of Page 1

Page 13

Learning Objective 5: Understand the basic characteristics and provisions of a Cyber Liability Insurance Policy.

VIII. COMMON CHARACTERISTICS OF CYBER LIABILITY POLICIES A.

Typically written on claims-made basis

B.

Insuring Agreement(s) a.

5

May be a singular insuring agreement, or a singular insuring agreement with more than one type of coverage, or multiple insuring agreements Single insuring agreement • The Company shall pay on behalf of each Insured all Loss on account of any Claim first made during the Policy Period arising out of the Insured's Internet activities which occurred on or after the Retroactive Date set forth in ITEM 7 of the Declarations. •

CLAIM INCLUDES NON-PECUNIARY RELIEF

•

(f) Internet Activities means: (i)

display or other use of Matter on an Internet Site;

(ii)

transmission of Matter via an Internet Site; or

(iii) dissemination of Matter by any other means of publication or communication shown in ITEM 8 of the Declarations. •

(i) Matter means printed, verbal, numerical, audio or visual expression, or any other expression, regardless of the medium upon which such expression is fixed.

Single insuring agreement with more than one coverage 1. The Company will pay on behalf of the Insured all Damages and Claim Expense in excess of the Retention and within the Limit of Insurance which the Insured becomes legally obligated to pay because of liability imposed by law or Assumed Under Contract as a result of one or more Claims arising from any of the following actual or alleged Wrongful Harrison Cyber Liability May 2, 2016

Page 14

Acts in performing Cyber and Technology Activities, including obtaining, processing, uttering or disseminating Content in or for the Cyber and Technology Activities, when the first written Claim is made against any Insured during the Policy Period or any Extended Reporting Period: 1.

2.

3. 4. 5.

6. 7. 8.

9.

Harrison Cyber Liability May 2, 2016

any form of defamation or other tort related to disparagement or harm to the character, reputation or feelings of any person or organization, including libel, slander, product disparagement, trade libel, infliction of emotional distress, malicious falsehood, outrage or outrageous conduct; any form of invasion, infringement or interference with rights of privacy or publicity, including false light, public disclosure of private facts, intrusion, breach of confidence and commercial appropriation of name or likeness; infringement of title, slogan, trademark, trade name, trade dress, service mark or service name; infringement of copyright, false attribution of authorship, passing off, plagiarism or misappropriation of ideas under implied contract; Piracy, Unfair Competition or other misuse of an intellectual property right in Content, but only when alleged in conjunction with the types of Claims named in 3. and 4. above; wrongful entry or eviction, trespass, eavesdropping or other invasion of the right of private occupancy; false arrest, detention or imprisonment or malicious prosecution; failure to prevent a party from: unauthorized access to, unauthorized use of, a. tampering with or introduction of malicious code into data or systems; or b. repetitively accessing a website, under the control of an Insured, with the intent to deny others access to such website or with the intent to cause such website’s functionality to fail, including what is commonly referred to as denial of service attacks; or errors, omissions or negligent acts.

Page 15

Example of multiple insuring agreements - ISO has eight insuring agreements that can be selected for coverage when indicated on the Declarations b. C.

Crucial to understand the terminology found within the insuring agreement(s) to recognize what coverage is being purchased

Who Is Insured 1.

x

2.

3.

a.

Typically, employees are included as “insureds”, but look for limitations.

b.

Definition may or may not include leased employees, temporary, part-time employees, or former employees

Partner or LLC member or manager Beware: May not include the spouse.

4.

Directors and officers of a corporation

5.

Trustees

6.

May or not include volunteer workers

7.

May or may not include coverage for newly acquired business

Key Definitions (vary by insurer) 1.

Harrison Cyber Liability May 2, 2016

Beware: If a sole proprietor, may not include the spouse.

Employees

x

D.

5

Named insured.

“Claim” a.

A written demand for monetary damages

b.

Non-monetary relief, any civil proceeding or arbitration

c.

May be limited to internet activities only or

d.

May be limited to wrongful acts as defined

Page 16

2.

3.

4.

5.

6.

Covered Territory a.

Due to the worldwide reach of the Internet, typically will provide worldwide coverage, but look for any limitations.

b.

May require the suit be brought in the United States of America, including its territories and possessions, Puerto Rico or Canada

“Damages” or may be defined as “loss” a.

Compensatory damages, settlement amounts and costs awarded pursuant to judgments or settlements

b.

May or may not include punitive and exemplary damages

c.

May or may not include fines, penalties, defense costs associated with regulatory proceedings

“E-commerce incident” may include the following a.

Virus; or malicious code; or

b.

May or may not include denial of service attack;

c.

May be expanded to include other

“Internet activities” a.

Content displayed on the Internet including audio, visual, content

b.

Transmittals/transactions via the Internet

c.

Dissemination by other computer technology

“Personal information” x

7.

“Security breach” x

Harrison Cyber Liability May 2, 2016

May be limited to just information the insured is required by law to protect from public disclosure

Is this limited to outside unauthorized users?

Page 17

Beware some policies may not include unauthorized access by employees as a security breach

x

8.

“Security breach costs” What is included? Investigative costs? Notification costs? Overtime? Outside call service? Credit monitoring costs?

x

9.

“Wrongful Acts” x

E.

F.

G.

H.

Crucial to determine what wrongful acts are covered by the definition

Defense and Settlement Provision 1.

Insurer has the right and duty to defend

2.

Usually within the limits of liability, and NOT in addition to the limit of insurance

3.

Defense costs may apply against the policy’s deductible

Limits of Liability 1.

Limit of insurance per Insuring Agreement/Coverage indicated in the Declarations

2.

May have a maximum policy aggregate

Deductible 1.

Deductible per claim?

2.

Deductible per loss regardless of the number of claims?

3.

Deductible per insuring agreement?

4.

Deductible per policy?

Exclusions vary but typically include a.

Harrison Cyber Liability May 2, 2016

5

Bodily injury or property damage

Page 18

IX.

b.

Fraud committed by any Insured

c.

Breach of contract

d.

Employment Practices

e.

Product Liability

f.

War

SUMMARY OF LEARNING OBJECTIVES 1.

List the common cyber liability exposures to loss (page 4)

2.

Distinguish the type of business that may need Technology E&O Insurance versus Cyber Liability Insurance. (page 8)

3.

Identify and explain the types of Cyber Liability insurance coverages that are available. (page 10)

4.

Identify and explain the types of Cyber Insurance coverage that are available for first party losses. (page 12)

5.

Understand the basic characteristics and provisions of a Cyber Liability Insurance Policy. (page 15)

Harrison Cyber Liability May 2, 2016

Page 19

FORMS INDEX EC DS 01

Information Security Protection Policy Declarations

EC 00 10

Information Security Protection Policy

5

Harrison Cyber Liability May 2, 2016

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POLICY NUMBER:

E-COMMERCE EC DS 01 01 14

INFORMATION SECURITY PROTECTION POLICY DECLARATIONS In return for the payment of the premium, and subject to all the terms and conditions of this Policy, we agree with you to provide the insurance as stated in this Policy. Company Name:

Producer Name:

Named Insured:

Mailing Address:

Policy Pe Period From: To: Web Site Address(es):

12:01 AM at the e Insured's In mailing address shown above

Form Of Business (Check eck approp appropriate box.): x.): Individuall

Joint Venture

Limited Liability Company

P Partnership p

Corporation C

Other:

Retroactive Date (Enter date o or "none" none if no Retroactive Date applies.): Insuring Agreement ement 1. Web Site Publishing ublis Liability: Insuring Agreement 2. Security ty Breach B ac Liability: Insuring Agreement 3. Programming amm Errors And Omissions Liability: Annual Premium: Policy Aggregate Limit Of Insurance:

Harrison Cyber Liability May012,012016 EC DS 14

$ $

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Insuring Agreements, Aggregate Limits Of Insurance And Deductibles: Aggregate Insuring Agreement/Coverages Limit Of Insurance 1. Web Site Publishing Liability $ 2. Security Breach Liability $ Defense Expenses And Fines Or Penalties (if insurable by law) In Connection With A Regulatory Proceeding – Sublimit: $ 3. Programming Errors And Omissions Liability $ 4. Replacement Or Restoration Of Electronic Data $ 5. Extortion Threats $ 6. Business Income And Extra Expense $ Waiting Period Hours: 7. Public Relations Expense $ 8. Security Breach Expense $

Deductible Amount $ $

5 $ $ $ $ $ $

If "Not Covered" is inserted above opposite any y spec specified Insuring Agreement, Agre such uch Insuring Ins Agreement and any other reference to it in this Policy is deleted. If Added By Endorsement:

Insuring Agreement(s) Or Coverage(s) verage(s)

Limit it Of IInsurance

$ $ $ $ $ Endorsement(s) nt(s) Forming Part Of This Policy Wh When Issued:

Deductible Amount $ $ $ $ $

Countersignature Of Authorized Representative Coun Name: Title: Signature: Date:

Harrison Cyber Liability May Page 2 of2,2 2016

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EC DS 01 01 14

E-COMMERCE EC 00 10 01 14

INFORMATION SECURITY PROTECTION POLICY INSURING AGREEMENTS 1., 2. AND 3. OF THIS POLICY PROVIDE CLAIMS-MADE COVERAGE. DEFENSE EXPENSES ARE PAYABLE WITHIN, AND NOT IN ADDITION TO, THE LIMIT OF INSURANCE. PAYMENT OF DEFENSE EXPENSES UNDER THIS POLICY WILL REDUCE THE LIMIT OF INSURANCE. PLEASE READ THE ENTIRE POLICY CAREFULLY. Various provisions in this Policy restrict coverage. Read the entire Policy carefully to determine rights, duties and what is and is not covered. Throughout this Policy the words "you" and "your" refer to the "named insured" shown in the Declarations. The words "we", "us" and "our" refer to the company providing this insurance. Other words and phrases that appear in quotation marks have special meaning. Refer to Section VII – Definitions. SECTION I – INSURING AGREEMENTS Coverage is provided under the following Insuring suri Agreements for which an Aggregate Limit mit Of Insurance is shown in the Declarations: 1. Web Site Publishing Liability We will pay for both "loss" that hat the "insured" becomes legally obligated to pay and "defense expenses" as a result of a "claim" claim" first made m against the "insured" during the "policy policy period" or o during the applicable Ext Extended Reporting orting Period, for a "wrongful act" or a series of "interrelated se interrelated wrongful acts" taking g place on or after the t Retroactive Date, if any, shown in the Declarations rations and before the end of the "policy period". e en 2. Security Breach L Liability a. We willll p pay for both "loss" s" that the "insured" "insure becomes to es legally obligated obliga o pay pa and "defense expenses" es" as a result of a "claim" "claim first made against the "insured" during the "policy period" e "p or during the applicable Ext Extended nde Reporting Period, for a "wrongful act" or a series of "interrelated wrongful place on or ul acts" taking t after the Retroactive e Date, if any, shown in the Declarations and before the end of the "policy period". b. We will pay for both "loss" and "defense expenses" as a result of a "claim" in the form of a "regulatory proceeding" first made against the "insured" during the "policy period" or during the applicable Extended Reporting Period, in response to a "wrongful act" or a series of "interrelated wrongful acts" covered under Paragraph 2.a.

Harrison Cyber Liability May EC 00 102, 012016 14

3. Programming Errors And Omissions Liability We will pay for both "loss" that the "insured" b becomes legally egally obligated to pay and "defense expenses" as a result of a "claim" first made against the "insured" sured" during the "policy period" or during Reporting Period, rin the applicable able Extended Exte forr a ""wrongful act" t" or a series of "interrelated wrongful ngful acts" taking g place on or o after the Retroactive Re active Date, if any, shown in the Declarations and before b re the end of the "policy policy period". p 4. Replacement eplace nt Or Restoration ratio Of Electronic Data We will pay for "loss" of o "electronic data" or "computer programs" within the "computer "comput ms" stored sto from an "e-commerce system" resulting directly ire incident" sustained during the "policy period". inciden 5. Extortion 5 ortion Threats We willll pay for "loss" resulting directly from an W "extortion threat" communicated to you during the "exto t "policy policy period". However, we will not pay for "extortion expenses" or "ransom payments" which are part of a series of related threats that began prior to the "policy period". 6. Business Income And Extra Expense We will pay for "loss" due to an "interruption" resulting directly from an "e-commerce incident" sustained during the "policy period" or an "extortion threat" communicated to you during the "policy period". 7. Public Relations Expense We will pay for "loss" due to "negative publicity" resulting directly from an "e-commerce incident" or a "security breach" sustained during the "policy period". 8. Security Breach Expense We will pay for "loss" resulting directly from a "security breach" sustained during the "policy period".

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SECTION II – LIMITS OF INSURANCE 1. Policy Aggregate Limit Of Insurance The most we will pay for all "loss", and "defense expenses" if covered, under this Policy is the Policy Aggregate Limit Of Insurance shown in the Declarations. The Policy Aggregate Limit of Insurance shall be reduced by the amount of any payment made under the terms of this Policy. Upon exhaustion of the Policy Aggregate Limit of Insurance by such payments, we will have no further obligations or liability of any kind under this Policy. 2. Insuring Agreement Aggregate Limit Of Insurance a. Subject to the Policy Aggregate Limit of Insurance, the most we will pay for all "loss", and "defense expenses" if covered, under each Insuring Agreement, is the Insuring Agreement Aggregate Limit Of Insurance shown in the Declarations: (1) The Insuring Agreement Aggregate Limit of Insurance shall be reduced by the amount mou of any payment for "loss", and "defense efense expenses" if covered, under that Insuring nsuring Agreement; and (2) Upon exhaustion of the Insuring Agreement ment Aggregate Limit of Insurance surance by such payments, we will have no further obligations or liability of anyy kind under that th Insuring Agreement. b. If coverage for "regulato "regulatory proceedings" eedings" is being provided under Insuring er Paragraph Paragra b. of Insur Agreement 2. Security urity Breach Liability, y, the Limit of Insurance shall of, nott in hall be part of addition Insurance n to, the Aggregate gate Limit of Insura ce for the Insuring Agreement. Insur nt. SECTION III – DE DEDUCTIBLE 1. Subject to Section II – Limits O Of Insurance: nsur a. Under Insuring ring Agreements Agreement 1. Web Site Publishing Liability, 2. Security Liability curit Breach B and 3. Programming Errors rrors And Omissions Liability: We will pay only the of "loss" and e amount a "defense expenses" which are in excess of the applicable Deductible Amount shown in the Declarations resulting from the same "wrongful act" or "interrelated wrongful acts". Such Deductible Amount will be borne by you, selfinsured, and at your own risk.

b. Under Insuring Agreements 4. Replacement Or Restoration Of Electronic Data, 5. Extortion Threats, 7. Public Relations Expense and 8. Security Breach Expense: We will pay only the amount of "loss" which is in excess of the applicable Deductible Amount shown in the Declarations. c. Under Insuring Agreement 6. Business Income And Extra Expense: We will pay only the amount of "loss" which exceeds the greater of: e great (1) The Deductible Amount shown in the Dedu Declarations; aration or (2) The amount ount of "loss" "loss incurred during the Waiting Period shown in the Declarations. eriod show 2. In the event a "loss"" is covered under e co nde more than one Insuring Agreement, highest Insu ment, only the t Deductible applicable "loss" shall Ded ible Amount A cable to the t be applied. app d SECTION ON IV I – DEFENSE AND SETTLEMENT The provisions contained this section apply provisi ntained within wi only to Insuring Agreements Insu emen 1. Web Site Publishing Liability, ability, 2. Security Breach Liability and 3. Programming Errors And Omissions Liability: gramm 1. We shall have the right and duty to select counsel h and an defend efend the "insured" against any "claim" covered under Insuring Agreements 1. Web Site cove Publishing Liability, 2. Security Breach Liability Publis and d 3. Programming Errors And Omissions Liability, even if the allegations of such "claim" are groundless, false or fraudulent. However, we shall have the right but not the duty to defend the "insured" against a "claim" covered under Paragraph b. of Insuring Agreement 2. Security Breach Liability, and we shall have no duty to defend the "insured" against any "claim" which is not covered under any of these Insuring Agreements. 2. We may, upon the written consent of the "insured", make any settlement of a "claim" which we deem reasonable. If the "insured" withholds consent to such settlement, our liability for all "loss" resulting from such "claim" will not exceed the amount for which we could have settled such "claim", plus "defense expenses" incurred, as of the date we proposed such settlement in writing to the "insured". Upon refusing to consent to a settlement we deem reasonable, the "insured" shall, at its sole expense, assume all further responsibility for its defense, including all additional costs associated with the investigation, defense and/or settlement of such "claim".

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EC 00 10 01 14

5

SECTION V – EXCLUSIONS We will not be liable for "loss" or "defense expenses": 1. Based upon, attributable to or arising out of lightning, earthquake, hail, volcanic action or any other act of nature. 2. Based upon, attributable to or arising out of: a. War, including undeclared or civil war or civil unrest; b. Warlike action by military force, including action hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or c. Insurrection, rebellion, revolution, usurped power, or action taken by government authority in hindering or defending against any of these. 3. Based upon, attributable to or arising out of the dispersal or application of pathogenic or poisonous biological or chemical materials, nuclear reaction, nuclear radiation or radioactive contamination, or any related act or incident, however caused. 4. Based upon, attributable to or arising out of bodily injury or physical damage to or destruction on of tangible property, including loss of use thereof. Bodily injury means bodily injury, njury, sickness or disease sustained by a person, n, including death resulting from any of these at any time. 5. Based upon, attributable ble to or arising ng out of any unexplained or indeterminable rminable failure, malfunction or slowdown of the "computer including omputer system", sy ncludi "electronic data" and the he inability to access ess or properly manipulate pula the "electronic electronic data". 6. Based upon, to on, attributable attrib o or arising out of any a "interruption" on" in normal computer omputer function or network service or function due to insufficient serv capacity to transactions or due to an o process transac ns o overload of activity on the "computer "co pute system" or network. However, this exclusion usion shall hal not apply if such "interruption" is caused by an "e-commerce incident". 7. Based upon, attributable ble to or o arising out of a complete or substantial failure, disablement or shutdown of the Internet, regardless of the cause. 8. Based upon, attributable to or arising out of any failure of, reduction in or surge of power. 9. Based upon, attributable to or arising out of any actual or alleged violation of the Racketeer Influenced and Corrupt Organizations Act (RICO) and its amendments, or similar provisions of any federal, state or local statutory or common law.

10. Based upon, attributable to or arising out of any malfunction or failure of any satellite. 11. Based upon, attributable to or arising out of any oral or written publication of material, if done by an "insured" or at an "insured's" direction with knowledge of its falsity. 12. Based upon, attributable to or arising out of an "insured's" assumption of liability by contract or agreement, whether oral or written. However, this exclusion shall not o apply to any liability that an "insured" would have incurred in the absence of such contract or agreement. agr 13. Based upon, to or arising out of any n, attributable att actual or alleged eged patent orr trade secret violation, including any actual or alleged violation of the al Patent aten Act, the Economic conomic Espionage Act of 1996 or the Uniform Trade rade Secrets Act Ac and their amendments. ndme 14. Based attributable to Base upon, a o or arising arisin out of: a. The actual, discharge, tual, alleged or threatened h dispersal, seepage, migration, release or dispe m escape scap of "pollutants" ollutants" at a any time; order or statutory or b. Any request, demand, ema regulatory requirement that any "insured" or reg others test for, monitor, clean up, remove, othe contain, contain treat, detoxify or neutralize, or in any wayy respond to, or assess the effects of, res "pollutants"; or tan c. Any "claim" or "suit" brought by, or on behalf of, any governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of, "pollutants". 15. Based upon, attributable to or arising out of any "claim", "suit" or other proceeding against an "insured" which was pending or existed prior to the "policy period", or arising out of the same or substantially the same facts, circumstances or allegations which are the subject of, or the basis for, such "claim", "suit" or other proceeding. 16. Based upon, attributable to or arising out of an "insured's" employment practices including, but not limited to, termination of employment, demotion, reassignment, discipline, harassment, coercion or refusal to employ regardless of whether the "insured" is liable as an employer or in any other capacity. 17. Based upon, attributable to or arising out of any "wrongful act" or "interrelated wrongful acts" that occurred before the Retroactive Date, if any, shown in the Declarations.

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18. Based upon, attributable to or arising out of the same facts, "wrongful acts" or "interrelated wrongful acts" alleged or contained in any "claim" which has been reported, or in any circumstances of which notice has been given, under any insurance policy of which this Policy is a renewal or replacement. 19. Based upon, attributable to or arising out of any criminal, dishonest, malicious or fraudulent act or any willful violation of any statute or regulation committed by an "insured", acting alone or in collusion with others. However, this exclusion shall not apply to dishonest, malicious or fraudulent acts committed by an "employee" which give rise to a "claim" or "loss" covered under Insuring Agreement 2. Security Breach Liability. With the exception of "claims" excluded under Exclusion 13., we will defend "claims" first made against an "insured" alleging such acts or violations until final adjudication is rendered against that "insured". Final adjudication rendered against one "insured" shall not be imputed to any other "insured". We will not provide indemnification for any "claim" to which any "insured" enters a guilty plea lea or pleads no contest and we will not provide de a defense from the time we become aware that any "insured" intends to so plead. 20. Based upon, attributable to or arising out of any action or proceeding brought by, or on behalf o of, any governmental authority or regulatory latory agency including, but not limited ed to: a. The seizure or destruction by order ruction of property pr ord of a governmental authority; thority; or b. Regulatory or proceedings brought ory actions act broug by, or on behalf of, the Federal Commission, ral Trade Commissio Federal Commission or other al Communications C oth regulatory except when covered under ory agency, a Paragraph ph b. of Insuring Agreement A eeme 2. Security Breach Liability. ability. However, this exclusion shalll no not apply pp to actions or proceedings brought by a governmental authority or regulatory agency acting solely in its a capacity as a customer of the "named insured" or of a "subsidiary". 21. Based upon, attributable to or arising out of costs associated with upgrading or improving the "computer system" regardless of the reason for the upgrade.

22. Based upon, attributable to or arising out of any "claim" brought or alleged by one "insured" against another, except for a "claim" brought or alleged by an "employee" against an "insured" as a result of a "security breach". 23. Based upon, attributable to or arising out of unintentional errors or omissions in the entry of "electronic data" into the "computer system". SECTION VI – CONDITIONS 1. Cancellation a. The first "named "name insured" shown in the Declarations ions may m cancel this Policy by mailing or delivering written notice of ering to us advance adv cancellation. n. b. W We may cancel ncel this Policy by mailing or delivering to the written deliv e first "named insured" ns notice of cancellation on at least: l (1) days before the effective date of ( 10 da effe cancellation if we cancel ncellat ncel for fo nonpayment of premium; p um; or o (2)) 30 dayss before the effective date of t cancellation ca n if we cancel for any other reason. r c. We will mail or deliver our notice to the first "named "name insured's" last mailing address known to us. of cancellation will state the effective d. Notice N date dat of cancellation. The "policy period" will end en on that date. e. If this Policy is canceled, we will send the first "named insured" any premium refund due. If we cancel, the refund will be prorated. If the first "named insured" cancels, the refund may be less than pro rata. The cancellation will be effective even if we have not made or offered a refund. f. If notice is mailed, proof of mailing will be sufficient proof of notice. 2. Changes This Policy contains all the agreements between you and us concerning the insurance afforded. The first "named insured" shown in the Declarations is authorized to make changes in the terms of this Policy with our consent. This Policy's terms can be amended or waived only by endorsement issued by us and made a part of this Policy.

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3. Examination Of Your Books And Records We may examine and audit your books and records as they relate to this Policy at any time during the "policy period" and up to three years afterward. 4. Inspections And Surveys a. We have the right to: (1) Make inspections and surveys at any time; (2) Give you reports on the conditions we find; and (3) Recommend changes. b. We are not obligated to make any inspections, surveys, reports or recommendations, and any such actions we do undertake relate only to insurability and the premiums to be charged. We do not make safety inspections. We do not undertake to perform the duty of any person or organization to provide for the health or safety of workers or the public. And we do not warrant that conditions: (1) Are safe or healthful; or (2) Comply with laws, regulations, codes des or standards. c. Paragraphs 4.a. and 4.b. of this condition apply pply not only to us, but also to any y rating, advisory, rate service or similar organization rganization which makes insurance inspections, s, surveys, reports re or recommendations. 5. Premiums The first "named insured" shown in the Declarations: a. Is responsible premiums; sible for the payment of all pre ms; and b. Will be we e the payee for any return premiums w pay. 6. Transfer Off Your Rights And Duties uties Under This Policy Your rights and duties underr thi this Policy may not be transferred without our written consent, except in the case of death of an individual "named insured". If you are a sole proprietor and you die, your rights and duties will be transferred to your legal representative but only while acting within the scope of duties as your legal representative. Until your legal representative is appointed, anyone having proper temporary custody of your property will have your rights and duties but only with respect to that property.

7. Subrogation With respect to any payment made under this Policy on behalf of any "insured", we shall be subrogated to the "insured's" rights of recovery to the extent of such payment. The "insured" shall execute all papers required and shall do everything necessary to secure and preserve such rights, including the execution of such documents necessary to enable us to bring suit in the "insured's" name. Any recoveries, less the cost of obtaining them, will be b distributed as follows: a. To you, until ntil you are reimbursed for any "loss" you sustain stain that exceeds the sum of the applicable of Insurance and e Aggregate Limit Li the Deductible ble Amount, if any; b. Th Then to us, until we are reimbursed for the payment made under paym nder this Policy; and an c. Then for that hen to you, until you ou are reimbursed reimbu part of the payment equal to the Deductible p Amount, Am t, if any. an Bankruptcy 8. Bankrup bankruptcy, or the bankruptcy of your estate Your ban b will not relieve us of if you are a a sole proprietor, ropr obligations under this Policy. our ob 9. Representations 9 eprese You represent Y eprese that all information and statements contained con d in i the "application" are true, accurate All such information and statements and complete. co are e the basis for our issuing this Policy and shall be considered as incorporated into and shall constitute a part of this Policy. Misrepresentation of any material fact may be grounds for the rescission of this Policy. 10. Changes In Exposure a. Acquisition Or Creation Of Another Organization If before or during the "policy period": (1) You acquire securities or voting rights in another organization or create another organization which, as a result of such acquisition or creation, becomes a "subsidiary"; or (2) You acquire any organization through merger or consolidation;

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then such organization will be covered under this Policy but only with respect to "wrongful acts" or "loss" which occurred after the effective date of such acquisition or creation provided, with regard to Paragraphs 10.a.(1) and 10.a.(2), you: (a) Give us written notice of the acquisition or creation of such organization within 90 days after the effective date of such action; (b) Obtain our written consent to extend the coverage provided by this Policy to such organization; and (c) Upon obtaining our consent, pay us an additional premium. b. Acquisition Of Named Insured If during the "policy period": (1) The "named insured" merges into or consolidates with another organization, such that the "named insured" is not the surviving organization; or (2) Another organization, or person or group roup of o organizations and/or persons acting ing in concert, acquires securities or voting rights which result in ownership or voting control ntrol by the other organization(s) s) or person(s) of more than 50% of the outstanding securities or voting rightss representing the present right to vote for the election of o directors, trustees or managers rs (if a limited liability company) y) of the "named insured"; insure then the coverage afforded under thiss Polic Policy un will continue until the end off the "policy period", "pol eriod", but only with rrespect to o "claims" arising outt of "wrongful ful acts" or "loss" which occurred prior to the effective ectiv date of such merger, consolidation consolidatio or acquisition. uisiti The full annual premium fo for the ""policy period" will be deemed emed to be fully earned e rned immediately upon the occurrence of such merger, suc consolidation or acquisition tion of the "named insured". The "named insured" must give written notice d" mus of such merger, consolidation or acquisition to us as soon as practicable, together with such information as we may reasonably require. c. Cessation Of Subsidiaries If before or during the "policy period" an organization ceases to be a "subsidiary", the coverage afforded under this Policy with respect to such "subsidiary" will continue until the end of the "policy period" but only with respect to "claims" arising out of "wrongful acts" or "loss" which occurred prior to the date such organization ceased to be a "subsidiary".

11. Other Insurance a. If any covered "claim" or "loss" is insured by any other valid policy, then this Policy shall apply only in excess of the amount of any deductible, retention and limit of insurance under such other policy, whether such other policy is stated to be primary, contributory, excess, contingent or otherwise, unless such other policy is written specifically excess of this Policy by reference in such other policy to this Policy's policyy number. num b. When thiss Policy is excess, we shall have no duty under Agreement 1. Web Site der Insuring In Publishing 2. Security Breach Liability ng Liability, Liab Se or 3. Programming And Omissions gramming Errors Er Liability to defend efend the "insured" against any "suit" to defend "sui if any other er insurer has a duty d the "insured" against "in inst that "suit". If no other insurer we will undertake to do so, but urer defends, d we will be entitled to the "insured's" rights "i against all those other insurers. aga in ure 12. Legal Action Against Us Ac a. person or organiza organization has a right: a No pe (1) T To join us as a party or otherwise bring us into a "suit" asking for damages from an "insured"; or "in su us under this Policy unless all of its (2) To sue terms rm have been fully complied with. A person or organization may sue us to recover on an agreed settlement or on a final judgment against an "insured", but we will not be liable for damages that are not payable under Insuring Agreement 1. Web Site Publishing Liability, 2. Security Breach Liability or 3. Programming Errors And Omissions Liability, or that are in excess of the applicable Aggregate Limit of Insurance. An agreed settlement means a settlement and release of liability signed by us, the first "named insured" and the claimant or the claimant's legal representative. b. You may not bring any legal action against us involving "loss": (1) Unless you have complied with all the terms of this Policy; (2) Until 90 days after you have filed proof of loss with us; and (3) Unless brought within two years from the date you reported the "loss" to us. If any limitation in this condition is prohibited by law, such limitation is amended so as to equal the minimum period of limitation provided by such law.

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13. Separation Of Insureds Except with respect to the applicable Aggregate Limit of Insurance, and any rights or duties specifically assigned in Insuring Agreement 1. Web Site Publishing Liability, 2. Security Breach Liability or 3. Programming Errors And Omissions Liability to the first "named insured", this Policy applies separately to each "insured" against whom "claim" is made. 14. Duties In The Event Of Claim Or Loss In the event of either an occurrence or offense that may result in a "claim" against an "insured" or a "loss" or situation that may result in a "loss" covered under this Policy, you must notify us in writing as soon as practicable, but not to exceed 30 days, and cooperate with us in the investigation and settlement of the "claim" or "loss". Additionally: a. Under Insuring Agreements 1. Web Site Publishing Liability, 2. Security Breach Liability and 3. Programming Errors And Omissions Liability, you must: (1) Immediately record the specifics of the "claim" and the date received; (2) Immediately send us copies of any demands, notices, summonses or legal egal papers received in connection nnection with the "claim"; (3) Authorize us to obtain records other cords and oth information; and (4) Assist us, upon pon our request, t, in the enforcement off any right against any nst an person or organization ation which may ma be liable to you of an occurrence or o offense u because beca nse to which this Policy may also apply. You will not, except at your own cost, co voluntarily arily make a payment, ment, assume any obligation expense on or incur any e ense without our consent. A "claim" brought by a person erso or organization seeking damages will be deemed deem to have been made when the "claim" claim" is received by an "insured". b. Under Insuring Agreements 4. Replacement Or Restoration Of Electronic Data and 5. Extortion Threats, you must: (1) Notify local law enforcement officials; (2) Submit to examination under oath at our request and give us a signed statement of your answers; and

(3) Give us a detailed, sworn proof of loss within 120 days. (4) In addition, under Insuring Agreement 5. Extortion Threats, you must: (a) Determine that the "extortion threat" has actually occurred; (b) Make every reasonable effort to immediately notify an associate and the security firm, if any, before making any "ransom m payment" based upon the "extortion and rtion threat"; t (c) Approve pprove any "ransom payment" based upon pon the "extortion "extortio threat". 15. Valuation – Settlement ettlement a. All premiums, Aggregate Aggreg Limits of Insurance, Deductible Amounts, Dedu unts, "loss" and any other amounts s under this Policy are monetary moneta expressed of the ressed and payable le in the currency c United States of America. Un Stat erica. If judgment is rendered, rend , settlement is agreed to or another component of "loss" under this Policy is omp u expressed in any currency other than United xpre cur States payment under this State of America ca dollars, d Policy shall be made in United States dollars at Po the rate of exchange published in The Wall Street Journal on the date the final judgment is entered, ered, settlement amount is agreed upon or component of "loss" is due, tthe other oth respectively. res b. W With respect to "loss" covered under Insuring Agreement 6. Business Income And Extra Expense: (1) The amount of "business income" will be determined based on consideration of: (a) The net income generated from your "ecommerce activities" before the "interruption" occurred; (b) The likely net income generated by your "e-commerce activities" if no "interruption" had occurred, but not including any net income that would likely have been earned as a result of an increase in the volume of business due to favorable business conditions caused by the impact of the "e-commerce incident" on customers or on other businesses; (c) The operating expenses, including payroll, necessary to resume your "ecommerce activities" with the same quality of service that existed before the "interruption"; and

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(d) Other relevant sources of information, including your financial records and accounting procedures, bills, invoices and other vouchers, and debts, liens and contracts. However, the amount of "business income" will be reduced to the extent that the reduction in the volume of business from the affected "e-commerce activities" is offset by an increase in the volume of business from other channels of commerce such as via telephone, mail or other sources. (2) The amount of "extra expense" will be determined based on: (a) Necessary expenses that exceed the normal operating expenses that would have been incurred in the course of your "e-commerce activities" during the period of coverage if no "interruption" had occurred. We will deduct from the total of such expenses the salvage value that remains of any property oper bought for temporary use during ng the period of coverage once your ur "ecommerce activities" are resumed; and (b) Necessary expenses that reduce the "business income" "loss" oss" that otherwise would have been incurred curred during the period of coverage. 16. Extended Reporting Perio Periods The provisions contained this condition ained within with condi apply only to Insuring Agreements 1. Web eb Site Sit Publishing Liability, 2. Security Breach Liability ability and 3. Programming Errors And Omissions rogram Omis ns Liability. a. Basic Extended Reporting Period Ext g Perio (1) A Basic Extended Reporting Period is porti automatically atically provided without withou additional charge. This period starts with the end of the "policy period" and lasts las for 30 days. A "claim" first made and reported by the "insured" during this 30-day period will be 30considered to have received within ave been b the "policy period". However, the 30-day Basic Extended Reporting Period does not apply to "claims" that are covered under any subsequent insurance purchased by the "insured", or that would be covered but for exhaustion of the Aggregate Limit of Insurance applicable to such "claims".

(2) The Basic Extended Reporting Period does not extend the "policy period" or change the scope of coverage provided. It applies only to "claims" to which the following applies: (a) The "claim" is first made and reported to us during the Basic Extended Reporting Period; and (b) The "claim" arose out of either a "wrongful act" or the first of a series of "interrelated wrongful acts" which ae occurred red on o or after the Retroactive Date, shown in the Declarations te, if any, a and the end of the "policy nd before be period". eriod". b. Supplemental tal Extended Reporting Period Extended Reporting Period (1) A Supplemental ntal E iss canceled or not is available if this Policy Po can renewed by either renew er you or us, but only by endorsement and for extra charge. The ndorse or an ext Supplemental pplemental Extended Exten ed Reporting Period sstarts when the Basic Extended Reporting Period set forth in Paragraph 16.a. ends. P P The Supplemental Th plementa Extended Reporting Period is available P lab unless: ((a) We cancel this Policy for nonpayment of premium; or Yo fail to pay any amounts owed us. (b) b) You (2) In order to obtain a Supplemental Extended Reporting Period, you must give us a written request for the Supplemental Extended Reporting Period Endorsement together with the full payment of the additional premium for the endorsement within 30 days after the end of the "policy period". The Supplemental Extended Reporting Period will not go into effect unless you pay the additional premium promptly when due. (3) The Supplemental Extended Reporting Period does not extend the "policy period" or change the scope of coverage provided. It applies only to "claims" to which the following applies: (a) The "claim" is first made and reported to us during the Supplemental Extended Reporting Period; and (b) The "claim" arose out of either a "wrongful act" or the first of a series of "interrelated wrongful acts" which occurred on or after the Retroactive Date, if any, shown in the Declarations and before the end of the "policy period".

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(4) Once in effect, the Supplemental Extended Reporting Period may not be canceled. The premium for the Supplemental Extended Reporting Period Endorsement will be deemed to be fully earned as of the date it is purchased. c. There is no separate or additional Aggregate Limit of Insurance for the Basic Extended Reporting Period or the Supplemental Extended Reporting Period. The limit of insurance available during the Basic Extended Reporting Period, and the Supplemental Extended Reporting Period if purchased, shall be the remaining amount, if any, of the Aggregate Limit of Insurance of the respective Insuring Agreement, subject to the remaining amount of the Policy Aggregate Limit of Insurance at the time this Policy was canceled or nonrenewed. 17. Confidentiality Under Insuring Agreement 5. Extortion Threats, "insureds" must make every reasonable effort not to divulge the existence of this coverage. 18. Territory This Policy covers "wrongful acts" which occurred urred anywhere in the world. However, "suits" mustt be brought in the United States of America (including its territories and possessions), ), Puerto Rico or Canada. SECTION VII – DEFINITIONS 1. "Application" means the signed application he signe tion for this Policy, including any attachments and other y attachme nd oth materials submitted in conjunction onjunction with wit the signed application. 2. "Business income" means the: he: a. Net income income com (net profit or loss before incom taxes) that would have been bee earned or incurred;; and b. Continuing operating expenses normal oper ing incurred, including payroll. 3. "Claim" means: a. A written demand forr monet monetary or nonmonetary damages, including injunctive relief; b. A civil proceeding commenced by the service of a complaint or similar proceeding; or c. Under Paragraph b. of Insuring Agreement 2. Security Breach Liability, a "regulatory proceeding" commenced by the filing of a notice of charges, formal investigative order, service of summons or similar document; against any "insured" for a "wrongful act", including any appeal therefrom.

4. "Computer program" means a set of related electronic instructions, which direct the operation and function of a computer or devices connected to it, which enables the computer or devices to receive, process, store or send "electronic data". 5. "Computer system" means the following which are owned, leased or operated by you: a. Computers, including Personal Digital Assistants (PDAs) and other transportable or handheld devices, ce electronic storage devices and related peripheral components; periph b. Systems and ap applications software; and c. Related communications networks; by which "electronic tronic data" is collected, transmitted, processed, stored oce d or retrieved. retrie 6. "Defense and efense expenses" means the reasonable reas necessary experts' fees) and ssary fees (attorneys' eys' and expert expenses exp es incurred inc in the defense or appeal of a appe attachment or "claim", including "claim cludin the cost of appeal, similar obligation on our part to milar bonds b s (without any ob obtain wages, salaries, in such su bonds) onds) but excluding exclu your "employees". benefits or expenses ses of yo 7. "E-com "E-commerce activities" means those activities 7 tie conducted by you in the normal conduct of your condu business siness via your web site or your e-mail system. 8. ""E-commerce mmerc incident" means a: a. "Virus"; " " b. Malicious code; or Ma c. Denial of service attack; introduced into or enacted upon the "computer system" (including "electronic data") or a network to which it is connected, that is designed to damage, destroy, delete, corrupt or prevent the use of or access to any part of the "computer system" or otherwise disrupt its normal operation. Recurrence of the same "virus" after the "computer system" has been restored shall constitute a separate "e-commerce incident". 9. "Electronic data" means digital information, facts, images or sounds stored as or on, created or used on, or transmitted to or from computer software (including systems and applications software) on electronic storage devices including, but not limited to, hard or floppy disks, CD-ROMs, tapes, drives, cells, data processing devices or any other media which are used with electronically controlled equipment. "Electronic data" is not tangible property. "Electronic data" does not include your "electronic data" that is licensed, leased, rented or loaned to others.

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10. "Employee" means any natural person who was, now is or will be: a. Employed on a full- or part-time basis; b. Furnished temporarily to you to substitute for a permanent employee on leave or to meet seasonal or short-term workload conditions;

(2) Weaknesses in the source code; within the "computer system" by gaining unauthorized access to the "computer system"; c. To destroy, corrupt or prevent normal access to the "computer system" by gaining unauthorized access to the "computer system";

c. Leased to you by a labor leasing firm under an agreement between you and the labor leasing firm to perform duties related to the conduct of your business, but does not mean a temporary employee as defined in Paragraph 10.b.; d. An officer; e. A director, trustee or manager (if a limited liability company); f. A volunteer worker; or g. A partner or member (if a limited liability company);

d. To inflict "ransomware" on the "computer system" or a network to which it is connected; or e. To publish your "personal information". our client's cl 13. "Extra expense" necessary expenses you se" means me incur: n "interruption" that you would not a. During an have incurred had been no rred if there th "interruption"; or in b. To av avoid or minimize of your mize the suspension suspens "e-commerce activities". -comm es".

of the "named insured" and those of any organization qualifying as a "subsidiary" under the terms of this Policy, but only while acting within the scope of their duties as determined by the "named am insured" or such "subsidiary". 11. "Extortion expenses" means: a. Fees and costs of: (1) A security firm; or (2) A person or organization; hired with our consent to determine mine the validity and severity of an n "extortion threat" made against you;

"Extra expense" xpense does not include includ any costs or expenses maintaining, xpens associated with upgrading, u improving, remediating any "computer rovin repairing pairing or reme system". em".

b. Interest costs paid by you for any an loan from a financial institution taken aken by you to pay ay a ransom demand; deman c. Reward money paid by you to an "informan "informant" d mon which leads to the arrest lea st and conviction of parties responsible for "loss"; " "; and d. Any other er reasonable expenses exp nses incurred by you with our written consent, sent, including: clud (1) Fees and costs of independent negotiators; epen and (2) Fees and costs of a com company hired by you, upon the recommendation of the security firm, to protect your "electronic data" from further threats. 12. "Extortion threat" means a threat or series of related threats: a. To perpetrate an "e-commerce incident"; b. To disseminate, divulge or utilize: (1) Your proprietary information; or

"Informant" means a person, other than an 14. "Informa "employee", providing information not otherwise "emplo obtainable, btainab solely in return for a reward offered by you. "Insured" any "named insured" and its 15. "In d" means m "employees". "emp 16. "Interrelated wrongful acts" means all "wrongful terre acts" that have as a common nexus any: a. Fact, circumstance, situation, event, transaction or cause; or b. Series of causally connected facts, circumstances, situations, events, transactions or causes. 17. "Interruption" means: a. With respect to an "e-commerce incident": (1) An unanticipated cessation or slowdown of your "e-commerce activities"; or (2) Your suspension of your "e-commerce activities" for the purpose of avoiding or mitigating the possibility of transmitting a "virus" or malicious code to another person or organization; and, with regard to Paragraphs 17.a.(1) and 17.a.(2), shall be deemed to begin when your "e-commerce activities" are interrupted and ends at the earliest of: (a) 90 days after the "interruption" begins; (b) The time when your "e-commerce activities" are resumed; or

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(c) The time when service is restored to you. b. With respect to an "extortion threat", your voluntary suspension of your "e-commerce activities": (1) Based upon clear evidence of a credible threat; or (2) Based upon the recommendation of a security firm, if any; and, with regard to Paragraphs 17.b.(1) and 17.b.(2), shall be deemed to begin when your "e-commerce activities" are interrupted and ends at the earliest of: (a) 14 days after the "interruption" begins; (b) The time when your "e-commerce activities" are resumed; or (c) The time when service is restored to you. 18. "Loss" means: a. With respect to Insuring Agreements 1. Web Site Publishing Liability, 2. Security Breac Breach Liability and 3. Programming Errorss And Omissions Liability: (1) Compensatory damages, settlement ment amounts and costs awarded ded pursuant to judgments or settlements;; (2) Punitive and exemplary damages to the extent such damages are insurable surable by law; or (3) Under Paragraph Agreement ph b. of Insuring Ins greem 2. Security Breach Liability, fines each Liabilit es or o penalties assessed d against the "insured" "in d" to the extent such fines or penalties are re insurable urable by law. With regard to Paragraphs through rega hs 18.a.(1) 18. 18.a.(3), ), "loss" does not include: ude: (a) Civilil or criminal fines fi es or o penalties imposed by law, except fines or exc t civil c penalties as provided ed under Paragraph 18.a.(3); (b) The multiplied of multiplied ed portion por damages; (c) Taxes; (d) Royalties; (e) The amount of any disgorged profits; or (f) Matters that are uninsurable pursuant to law.

b. With respect to Insuring Agreement 4. Replacement Or Restoration Of Electronic Data: The cost to replace or restore "electronic data" or "computer programs" as well as the cost of data entry, reprogramming and computer consultation services. "Loss" does not include the cost to duplicate research that led to the development of your "electronic data" a or "computer programs". To the extent that any "electronic data" cannot be hat an replaced or restored, rest we will pay the cost to m replace the media on which the "electronic data" was stored with blank media of w substantiallyy identical type. typ c. W With respect to IInsuring Agreement 5. Extortion Threats:: Exto "Extortion Extortio expenses"" and "ransom payments". d. With respect to Insuring W resp suring Agreement 6. Business Extra Bus s Income And Ex a Expense: The income" you he actuall loss of "business "bu sustain you incur. usta and/orr "extra expense" e Agreement 7. Public e. With respect to Insuring Ins Relations Expense: Re "Public relations expenses". f. respect to Insuring Agreement 8. Security f With h res Breach B h Expense: "Security breach expenses". "Se 19. 19 "Named insured" means the entity or entities shown in the Declarations and any "subsidiary". 20. "Negative publicity" means information which has been made public that has caused, or is reasonably likely to cause, a decline or deterioration in the reputation of the "named insured" or of one or more of its products or services. 21. "Personal information" means any information not available to the general public for any reason through which an individual may be identified including, but not limited to, an individual's: a. Social security number, driver's license number or state identification number; b. Protected health information; c. Financial account numbers; d. Security codes, passwords, PINs associated with credit, debit or charge card numbers which would permit access to financial accounts; or e. Any other nonpublic information as defined in "privacy regulations".

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22. "Policy period" means the period of time from the inception date of this Policy shown in the Declarations to the expiration date shown in the Declarations, or its earlier cancellation or termination date. 23. "Pollutants" means 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. 24. "Privacy regulations" means any of the following statutes and regulations, and their amendments, associated with the control and use of personally identifiable financial, health or other sensitive information including, but not limited to: a. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) (Public Law 104-191); b. The Health Information Technology for Economic and Clinical Health Act (HITECH) (American Recovery and Reinvestment Act off 2009); c. The Gramm-Leach-Bliley Act of 1999; d. Section 5(a) of the Federal Trade Commission mission Act (15 U.S.C. 45(a)), but solely for alleged eged unfair or deceptive acts or practices in or affecting commerce; e. The Identity Theft Red Flagss Rules under the Fair and Accurate Credit Transactions nsactions Act of 2003; or f. Any other similarr state, federal or foreign for identity theft or privacy statute vacy protection protec atute or regulation. 25. "Public relations tions expenses" ex " means: me a. Fees and costs of a publicc relations firm; and co b. Any other ther reasonable expenses pense incurred by you with h our written consent; conse to protect or restore your reputation re utatio solely in response to "negative publicity". ty". 26. "Ransom payment" means a payment made in the pay form of cash. 27. "Ransomware" means any software that encrypts "electronic data" held within the "computer system" and demands a "ransom payment" in order to decrypt and restore such "electronic data". 28. "Regulatory proceeding" means an investigation, demand or proceeding brought by, or on behalf of, the Federal Trade Commission, Federal Communications Commission or other administrative or regulatory agency, or any federal, state, local or foreign governmental entity in such entity's regulatory or official capacity.

29. "Security breach" means the acquisition of "personal information" held within the "computer system" or in nonelectronic format while in the care, custody or control of the "insured" or authorized "third party" by a person: a. Who is not authorized to have access to such information; or b. Who is authorized to have access to such information but whose access results in the unauthorized disclosure of such information. s 30. "Security breach means: ch expenses" expe a. Costs to estab establish whether a "security breach" has occurred urred or is occurring; occur b. Costs to investigate nvestigate the th cause, scope and extent of a "security and to identify any ex ecurity breach" br affected parties; affe c. Costs to necessary to t determine e any action n correct conditions that led to ect or remediate the he conditi or resulted a "security ulted from fr ity breach"; bre d. Costs Cost to notify all parties affected by a "security breach"; reac salaries e. Overtime Over aries paid to "employees" assigned to handle inquiries from the parties ass affected by a "security breach"; affe f. Fees and a costs of a company hired by you for the purpo purpose of operating a call center to handle inquiries from the parties affected by a in "security breach"; "se g. P Post-event credit monitoring costs for the parties affected by a "security breach" for up to one year from the date of notification to those affected parties of such "security breach"; and h. Any other reasonable expenses incurred by you with our written consent. "Security breach expenses" do not include any costs or expenses associated with upgrading, maintaining, improving, repairing or remediating any "computer system" as a result of a "security breach". 31. "Subsidiary" means any organization in which more than 50% of the outstanding securities or voting rights representing the present right to vote for the election of directors, trustees, managers (if a limited liability company) or persons serving in a similar capacity is owned, in any combination, by one or more "named insured(s)". 32. "Suit" means a civil proceeding in which damages to which this Policy applies are claimed against the "insured". "Suit" includes: a. An arbitration proceeding in which such damages are claimed and to which the "insured" submits with our consent; or

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b. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the "insured" submits with our consent. "Suit" does not include a civil proceeding seeking recognition and/or enforcement of a foreign money judgment. 33. "Third party" means any entity that you engage under the terms of a written contract to perform services for you. 34. "Virus" means any kind of malicious code designed to damage or destroy any part of the "computer system" (including "electronic data") or disrupt its normal functioning. 35. "Wrongful act" means: a. With respect to Insuring Agreement 1. Web Site Publishing Liability: Any actual or alleged error, misstatement or misleading statement posted or published by an "insured" on its web site that results in: (1) Any type of infringement of another's copyright, title, slogan, trademark, trade name, trade dress, service mark or service name;

(2) Any form of defamation against a person or organization; or (3) A violation of a person's right of privacy. b. With respect to Insuring Agreement 2. Security Breach Liability: Any actual or alleged neglect, breach of duty or omission by an "insured" that results in: (1) A "security breach"; or (2) A "computer er ssystem" transmitting, by e-mail or other mean means, a "virus" to another person or organization. anizatio c. With respect espec to Insuring Agreement 3. Programming And Omissions Liability: ming Errors Er Any actual or alleged programming error or omission that results of your om esults in the disclosure discl client's client' "personal information" held hel within the "computer omput system".

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Security Breach Notification Laws 1/4/2016 Forty-seven states, the District of Columbia, Guam, Puerto Rico and the Virgin Islands have enacted legislation requiring private, governmental or educational entities to notify individuals of security breaches of information involving personally identifiable

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information. Security breach laws typically have provisions regarding who must comply with the law (e.g., businesses, data/ information brokers, government entities, etc); definitions of “personal information” (e.g., name combined with SSN, drivers license or state ID, account numbers, etc.); what constitutes a breach (e.g., unauthorized acquisition of data); requirements for notice (e.g., timing or method of notice, who must be notified); and exemptions (e.g., for encrypted information). State

Citation

Alaska

Alaska Stat. § 45.48.010 et seq.

Arizona

Ariz. Rev. Stat. § 44-7501

Arkansas

Ark. Code § 4-110-101 et seq.

California

Cal. Civ. Code §§ 1798.29, 1798.80 et seq.

Colorado

Colo. Rev. Stat. § 6-1-716

Connecticut

Conn. Gen Stat. § 36a-701b, 2015 S.B. 949, Public Act 15142

Delaware

Del. Code tit. 6, § 12B-101 et seq.

Florida

Fla. Stat. §§ 501.171, 282.0041, 282.318(2)(i)

Georgia

Ga. Code §§ 10-1-910, -911, -912; § 46-5-214

Hawaii

Haw. Rev. Stat. § 487N-1 et seq.

Idaho

Idaho Stat. §§ 28-51-104 to -107

Illinois

815 ILCS §§ 530/1 to 530/25 Page 38

State

Citation

Indiana

Ind. Code §§ 4-1-11 et seq., 24-4.9 et seq.

Iowa

Iowa Code §§ 715C.1, 715C.2

Kansas

Kan. Stat. § 50-7a01 et seq.

Kentucky

KRS § 365.732, KRS §§ 61.931 to 61.934

Louisiana

La. Rev. Stat. §§ 51:3071 et seq., 40:1300.111 to .116

Maine

Me. Rev. Stat. tit. 10 § 1347 et seq.

Maryland

Md. Code Com. Law §§ 14-3501 et seq., Md. State Govt. Code §§ 10-1301 to -1308

Massachusetts

Mass. Gen. Laws § 93H-1 et seq.

Michigan

Mich. Comp. Laws §§ 445.63, 445.72

Minnesota

Minn. Stat. §§ 325E.61, 325E.64

Mississippi

Miss. Code § 75-24-29

Missouri

Mo. Rev. Stat. § 407.1500

Montana

Mont. Code §§ 2-6-1501 to -1503, 30-14-1701 et seq., 33-19321

Nebraska

Neb. Rev. Stat. §§ 87-801, -802, -803, -804, -805, -806, -807

Nevada

Nev. Rev. Stat. §§ 603A.010 et seq., 242.183

New Hampshire

N.H. Rev. Stat. §§ 359-C:19, -C:20, -C:21; 189:66

New Jersey

N.J. Stat. § 56:8-161, -163

New York

N.Y. Gen. Bus. Law § 899-aa, N.Y. State Tech. Law 208

North Carolina

N.C. Gen. Stat §§ 75-61, 75-65

North Dakota

N.D. Cent. Code §§ 51-30-01 et seq., 51-59-34(4)(d)

Ohio

Ohio Rev. Code §§ 1347.12, 1349.19, 1349.191, 1349.192 Page 39

State Oklahoma Oregon

Citation Okla. Stat. §§ 74-3113.1, 24-161 to -166 Oregon Rev. Stat. § 646A.600 to .628, 2015 S.B. 601, Chap. 357

Pennsylvania

73 Pa. Stat. § 2301 et seq.

Rhode Island

R.I. Gen. Laws § 11-49.2-1 et seq., 2015 S.B. 134, Public Law 2015-138, 2015 H.B. 5220, Public Law 2015-148

South Carolina

S.C. Code § 39-1-90, 2013 H.B. 3248

Tennessee

Tenn. Code § 47-18-2107; § 8-4-119 (2015 S.B. 416, Chap. 42)

Texas

Tex. Bus. & Com. Code §§ 521.002, 521.053; Tex. Ed. Code § 37.007(b)(5); Tex. Pen. Code § 33.02

Utah

Utah Code §§ 13-44-101 et seq.; § 53A-13-301(6)

Vermont

Vt. Stat. tit. 9 § 2430, 2435

Virginia

Va. Code § 18.2-186.6, § 32.1-127.1:05, § 22.1-20.2

Washington

Wash. Rev. Code § 19.255.010, 42.56.590, 2015 H.B. 1078, Chapter 65

West Virginia

W.V. Code §§ 46A-2A-101 et seq.

Wisconsin

Wis. Stat. § 134.98

Wyoming

Wyo. Stat. § 40-12-501 et seq.

District of Columbia

D.C. Code § 28- 3851 et seq.

Guam

9 GCA § 48-10 et seq.

Puerto Rico

10 Laws of Puerto Rico § 4051 et seq.

Virgin Islands

V.I. Code tit. 14, § 2208 Page 40

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States with no security breach law: Alabama, New Mexico, and South Dakota. Additional Resources ƒ

Consumer report security freeze laws

ƒ

Data disposal laws

ƒ

Security Breach homepage

ƒ

Security breach overview (including links to 2010-2015 legislation)

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South Carolina Code of Laws Unannotated Current through the end of the 2015 Session Title 39 - Trade and Commerce CHAPTER 1 General Provisions DISCLAIMER The South Carolina Legislative Council is offering access to the South Carolina Code of Laws on the Internet as a service to the public. The South Carolina Code on the General Assembly's website is now current through the 2015 session. The South Carolina Code, consisting only of Code text, numbering, history, and Effect of Amendment, Editor’s, and Code Commissioner’s notes may be copied from this website at the reader's expense and effort without need for permission. The Legislative Council is unable to assist users of this service with legal questions. Also, legislative staff cannot respond to requests for legal advice or the application of the law to specific facts. Therefore, to understand and protect your legal rights, you should consult your own private lawyer regarding all legal questions. While every effort was made to ensure the accuracy and completeness of the South Carolina Code available on the South Carolina General Assembly's website, this version of the South Carolina Code is not official, and the state agencies preparing this website and the General Assembly are not responsible for any errors or omissions which may occur in these files. Only the current published volumes of the South Carolina Code of Laws Annotated and any pertinent acts and joint resolutions contain the official version. Please note that the Legislative Council is not able to respond to individual inquiries regarding research or the features, format, or use of this website. However, you may notify the Legislative Services Agency at [email protected] regarding any apparent errors or omissions in content of Code sections on this website, in which case LSA will relay the information to appropriate staff members of the South Carolina Legislative Council for investigation. SECTION 39-1-90. Breach of security of business data; notification; definitions; penalties; exception as to certain banks and financial institutions; notice to Consumer Protection Division. (A) A person conducting business in this State, and owning or licensing computerized data or other data that includes personal identifying information, shall disclose a breach of the security of the system following discovery or notification of the breach in the security of the data to a resident of this State whose personal identifying information that was not rendered unusable through encryption, redaction, or other methods was, or is reasonably believed to have been, acquired by an unauthorized person when the illegal use of the information has occurred or is reasonably likely to occur or use of the information creates a material risk of harm to the resident. The disclosure must be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement, as provided in subsection (C), or with measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system. (B) A person conducting business in this State and maintaining computerized data or other data that includes personal identifying information that the person does not own shall notify the owner or licensee of the information of a breach of the security of the data immediately following discovery, if the personal identifying information was, or is reasonably believed to have been, acquired by an unauthorized person.

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(C) (D)

(E)

(F)

(G)

The notification required by this section may be delayed if a law enforcement agency determines that the notification impedes a criminal investigation. The notification required by this section must be made after the law enforcement agency determines that it no longer compromises the investigation. For purposes of this section: (1) “Breach of the security of the system” means unauthorized access to and acquisition of computerized data that was not rendered unusable through encryption, redaction, or other methods that compromises the security, confidentiality, or integrity of personal identifying information maintained by the person, when illegal use of the information has occurred or is reasonably likely to occur or use of the information creates a material risk of harm to a resident. Good faith acquisition of personal identifying information by an employee or agent of the person for the purposes of its business is not a breach of the security of the system if the personal identifying information is not used or subject to further unauthorized disclosure. (2) “Person” has the same meaning as in Section 37-20-110(10). (3) “Personal identifying information” means the first name or first initial and last name in combination with and linked to any one or more of the following data elements that relate to a resident of this State, when the data elements are neither encrypted nor redacted: (a) social security number; (b) driver’s license number or state identification card number issued instead of a driver’s license; (c) financial account number, or credit card or debit card number in combination with any required security code, access code, or password that would permit access to a resident’s financial account; or (d) other numbers or information which may be used to access a person’s financial accounts or numbers or information issued by a governmental or regulatory entity that uniquely will identify an individual. The term does not include information that is lawfully obtained from publicly available information, or from federal, state, or local governmental records lawfully made available to the general public. The notice required by this section may be provided by: (1) written notice; (2) electronic notice, if the person’s primary method of communication with the individual is by electronic means or is consistent with the provisions regarding electronic records and signatures in Section 7001 of Title 15 USC and Chapter 6, Title 11 of the 1976 Code; (3) telephonic notice; or (4) substitute notice, if the person demonstrates that the cost of providing notice exceeds two hundred fifty thousand dollars or that the affected class of subject persons to be notified exceeds five hundred thousand or the person has insufficient contact information. Substitute notice consists of: (a) e-mail notice when the person has an e-mail address for the subject persons; (b) conspicuous posting of the notice on the web site page of the person, if the person maintains one; or (c) notification to major statewide media. Notwithstanding subsection (E), a person that maintains its own notification procedures as part of an information security policy for the treatment of personal identifying information and is otherwise consistent with the timing requirements of this section is considered to be in compliance with the notification requirements of this section if the person notifies subject persons in accordance with its policies in the event of a breach of security of the system. A resident of this State who is injured by a violation of this section, in addition to and cumulative of all other rights and remedies available at law, may: (1) institute a civil action to recover damages in case of a wilful and knowing violation; (2) institute a civil action that must be limited to actual damages resulting from a violation in case of a negligent violation of this section;

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(H) (I) (J)

(K)

(3) seek an injunction to enforce compliance; and (4) recover attorney’s fees and court costs, if successful. A person who knowingly and wilfully violates this section is subject to an administrative fine in the amount of one thousand dollars for each resident whose information was accessible by reason of the breach, the amount to be decided by the Department of Consumer Affairs. This section does not apply to a bank or financial institution that is subject to and in compliance with the privacy and security provision of the Gramm-Leach-Bliley Act. A financial institution that is subject to and in compliance with the federal Interagency Guidance Response Programs for Unauthorized Access to Consumer Information and Customer Notice, issued March 7, 2005, by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision, as amended, is considered to be in compliance with this section. If a business provides notice to more than one thousand persons at one time pursuant to this section, the business shall notify, without unreasonable delay, the Consumer Protection Division of the Department of Consumer Affairs and all consumer reporting agencies that compile and maintain files on a nationwide basis, as defined in 15 USC Section 1681a(p), of the timing, distribution, and content of the notice.

HISTORY: 2008 Act No. 190, Section 7.A, eff July 1, 2009; 2013 Act No. 15, Section 3, eff April 23, 2013. Effect of Amendment The 2013 amendment rewrote subsection (D)(3), the definition of “Personal identifying information”.

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The Society of Certified Insurance Counselors a proud member of The National Alliance for Insurance Education & Research

SECTION 6

Excess Liability/Commercial Umbrella Coverages

James T. Harrison, J.D., CIC, CPCU, CLU, ChFC Tallahassee, FL

www.TheNationalAlliance.com © 2016. The National Alliance for Insurance Education & Research. All Rights Reserved. This outline or any part thereof may not be reproduced in any form or by any means or stored in any information retrieval system without the express written consent of the author. This publication includes copyrighted material of Insurance Services Office, Inc., with its permission.

6

     

                                 

EXCESS LIABILITY/COMMERCIAL UMBRELLA COVERAGES 6

-$0(67+$55,621-5 MKDUULVRQ#ILVFHFRP

EXCESS LIABILITY /COMMERCIAL UMBRELLA LEARNING OBJECTIVES •

To know the difference among the various forms of excess liability coverage.

•

To explain the purpose of Excess Liability and the three functions of the Commercial Umbrella.

•

To explain the term "self-insured retention" and be able to understand the application of the "SIR" in loss situations.

•

To discuss the obligation of the Excess Policy to provide defense and how the dollars for defense expense are paid.

•

To know the differences among the important policy provisions of excess liability.

•

To explain the importance of concurrency of the underlying and excess policies.

I.

Introduction A.

Introduced by Lloyd's in 1947 and aimed at large buyers of insurance.

B.

Difference from primary casualty. 1. 2. 3.

C.

Non-standard. No standard form or rate. Concepts are the same, but each policy must be analyzed. Uncontrolled, but highly dependent on underlying policies. Negotiated.

Why sell? Losses are infrequent, but can be severe. Covers unanticipated losses. Property damage claims often larger than bodily injury claims due to loss of use component of damages.

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II.

Umbrella of coverage versus an excess liability policy.

To know the difference among the various forms of excess liability coverage. A.

Excess following form. This coverage is designed to provide exactly the same coverage terms and conditions (other than limits) as the underlying policy. The distinguishing characteristic of this form is that in the event of a conflict with the underlying policy, the underlying policy terms take precedent. In other words, the coverage of the excess follow form is virtually identical to the underlying policy. Cover excess of underlying exactly. The terms and conditions of the underlying policies are the terms and conditions of the Excess policy. Notwithstanding anything to the contrary contained above, if underlying insurance does not cover loss, for reasons other than exhaustion of an aggregate limit of insurance by payment of claims, then we will not cover such loss. It is becoming increasingly rare to find "true" excess following forms, because these forms often are amended by a variety of endorsements, most commonly exclusions and limitations, not found in the underlying policies. B.

Excess stand alone. This is a self-contained policy that contains all of its own terms and conditions. It is not dependent upon nor does it incorporate any of the underlying policy terms. Covers excess of underlying based on the language of the excess policy. May or may not cover all claims covered by the primary. Policy has own Insuring Agreement, Exclusions and Conditions. May be broader, more restrictive or about the same as the underlying policies.

This excess liability policy is not subject to the terms or conditions of any other insurance policies and contains provisions which may be different from those of any other insurance. C.

"True" umbrella. Covers everything covered in underlying policies and, because of broader policy language, covers claims not covered in the underlying (subject to the SIR). Covers three functions discussed later. Sometimes referred to as the "A/B" contract where coverage A is following form excess and coverage B is an insuring agreement, exclusions, definitions and conditions that apply to any occurrence not covered by an underlying policy.

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NOTES

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THINGS TO DO

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III.

Excess/umbrella Policy has three functions.

To explain the purpose of Excess Liability and the three functions of the Commercial Umbrella. A.

B.

Excess liability limits over the limits provided by underlying policies. 1.

Underlying requirements-coverage. Requires broad underlying to address any possible liability peril. Primary must be comprehensive.

2.

Underlying requirements-limits. Requires high limits to respond to all but the most catastrophic claim. Limits not level at the top.

"Drop down" and become primary policy when aggregate is exhausted. Also remains excess over reduced underlying aggregate.

Policy will have language that will read: "In the event of reduction or exhaustion of any underlying amount for which an aggregate is stated, this policy, subject to its insuring agreements, definitions, exclusions and conditions shall: 1) in the event of reduction, pay the excess of such reduced amount; or, 2) in the event of exhaustion apply in place of the exhausted underlying amount, subject always to the insuring agreements, definitions, exclusions and conditions of this policy." CGL $1M/$2M

EXCESS/UMBRELLA $5M/$5M

Claims

CGL Pays

CGL Agg after loss paid $1.25K

Excess/Umbrella Pays 0

Premises claim 1 $750K Premises claim 2 $1.35M Premises claim 3 $750K Premises claim 4 $1.1M

$750K $1.0M Occ. limit $250K

$250K

0

0

$350K Excess coverage $500K Drop down $1.1M Drop down

0

1.

Potential problem – concurrency (discussed later)

2.

Potential problem – pay in excess of exhaustion in payment of claims not including defense.

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NOTES

THINGS TO DO

There is no primary coverage or there is exclusion in the primary but that exclusion is not in the excess/umbrella.

This broadened function is subject to a self-insured retention (SIR), which is discussed later in the outline.

PD exclusion in excess/umbrella is not as broad as that found in the CGL; therefore there is coverage in the excess/umbrella for PD claims excluded in the CGL.

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C.

Coverage broadened to cover liability perils not covered by underlying policies. 1.

Where the excess/umbrella may be broader than the underlying policy. a.

Coverage Territory: Most excess/umbrellas are written to provide worldwide coverage.

b.

Personal Injury: Definition may be broader and may include mental anguish, humiliation, shock and discrimination.

c.

Fellow Employee: Coverage may be afforded for bodily injury to a fellow employee.

d.

Non-owned Watercraft and Aircraft: Non-owned watercraft in excess of 26 feet may be covered as well as aircraft chartered with a crew.

Example of an exclusion that does not exclude as much as the CGL excludes therefore giving coverage in the excess/umbrella that is not found in the CGL. "Bodily injury" or "property damage" arising out of the ownership, maintenance, operation, use, including loading or unloading, or entrustment to others of watercraft over 50 feet in length or any aircraft: (1) Owned by any insured; (2) Chartered without crew by or on behalf of any insured; or (3) Owned and operated by an employee of any insured. This exclusion does not apply to: (1) a watercraft while ashore on premises you own or rent; or (2) Liability assumed under any contract or agreement. e.

Property in care, custody or control: Coverage may be afforded for certain types of property, including personal property and real property, unless the insured has agreed to insure such property.

Control of property. We won't cover property damage to the following property ... *Property rented, leased, occupied, borrowed or used by, or in the care, custody or control of, any protected person. But we'll apply this exclusion part only to the extent that the protected person is required by contract to insure such property. f.

Property damage does not have the “electronic data” limitation.

g.

Coverage not found in underlying – National Union “Crises Management Coverage”

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NOTES

THINGS TO DO

The definition of “insured contract” often reads like the definition in the CG 21 39.

Be careful about punitive damages exclusion because certain states such as Alabama classify wrongful death awards as punitives.

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2.

Circumstances where the excess/umbrella may be more restrictive than the coverage of the underlying policies. a.

Pollution Liability: Excess/umbrella may contain absolute pollution exclusion.

b.

Contractual Liability: Excess/umbrella may not provide as broad contractual coverage as that found in CGL and BAP.

c.

Punitive Damages: Punitive damages are often excluded in the excess/umbrella. This policy does not apply to: x Any punitive or exemplary damages. d.

Liquor Liability: Coverage may be more restrictive than that afforded in the CGL with respect to landlords and "host" liquor situations.

e.

Care, Custody or Control: Excess/umbrella may be more restrictive than the CGL with respect to damage to real property in the care of the insured. This policy does not apply to: x Any real or personal property in the care, custody or control of the insured. f.

Business Risks/Impaired Property: Excess/umbrella may contain exclusions dealing with products and work performed by the insured that are more restrictive than those found in the CGL. This policy does not apply to: x Your work arising out of it or any part of it and included in the products-completed operations hazard. g.

Property Damage: Definition of property damage may be more restrictive than that found in CGL by not affording coverage for loss of use of property that has not been physically injured.

h.

Personal Injury. Items named in the CGL may not be named in the excess/umbrella.

i.

No contractual give back for bodily injury to an employee.

j.

Insured v. insured exclusion

k.

Absolute exclusion for hired autos

l.

No subcontractor give back in the “your work” exclusion

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6

SINGLE POLICY $5 MILLION EXCESS/UMBRELLA

$1 MILLION UNDERLYING

LAYERING $5 MILLION X OF $20 MILLION $10 MILLION X OF $10 MILLION "QUOTA SHARE" (Co. A-50% & Co. B-50%)

$9 MILLION EXCESS

$1 MILLION UNDERLYING

BUFFER LAYER $5 MILLION EXCESS

$500,000 "GAP" filled with a "buffer layer." $500,000 UNDERLYING

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IV.

Structuring an umbrella/excess liability program. A.

Single policy.

B.

Layering. First layer ("Burning Layer") is first to pay, last to recover (subrogation or salvage). 1. 2.

C.

D.

V.

Must follow primary. Will excess/umbrella accept?

"Quota Share." Two or more insurers sharing a layer of coverage on some proportionate basis. (Always make sure that "quota share" policies have identical terms and conditions.) Buffer Layer. Layer between underlying limits and first excess layer. Used to fill a "gap" between the limits of the underlying policy and the underlying requirement of the Excess policy. Buffer policy should "follow form" of the underlying policy.

Overview of the umbrella/excess policy. A.

Underlying Insurance.

B.

Self-Insured Retention (Retained Limit).

To explain the term "self-insured retention" and be able to understand the application of the "SIR" in loss situations. 1.

Self-Insured Retention a.

SIR applies to claims covered in the Excess/umbrella but not covered in the underlying.

"Self-Insured Retention means the amount stated as such in the Declarations which is retained and payable by the insured with respect to each occurrence." b.

Is SIR “per occurrence" or "policy period"? SIR may apply on an aggregate basis.

2.

Amount of the SIR

3.

SIR versus deductible.

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NOTES

THINGS TO DO

Some excess/umbrellas now provide that if the underlying is “occurrence” then the excess/umbrella will operate as an occurrence trigger, and if the underlying is “claims made” the excess/umbrella operates as claims made.

If "mixed" underlying program (claims made and occurrence), better to write "Follow Form" Excess.

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C.

Limits: 1.

Per occurrence

2.

Aggregate: a.

Singe policy aggregate (less desirable); or

b.

(1)

General aggregate (All losses except Auto and Products/Completed Operations); and

(2)

Products/Completed Operations aggregate.

6

Example language of aggregate limits. "This policy is subject to an aggregate limit of liability as stated in the Declarations. This aggregate limit of liability is the maximum amount which will be paid under this policy for all claims during the policy and it applies separately to: 1) the products hazard and the completed operations hazard combined; and 2) all other coverages combined, except automobile liability which is not subject to any aggregate limit."

D.

c.

Most Excess policies have two aggregates - General and Products/Completed Operations.

d.

Excess most commonly tracks the underlying – if underlying has an aggregate, so will the excess.

Coverage "trigger": 1.

Occurrence or claims made.

2.

Problems (retro date and tail) if: a. b.

3.

Claims made over occurrence; or Occurrence over claims made.

If claims made need to check the: a. b.

Retroactive Date - Same as underlying? Extended Reporting Period: (1) (2) (3)

Commercial Umbrella April 2016

How long? Are Excess aggregates reinstated? Cost?

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NOTES

THINGS TO DO

Although the insuring agreement may say "personal injury" not "bodily injury" as you are accustomed to seeing, the term "bodily injury" is included in the definition of "personal injury."

Pay on behalf of means that the insurance company assumes the defense, pays the loss directly to the third party, and insurance company will settle if possible if can do so within policy limits. Indemnify means that the insured assumes the defense, pays the loss, the insurer reimburses for the loss and the insurer has no right to settle.

More on the term "ultimate net loss" in the definitions section of the outline.

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Examples of policy language regarding the Extended Reporting Period. Any provisions in your Basic Insurance that apply to a defined Limited Reporting Period or to a defined Extended Reporting Period are also considered part of this agreement, except for any premium calculation provision. In addition, we won't provide coverage for any Extended Reporting Period to which your Basic Insurance doesn't apply. We will provide an Extended Reporting Period if the policy is either canceled or not renewed by the First Named Insured or by us for any reason except non-payment of premium. The Extended Reporting Period will not reinstate the aggregate limit. ....we will issue an Extended Reporting Period Endorsement for a period of twelve (12) months from the end of the policy period. E.

Insuring agreement.

Examples: "The Company will pay on behalf of (indemnify) the Insured for the ultimate net loss (as defined herein) which the Insured shall be obligated to pay by reason of the liability imposed upon the Insured by law or liability assumed by the Insured under contract or agreement for: (a) personal injury, (b) property damage, and (c) advertising injury." We will pay on behalf of the insured the "ultimate net loss" in excess of the "applicable underlying limit" which the insured becomes legally obligated to pay as damages because of... 1.

Pay on behalf of OR indemnify.

2.

“All sums,” “those sums,” “ultimate or final net loss.”

"Ultimate Net Loss" means the sum actually paid or payable due to a claim for which the insured is liable either by a settlement to which we agreed or a final judgment. Such sum will include proper adjustments for recoveries and salvage. The reduction for "recoveries" technically means that the umbrella insurer will reduce the amount of the loss it will pay to the extent that damaged property can be recovered and put back into use. If an insured negligently causes a fire which collapses the roof of an inventory storage area, the total amount the umbrella insurer would pay would be reduced by the amount of inventory that can be recovered from the ashes of the fire, cleaned, and reused.

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NOTES

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THINGS TO DO

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3.

Applicable Underlying Limit

"Applicable underlying limit" means: a. If the policies of "underlying insurance" apply to the "occurrence" or "offense", the greater of: (1) The amount of insurance stated in the policies of underlying insurance" in the Declarations or any other available insurance less the amount by which any aggregate limit so stated has been reduced solely due to payment of claims; or (2) The "retained limit" shown in the Declarations; or b. If the policies of "underlying insurance" do not apply to the "occurrence" or " offense", the amount stated in the Declarations as the "retained limit". 4. F.

Arising out of Personal Injury, Property Damage, or Advertising Injury.

Defense. The obligation to defend and the payment of defense vary among excess/umbrella policies.

To discuss the obligation of the Excess Policy to provide defense and how the dollars for defense expense are paid. 1.

Obligation to defend when the.... a.

Coverage is excess. 1)

Policy is silent.

2)

Policy reserves right to participate. required to...

May elect but not

The Company shall not be called upon to assume charge of the investigation, settlement or defense of any claim made, or suit brought, or proceedings instituted against the Insured, but shall have the right and be given the opportunity to be associated in the defense of any such claims, suits or proceedings relative to any Occurrence which, in the opinion of the Company, may create liability on the part of the Company.

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NOTES

THINGS TO DO

Some excess/umbrella contracts have no defense obligation or payment. Those are usually easily identified when the company providing the excess/umbrella asks if you want to purchase the defense coverage endorsement.

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b.

Coverage is "drop down".

1) Policy reserves right to participate. The company shall have the right and shall be given the opportunity to associate with the insured or its underlying insurers, or both, in the defense or control of any claim, suit or proceeding which involves or appears reasonably likely to involve the company. 2) c.

Policy assumes duty to defend.

Coverage is broadened. 1) 2)

Policy reserves right to participate. Policy assumes duty to defend.

6

The insured shall be responsible for the investigation, settlement or defense of any claim made or suit brought or proceeding instituted against the insured, which no underlying insurer is obligated to defend …. 3)

First dollar defense.

Example of language that does not provide first dollar defense. With respect to any occurrence: (a) not covered by underlying insurance; but (b) covered by this policy except for the retained limit; We will defend... Example of language that does provide first dollar defense. With respect to any occurrence: (a) not covered by underlying insurance; but (b) covered by the terms of this policy without regard to the retained limit; The company shall defend a claim or suit.... 2.

Payment of defense costs. (See later definitions of the Ultimate Net Loss for examples of other ways the policy states how defense is to be paid.) a.

In addition to the limit of liability.

"The Company agrees to pay the amounts incurred under this Insurance Agreement, except in settlement of claims and suits, in addition to the limit of liability stated in the Declarations, and such defense and supplementary payments shall not be included as part of the ultimate net loss, as defined in the policy." With respect to any Occurrence not covered by the underlying policies listed in the Schedule of Underlying Insurance, or any other underlying insurance collectible by the Insured, but covered by this policy the Company shall pay for defense in addition to the amount of Ultimate Net Loss payable.

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NOTES

THINGS TO DO

To find the policy language that tells the defense obligation and the payment it may be necessary to read the policy language on each of the following topics: Defense, Ultimate Net Loss, Limit of Liability, or the Insuring Agreement.

May want to find broader definition that includes such perils as mental injury, humiliation, and discrimination. Perils listed in the definition run as high as 22 terms. Often encompass the coverage of the term "bodily injury".

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b.

Within the policy limit. Self-insured retention will include defense costs.

Example of within limit. "Any payment of amounts incurred above shall: 1) serve to reduce the limits of liability of this policy as stated in the declarations....," c.

G.

Combination of a. and b. 1)

In addition if "drop down" or broadened.

2)

Within if excess.

6

Definitions.

To know the differences among the important policy provisions. 1.

Personal Injury. Most follow the ISO CGL.

Examples. "Personal Injury means injury, other than advertising injury or bodily injury, arising out of one or more of the following offenses committed during the policy period in the conduct of your business: 1. False arrest, detention or imprisonment; 2 Malicious prosecution; 3. Wrongful entry into, or eviction...; 4. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods products or services; Oral or written publication of material that violates a person's right of privacy; or 5. 6. Discrimination or humiliation not intentionally committed by or at the direction of the insured or any executive officer, director, stockholder, partner or member thereof, but only with respect to injury to the feelings or reputation of a natural person." "Personal Injury means injury, such as but not limited to, libel, slander, defamation of character, discrimination, false arrest, false imprisonment, wrongful eviction, wrongful detention, malicious prosecution or humiliation which occurs during the policy sustained by a natural person, but excluding any such injury included within the definition of advertising liability."

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NOTES

THINGS TO DO

Note that the definition of "ultimate net loss" makes defense in addition to the limit in the first example and within the limit of the policy in the second example.

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2.

Property Damage. The only real variation from ISO is that a few do not cover loss of use when property is not physically injured.

3.

Advertising Injury. Follows ISO

4.

Ultimate Net Loss. This is the amount that will be paid. May give information on whether defense is within or in addition to the limit of liability. May cover actual damages only with no coverage for expenses and costs, or actual damages with other expenses and costs paid within limit, or actual damages plus expenses and costs paid in addition to the policy limit.

Examples. Notice that this definition defines how the cost of defense is to be handled. "The term ultimate net loss means the sum actually paid or payable in cash in the settlement or satisfaction of losses for which the Insured is liable either by adjudication or compromise with a written consent of the company, after making proper deduction for all recoveries and salvages collectible, but excludes all loss expenses and legal expenses (including attorneys' fees, court costs and interest on any judgment or award) and all salaries of employees and office expenses of the Insured, the company or any underlying insurer so incurred." "Ultimate net loss means the total sum which the Insured or any Company as its insurer or both become obligated to pay by reason of personal injury, property damage, or advertising liability claims, either through adjudication or compromise, and shall also include hospital, medical and funeral charges and all sums paid or payable as salaries, wages, compensation, fees, charges, interest, or expenses for doctors, nurses, and investigators and other persons, and for settlement, adjustment, investigation and defense of claims and excluding only the Insured's salaries or the salaries of any underlying insurer's permanent employees."

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6

NOTES

THINGS TO DO

With the increasing demands to name other parties as additional insureds, the language making anyone insured under the underlying an insured in the excess/umbrella is very important. Caution that there may also be a requirement to notify the excess insurer if parties are added to the underlying.

Most occurrence definitions are ISO plus additional language that addresses the Advertising Injury and Personal Injury terms in the context of an event or series of events, or as an act or series of acts.

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5.

Persons Insured. Most are a combination of the CGL, Employers Liability and BAP language and may be broader than, or narrower than, or the same as that found in the underlying policy: a. b.

Named insured and spouse Partnerships and joint ventures named in decs, including partners and venturers. c. Officers, directors, stockholders acting within the scope of their duties. d. Employees – but not automatically volunteers. e. Real estate managers. f. Persons using auto with permission, except lessor. g. Any person or organization insured under any policy of the underlying insurance. WATCH THIS IN THE WORLD OF ADDITIONAL INSUREDS ON THE UNDERLYING AND A POSSIBLE GAP IF THE UMBRELLA PICKS UP AFTER PAYMENT "FOR AN INSURED IN THIS POLICY" LANGUAGE. Some policies restrict the limit available to the AI. Any person or organization which an insured is required by virtue of a written contract entered into prior to a happening to provide the kind of insurance that is afforded by this policy, but only with respect to operations by or on an insureds behalf, or to facilities an insured owns or uses, and only to the extent of the limits of liability required by such contract, but not to exceed the applicable limits of liability set forth in this policy. h. i. j.

Newly acquired organizations for 90 days. (Not all entities and may have a written notice requirement.) Any subsidiary over which the insured has active control. Legal rep of insured if insured dies.

6. Occurrence. "Occurrence means an accident, including continuous or repeated exposure to conditions, which results in PI, PD or AI neither expected nor intended...." "Occurrence means 1. With respect to bodily injury or property damage: an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results in BI or PD neither expected nor intended from the standpoint of the insured and includes...; or 2. With respect to advertising injury and personal injury respectively: an offense described in one of the numbered subdivisions of those definitions in this policy." 7.

Territory. Following form; worldwide; anywhere. Limited to the venue of the suit – anywhere; policy territory; defined territory.

Commercial Umbrella April 2016

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6

NOTES

THINGS TO DO

Two forms of exclusion are found in umbrella/excess policies. The absolute exclusion applies in all circumstances. The conditional exclusion is activated in certain circumstances; most often if there is no underlying policy there is an exclusion. Most all endorsements found on these policies are exclusionary.

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H.

Exclusions. (Found in definitions, exclusions or by endorsement.) a.

Intentional BI or PD, except reasonable force. Some do not give back "reasonable force to protect."

b.

Replacement of "work or "product." subcontractors.

c.

PD to property rented to, occupied by, or in CCC. Excluded if insured agreed to provide insurance, or if property is owned by entity controlling insured or under control of insured.

d.

Impaired Property.

e.

Product recall.

f.

Watercraft. Excluded if owned by insured or non-owned over 75 ft. Excluded if owned or chartered over 50 ft.

g.

Aircraft. Provides nonownership liability as long as charter is with crew.

h.

BI to fellow employee.

i.

Employee injury/WC.

j.

Pollution. Same as CGL or absolute.

k.

Professional.

l.

Mismanagement by D&O.

m.

BI or PI due to wrongful term. discrimination, coercion, harassment.

n.

Fiduciary duties (ERISA).

o.

Legal Liquor. Almost always follow form.

p.

UM/UIM, PIP, etc.

q.

Punitive damages.

r.

Asbestos

s.

Discrimination

t.

Contractual.

Commercial Umbrella April 2016

No coverage for "work" done by

6

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NOTES

THINGS TO DO

Some companies will endorse to make notice of occurrence once known by certain parties (you, executive officer, or employee designated by you to give such notice). Some companies will endorse to say that rights are not prejudiced by failure to give notice is based on reasonable belief that the loss or injury is not covered by the excess policy.

Some excess/umbrellas require the insured to reinstate or show effort to reinstate when the underlying is reduced or exhausted during the policy term.

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I.

Conditions. 1.

Duties in event of an occurrence. Notice of occurrence...Most say as soon as practicable.

2.

Other insurance. Unless policy is specifically excess of this policy, any other valid and collectible insurance pays first.

Example of the Other Insurance clause. "If other valid and collectible insurance with any other insurer is available to the insured covering a loss also covered hereunder, this insurance shall be excess of, and shall not contribute with, such other insurance. Excess insurance over the limits of liability expressed in this policy is permitted without prejudice to this insurance; and, the existence of such insurance shall not reduce any liability under this policy." 3.

Maintenance of underlying. a.

Maintain in full force except for reduction of aggregate by claims paid during the term this policy.

b.

May renew or replace underlying as long as broad or broader than previous. Must notify within 30 days of renewal policy or replacement policy or a material change in the underlying policy.

Examples. If you change any provisions, other than increasing limits, this policy will cover as it would have covered had underlying insurance been maintained without such change. Any material change in the premium for the scheduled underlying insurance shall be promptly reported to us. c.

If not maintained excess still operates as if policy were available and collectible.

Example of failure to maintain underlying. The insurance afforded by each policy in the schedule of "underlying insurance in the Declarations will be maintained for the full term of this insurance", except for any reduction of the aggregate limits due to the payment of claims for BI, PD, PI and AI. If you fail to comply with the above, this insurance is not invalidated. However, we will pay any loss only to the extent that we would have paid had you complied. d.

Commercial Umbrella April 2016

Excess will only apply after claims paid by underlying in amounts equal to the scheduled underlying limits.

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6

NOTES

THINGS TO DO

Some policies now state this insolvency of the underlying as exclusion.

When writing Excess liability, you must review the policy, especially the exclusions and ask the underwriter what endorsements will be attached.

Commercial Umbrella April 2016

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4.

Bankruptcy or insolvency of underlying insurer. Excess policy acts as if underlying is available and collectible.

"If any underlying policy listed in Schedule A is not collectible because of the Bankruptcy or Insolvency of the Insurer, this policy shall apply as if the underlying insurance were available and collectible." 5.

“Self-destruct” clause

If at any time a scheduled underlying insurance policy written on a claims-made [or occurrence] basis is canceled or nonrenewed while this policy is in force, coverage will cease under this policy on the same date and the same time as coverage ceases under the scheduled underlying policy. 6.

Transfer of Rights to Recover From Others to Us

If the insured has rights to recover all or part of any payment we have made under this policy, those rights are transferred to us. At our request, the insured will bring "suit" or otherwise assist us in enforcing those rights. We will cooperate with the insured and all other interests. VI.

Endorsements. Ninety percent of the endorsements to Excess/umbrella policies are exclusionary in nature. A.

Some are absolute (total) exclusions, such as Pollution, Asbestos, Professional, D&O exposures, Etc.

B.

Only excluded if not covered by underlying. Personal Injury, Care, custody or control, Etc.

Commercial Umbrella April 2016

Examples include Contractual,

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6

NOTES

THINGS TO DO

Concurrency is important in coverage and in time of the coverage. Excess policies should be as broad as the underlying policies and due to the aggregate limit issues the dates should be the same.

The only way to guarantee the limits of the underlying policies are not impaired is to have the same inception date for underlying and excess.

Commercial Umbrella April 2016

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VII.

Concurrency of liability program.

To explain the importance of concurrency of the underlying and excess policies. A.

Excess policies require certain underlying limits per occurrence and aggregate. The insured is promising that the underlying policies and limits are in full force as of the effective date of the umbrella. The excess policy is not going to respond until the insured has incurred losses exceeding these required underlying limits. We will pay on behalf of the insured, that part of loss covered by this insurance in excess of the total applicable limits of underlying insurance, provided the injury or offense takes place during the Policy Period of the policy. Excess policies agree to pay for covered losses that exceed the underlying requirements only if:

B.

1.

Occurrence - Losses occur during the Excess policy period.

2.

Claims made - Losses occur after the Retroactive Date of the Excess policy and claims are made during the Excess policy period.

Problems - Aggregates $5M EXCESS POLICY (July to July)

$1M OCC/$1M AGG UNDERLYING (Jan to Jan) Jan July Loss (#1) on 4/15 $750,000 Underlying paid $750,000 General aggregate reduced to $250,000

Jan

July Loss (#2) on 9/20 $500,000 Underlying paid $250,000 Excess paid 0 Loss paid prior to 7/1 produces a $750,000 gap between primary and excess

If the underlying policies are not concurrent, request the Non-concurrency Endorsement (National Union AH 1077)

Commercial Umbrella April 2016

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C.

Concurrence of terms. 1.

"Broad-as-primary" endorsement. When the scope of the underlying insurance scheduled on the declarations page is broader than the agreed scope of cover in this policy, this policy will follow the broader form of the underlying insurance.

2.

"Follow-form" endorsement. The umbrella will be follow form with the underlying. Be careful to read the endorsement because most make the policy only as broad as the underlying possibly cutting out coverage in the umbrella not found in the underlying.

Commercial Umbrella April 2016

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COMMERCIAL LIABILITY UMBRELLA CU 00 01 04 13

COMMERCIAL LIABILITY UMBRELLA COVERAGE FORM Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered. Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy. The words "we", "us" and "our" refer to the company providing this insurance. The word "insured" means any person or organization qualifying as such under Section II – Who Is An Insured. Other words and phrases that appear in quotation marks have special meaning. Refer to Section V – Definitions. SECTION I – COVERAGES COVERAGE A – BODILY INJURY AND PROPERTY OP Y DAMAGE LIABILITY 1. Insuring Agreement a. We will pay on behalf of the insured red the "ultimate net loss" in excess of the "retained etained limit" because of "bodily y injury" or "property "propert damage" to which this insurance nsurance applies. We will have the right and duty to defend the insured against any "suit" seeking eking damages for such "bodily injury" ury" or "property damage" when the "underlying insurance insurance" does not provide coverage or the limits "underlying insura insurance" imits of "unde have been exhausted. sted. When we have no duty du to defend, we will have the right to defend, or efend, w nd, o to participate insured participa in the defense of, the in against to ainst any other "suit" it" seeking damages damag which insurance may However, we ch this t ay apply. ap will have no duty to de defend the insured against nd th any "suit" uit" seeking damages dama es for fo "bodily injury" or "property damage"" to which hich this insurance does not apply. At our discretion, we may investigate any "occurrence" urrenc that may involve this insurance and nd settle any a resultant claim or "suit" for which we have the duty to defend. ha But: (1) The amount we will pay for the "ultimate net loss" is limited as described in Section III – Limits Of Insurance; and

No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments – Coverages A and B. b. This insurance applies to "bodily injury" or ran "property that is subject to an ty damage" da applicable able ""retained limit". If any other limit, such h as a sublimit, is specified in the "underlying erlying insurance", ance this insurance does not apply to injury" or "property damage" o "bodily inju arising outt of that exposure unless that limit is specified in under the n the Declarations Declarat Schedule of "underlying insurance". Sc nderly suran c. This insurance applies injury" and pplies to "bodily "b "property ropert damage" only if: (1) The injury" or "property damage" is (1 he "bodily injury caused "occurrence" that takes place sed by an "occ in the "coverage territory"; (2) The "bodily (2 ily injury" or "property damage" occurs during the policy period; and (3) Prior to the policy period, no insured listed under Paragraph 1.a. of Section II – Who Is u An A Insured and no "employee" authorized by you to give or receive notice of an "occurrence" or claim, knew that the "bodily injury" or "property damage" had occurred, in whole or in part. If such a listed insured or authorized "employee" knew, prior to the policy period, that the "bodily injury" or "property damage" occurred, then any continuation, change or resumption of such "bodily injury" or "property damage" during or after the policy period will be deemed to have been known prior to the policy period. d. "Bodily injury" or "property damage" which occurs during the policy period and was not, prior to the policy period, known to have occurred by any insured listed under Paragraph 1.a. of Section II – Who Is An Insured or any "employee" authorized by you to give or receive notice of an "occurrence" or claim, includes any continuation, change or resumption of that "bodily injury" or "property damage" after the end of the policy period.

(2) Our right and duty to defend ends when we have used up the applicable limit of insurance in the payment of judgments or settlements under Coverages A or B.

CU 00 01 04 13

© Insurance Services Office, Inc., 2012

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6

e. "Bodily injury" or "property damage" will be deemed to have been known to have occurred at the earliest time when any insured listed under Paragraph 1.a. of Section II – Who Is An Insured or any "employee" authorized by you to give or receive notice of an "occurrence" or claim: (1) Reports all, or any part, of the "bodily injury" or "property damage" to us or any other insurer; (2) Receives a written or verbal demand or claim for damages because of the "bodily injury" or "property damage"; or (3) Becomes aware by any other means that "bodily injury" or "property damage" has occurred or has begun to occur. f. Damages because of "bodily injury" include damages claimed by any person or h organization for care, loss of services or death resulting at any time from the "bodily injury". 2. Exclusions

c. Liquor Liability "Bodily injury" or "property damage" for which any insured may be held liable by reason of: (1) Causing ing or o contributing to the intoxication of anyy person; perso (2) The fu furnishing of alcoholic beverages to a person erson under the th legal drinking age or under er the influence influenc of alcohol; or (3) Any statute, ordinance or regulation relating atute, or to the sale, gift, distribution or use of ale, g ribu alcoholic beverages. verage This exclusion applies if the claims pplies even ev against ainst any a insured allege negligence or other wrongdoing w gdoing in: (a) The hiring, employment, he supervision, supervis training ning or monitoring of others by that insured; d; or o

This insurance does not apply to: a. Expected Or Intended Injury "Bodily injury" or "property damage" expected or intended from the standpoint of the insured. nsured. This exclusion does not apply pply to "bodily injury" resulting from the use of reasonable force to protect persons or property. ty. b. Contractual Liability "Bodily injury" or "property damage" "pro mage" for which the insured is obligated to pay damages by reason of the assumption of liability bility in a contract or agreement. does not ment. This exclusion exclu n apply for dama damages: y to liability liab (1) That the insured would have in the absence abs of the t contract or agreement; reemen or (2) Assumed in a con contract ct or agreement that is an "insured contract contract", prov provided the "bodily injury" or "property damage" occurs dam subsequent to the exec execution on of the contract or agreement. Solely ely for the purposes of liability assumed an "insured contract", med in a reasonable attorneys' ttorney fees and necessary litigation expenses incurred by or for a party other than an insured are deemed to be damages because of "bodily injury" or "property damage", provided: (a) Liability to such party for, or for the cost of, that party's defense has also been assumed in the same "insured contract"; and

Page 2 of 18

(b) Such attorneys' fees and litigation expenses are for defense of that party against a civil or alternative dispute resolution proceeding in which damages to which this insurance applies are alleged.

(b) Providing or failing to provide transportation with respect to any person that may be under the influence of alcohol; if the "occurrence" which caused the "bodily injury" or "property damage" involved that which is described in Paragraph (1), (2) or (3) above. However, this exclusion applies only if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. For the purposes of this exclusion, permitting a person to bring alcoholic beverages on your premises, for consumption on your premises, whether or not a fee is charged or a license is required for such activity, is not by itself considered the business of selling, serving or furnishing alcoholic beverages. This exclusion does not apply to the extent that valid "underlying insurance" for the liquor liability risks described above exists or would have existed but for the exhaustion of underlying limits for "bodily injury" and "property damage". To the extent this exclusion does not apply, the insurance provided under this Coverage Part for the liquor liability risks described above will follow the same provisions, exclusions and limitations that are contained in the applicable "underlying insurance", unless otherwise directed by this insurance.

© Insurance Services Office, Inc., 2012

CU 00 01 04 13

d. Workers' Compensation And Similar Laws Any obligation of the insured under a workers' compensation, disability benefits or unemployment compensation law or any similar law. e. ERISA Any obligation of the insured under the Employee Retirement Income Security Act of 1974 (ERISA), and any amendments thereto or any similar federal, state or local statute. f. Auto Coverages (1) "Bodily injury" or "property damage" arising out of the ownership, maintenance or use of any "auto" which is not a "covered auto"; or (2) Any loss, cost or expense payable under or resulting from any first-party physical damage coverage; no-fault law; personal injury protection or auto medical paymentss coverage; or uninsured or underinsured red motorist law. g. Employer's Liability "Bodily injury" to: (1) An "employee" of the insured arising ing out of o and in the course of: (a) Employment by the insured; or (b) Performing duties related to the conduct conduc of the insured's business; siness; or (2) The spouse, child, parent, t, brother or sister of that "employee" as a consequence of ploye Paragraph (1) above. 1) above This exclusion applies whether the whet e insured ins may be liable as an employer or in any ny other oth capacity, to any obligation to city, and a t share shar damages or repay mages with w epay someone else who must pay damages because st p cause of the injury. Thiss exclusion does doe not apply to liability assumed an "insured med by the insured insur d under un contract". " arisi out of a "covered With respect to injury arising auto", this exclusion does not apply to "bodily tic "employees" "emplo injury" to domestic not entitled to ensation benefits. For the workers' compensation purposes of this insurance, a domestic "employee" is a person engaged in household or domestic work performed principally in connection with a residence premises.

CU 00 01 04 13

This exclusion does not apply to the extent that valid "underlying insurance" for the employer's liability risks described above exists or would have existed but for the exhaustion of underlying limits for "bodily injury". To the extent this exclusion does not apply, the insurance provided under this Coverage Part for the employer's liability risks described above will follow the same provisions, exclusions and limitations that are contained in the applicable icable "underlying insurance", unless otherwise directed by this insurance. wise dir h. Employment-related Practices ploym "Bodily y injury" to:

6

(1) A person son arising out of any: (a) Refusal that person; sal to employ e ((b) Termination tion of employment; nt; or

tthat

person's

(c) Employment-related E elated practices, policies, acts or omiss omissions, such as coercion, demotion, ev evaluation, reassignment, discipline, cipline, defamation, harassment, humiliation, iation discrimination or malicious prosecution directed at that person; or (2) The spouse, child, parent, brother or sister (2 of that person as a consequence of "bodily injury" to that person at whom any of the in employment-related practices described in Paragraph (a), (b), or (c) above is directed. This exclusion applies whether the injurycausing event described in Paragraph (a), (b) or (c) above occurs before employment, during employment or after employment of that person. This exclusion applies whether the insured may be liable as an employer or in any other capacity, and to any obligation to share damages with or repay someone else who must pay damages because of the injury. i. Pollution (1) "Bodily injury" or "property damage" which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants" at any time; or (2) "Pollution cost or expense".

© Insurance Services Office, Inc., 2012

Page 3 of 18

This exclusion does not apply if valid "underlying insurance" for the pollution liability risks described above exists or would have existed but for the exhaustion of underlying limits for "bodily injury" and "property damage". To the extent this exclusion does not apply, the insurance provided under this Coverage Part for the pollution risks described above will follow the same provisions, exclusions and limitations that are contained in the applicable "underlying insurance", unless otherwise directed by this insurance. j. Aircraft Or Watercraft "Bodily injury" or "property damage" arising out of the ownership, maintenance, use or entrustment to others of any aircraft or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and "loading or unloading". This exclusion applies even if the claims ms against any insured allege negligence or other ther wrongdoing in the supervision, hiring, ng, employment, training or monitoring of others othe byy that insured, if the "occurrence" which ch caused cau the "bodily injury" or "property damage" damage involved the ownership, maintenance,, use or entrustment to others of any aircraft raft or watercraft that is owned d or operated by or rented or loaned to any insured. nsured. This exclusion does not apply ply to: (1) A watercraft while ashore on premises you own or rent; (2) A watercraft you do not o own that is: (a) Less than 50 0 feet long; and (b) persons b) Not being used sed to carry per ns or o property for a charge; p (3) Liab Liability assumed under any "insured "i contract" for the ownership, o ershi maintenance or use e of aircraft or watercraft; wat craft; (4) The extent that valid insurance" alid "underlying "u derl for the aircraft or watercraft liability risks wat described above exis exists or would have existed but forr the exh exhaustion of underlying limits for "bodily bodily injury" or "property damage". To the extent this exclusion does not apply, the insurance provided under this Coverage Part for the aircraft or watercraft risks described above will follow the same provisions, exclusions and limitations that are contained in the "underlying insurance", unless otherwise directed by this insurance; or

Page 4 of 18

(5) Aircraft that is: (a) Chartered by, loaned to, or hired by you with a paid crew; and (b) Not owned by any insured. k. Racing Activities "Bodily injury" or "property damage" arising out of the use of "mobile equipment" or "autos" in, or while in practice for, or while being prepared for, any prearranged professional or organized rea racing, speed speed, demolition, or stunting activity or contest. st. l. War "Bodily injury" or "property damage", however "pr caused, arising, dire directly or indirectly, out of: ((1) War, including uding undeclared or civil war; (2) Warlike action on by a military force, including action in hindering against an ac ering or defending def actual or expected actua pected attack, by any government, sovereign or other authority overn sov using personnel or other agents; or ng military pers (3) Insurrection, revolution, usurped (3 ection, rebellion, re power, or action taken by governmental a authority in hindering or defending against any of these. m. Damage To Property Dam "Property damage" to: Prop (1) Property: (a) You own, rent, or occupy, including any costs or expenses incurred by you, or any other person, organization or entity, for repair, replacement, enhancement, restoration or maintenance of such property for any reason, including prevention of injury to a person or damage to another's property; or (b) Owned or transported by the insured and arising out of the ownership, maintenance or use of a "covered auto". (2) Premises you sell, give away or abandon, if the "property damage" arises out of any part of those premises; (3) Property loaned to you; (4) Personal property in the care, custody or control of the insured; (5) That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the "property damage" arises out of those operations; or

© Insurance Services Office, Inc., 2012

CU 00 01 04 13

(6) That particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it. Paragraph (2) of this exclusion does not apply if the premises are "your work" and were never occupied, rented or held for rental by you. Paragraphs (1)(b), (3), (4), (5) and (6) of this exclusion do not apply to liability assumed under a sidetrack agreement. Paragraphs (3) and (4) of this exclusion do not apply to liability assumed under a written Trailer Interchange agreement. Paragraph (6) of this exclusion does not apply to "property damage" included in the "productscompleted operations hazard". n. Damage To Your Product "Property damage" to "your product" arising outt of it or any part of it. o. Damage To Your Work ing out of "Property damage" to "your work" arising "produ it or any part of it and included in the "productscompleted operations hazard". amaged This exclusion does not apply if the damaged amage work or the work out of which the damage arises was performed on your behalf by a subcontractor. perty Or Property p. Damage To Impaired Property Not Physically Injured age" to "impaired d property" or "Property damage" as not been physically cally injured, property that has arising out of: eficiency, inadequacy inadeq cy or o (1) A defe defect, deficiency, dangero tion in "your product" produ " or dangerous condition "you work"; or "your

(3) "Impaired property"; if such product, work, or property is withdrawn or recalled from the market or from use by any person or organization because of a known or suspected defect, deficiency, inadequacy or dangerous condition in it. r. Personal And Advertising Injury "Bodily injury" arising out of "personal and advertising injury". ional Services s. Professional "Bodily injury" or "property damage" due to dily inju ering of or failure to render any rendering professional sional service. This includes but is not limited to: o: ccoun (1) Legal, accounting or advertising services; to prepare (2) Preparing, approving, or failing fa o approve, maps, aps, shop drawings, dr or opinions, reports, surveys, repo ys, field orders, change orders or drawings g or specifications; (3 Inspection, pection, supervision, supe (3) quality control, ectural or engineering activities done architectural by or for or you on a project on which you serve as construction manager; ((4) Engineering services, including supervisory or inspection services;

related

5) Medical, M (5) surgical, dental, X-ray or nursing services treatment, advice or instruction; (6) Any health or therapeutic service treatment, advice or instruction; (7) Any service, treatment, advice or instruction for the purpose of appearance or skin enhancement, hair removal or replacement, or personal grooming or therapy;

(2) A de delay or failure byy you or anyone acting n your behalf to perform erfor a contract or on eement in accordance accorda ce with wi its terms. agreement

(8) Any service, treatment, advice or instruction relating to physical fitness, including service, treatment, advice or instruction in connection with diet, cardiovascular fitness, bodybuilding or physical training programs;

ot apply ap y to the loss of use This exclusion does not ing out of sudden and of other property arising accidental physical injury to "your product" or be put to its intended "your work" after it has been use.

(9) Optometry or optical or hearing aid services including the prescribing, preparation, fitting, demonstration or distribution of ophthalmic lenses and similar products or hearing aid devices;

q. Recall Of Products, Work Or Impaired Property Damages claimed for any loss, cost or expense incurred by you or others for the loss of use, withdrawal, recall, inspection, repair, replacement, adjustment, removal or disposal of:

(10) Body piercing services; (11) Services in the practice of pharmacy; (12) Law enforcement or firefighting services; and (13) Handling, embalming, disposal, burial, cremation or disinterment of dead bodies.

(1) "Your product"; (2) "Your work"; or

CU 00 01 04 13

© Insurance Services Office, Inc., 2012

Page 5 of 18

6

This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the "occurrence" which caused the "bodily injury" or "property damage", involved the rendering of or failure to render any professional service. t. Electronic Data Damages arising out of the loss of, loss of use of, damage to, corruption of, inability to access or inability to manipulate electronic data. However, this exclusion does not apply to liability for damages because of "bodily injury". As used in this exclusion, electronic data means information, facts or programs stored as or on, created or used on, or transmitted to or from computer software, including systems and applications software, hard or floppy disks, CD-ROMs, tapes, drives, cells, data processing sing devices or any other media which are used sed with electronically controlled equipment. This exclusion does not apply if valid v "underlying insurance" for the electronic ronic data dat risks described above exists or would uld have existed but for the exhaustion of underlying derlying limits for "bodily injury" and d "property damage". The insurance provided under this Coverage Part will follow the same provisions, exclusions and limitations that are contained in the he applicable "underlying insurance", de urance", unless otherwise directed ted by tthis insurance. nce. u. Recording And Distributio Distribution Of Material aterial Or Information In Violation Law olation Of La "Bodily injury" or "property damage" ly inju damage arising arisin directly ctly or indirectlyy out of any action actio or omission issio that violates or is alleged to violate: viola (1) The Telephone Consumer Protection Act nsum (TCPA), amendment of or TCPA), including any y am addition tion to such law; (2) The CAN-SPAM Act ct of 2003, 00 including any amendment of or addition dditi to such law; (3) The Fair Credit Act (FCRA), and dit Reporting Repor any amendment nt of or addition to such law, including the Fair and Accurate Credit Transactions Act (FACTA); or (4) Any federal, state or local statute, ordinance or regulation, other than the TCPA, CAN-SPAM Act of 2003 or FCRA and their amendments and additions, that addresses, prohibits, or limits the printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information.

Page 6 of 18

COVERAGE B – PERSONAL AND ADVERTISING INJURY LIABILITY 1. Insuring Agreement a. We will pay on behalf of the insured the "ultimate net loss" in excess of the "retained limit" because of "personal and advertising injury" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking damages for such "personal and an advertising injury" when the "underlying ying insurance" does not provide coverage rage or o the limits of "underlying insurance" have been exhausted. When we have no duty e bee to defend, have the right to defend, or fend, we will ha to participate cipate in the defense of, the insured against any ny other "suit" seeking damages to which this insurance apply. However, we surance may app will have no duty wil ty to defend the insured against seeking any "suit" " g damages for "personal and advertising injury" to dvertis o which this insurance does not apply. At our disc discretion, etio we may investigate any offense may involve this insurance a ffense that ma and settle resultant claim or "suit" for which a e any result we have the w e duty to defend. But: ((1) The amount we will pay for the "ultimate net loss" is limited as described in Section III – Limits Of Insurance; and Our right and duty to defend end when we (2) O have used up the applicable limit of h insurance in the payment of judgments or settlements under Coverages A or B. No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments – Coverages A and B. b. This insurance applies to "personal and advertising injury" that is subject to an applicable "retained limit". If any other limit, such as a sublimit, is specified in the "underlying insurance", this insurance does not apply to "personal and advertising injury" arising out of that exposure unless that limit is specified in the Declarations under the Schedule of "underlying insurance". c. This insurance applies to "personal and advertising injury" caused by an offense arising out of your business but only if the offense was committed in the "coverage territory" during the policy period.

© Insurance Services Office, Inc., 2012

CU 00 01 04 13

2. Exclusions

(9) Infringement Of Copyright, Patent, Trademark Or Trade Secret

This insurance does not apply to: a. "Personal and advertising injury": (1) Knowing Violation Of Rights Of Another Caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict "personal and advertising injury". (2) Material Published With Knowledge Of Falsity Arising out of oral or written publication, in any manner, of material, if done by or at the direction of the insured with knowledge of its falsity. (3) Material Published Prior To Policy Period Arising out of oral or written publication, in any manner, of material whose first rst publication took place before the beginning ning of the policy period. (4) Criminal Acts Arising out of a criminal act committed mitted by or at the direction of the insured. (5) Contractual Liability For which the insured liability d has assumed liabilit in a contract or agreement. ement. This exclusion does not apply to: (a) Liability for damages that the insured would have in the absence bsence of the contract or agreement. agreeme (b) Liability forr false arres arrest, detention ention or imprisonment imp nt assumed in a contract tract or o agreement. agree (6) Breach Of Contract Bre ct Arising out of a breach Arisin ach of o contract, except an contract to use another's n implied contra advertising "advertisement". ertising idea in your you "adv (7) Quality Or Performance man Of Goods – Failure To Conform m To Statements Arising out of the failu failure of goods, products or services to conform with any statement confo of quality or performance made in your "advertisement". (8) Wrong Description Of Prices Arising out of the wrong description of the price of goods, products or services stated in your "advertisement".

CU 00 01 04 13

Arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. Under this exclusion, such other intellectual property rights do not include the use of another's advertising idea in your "advertisement". However, this exclusion does not apply to infringement, in your "advertisement", of eme copyright, yright, trade dress or slogan. (10) Insureds nsured In Media And Internet Type Busin Businesses mmitted by an insured whose business Committed is: tising, broadcastin (a) Advertising, broadcasting, publishing or ng; telecasting; (b) Designing orr determining determin content of web si s; or sites for others; (c) An Internet se search, access, content or ervice provid service provider. r, this exclusion does not apply to However, Paragraphs 14.a., b. and c. of "personal and advertising injury" under the Definitions section. F For the purposes of this exclusion, the p placing of frames, borders or links, or advertising, for you or others anywhere on the Internet, is not by itself, considered the business of advertising, broadcasting, publishing or telecasting. (11) Electronic Chatrooms Or Bulletin Boards Arising out of an electronic chatroom or bulletin board the insured hosts, owns, or over which the insured exercises control. (12) Unauthorized Use Of Another's Name Or Product Arising out of the unauthorized use of another's name or product in your e-mail address, domain name or metatag, or any other similar tactics to mislead another's potential customers. (13) Pollution Arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants" at any time.

© Insurance Services Office, Inc., 2012

Page 7 of 18

6

(f) Any health or therapeutic service treatment, advice or instruction;

(14) Employment-related Practices To: (a) A person arising out of any: (i) Refusal to employ that person; (ii) Termination of employment; or

that

person's

(iii) Employment-related practices, policies, acts or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination or malicious prosecution directed at that person; or (b) The spouse, child, parent, brother or sister of that person as a consequence of "personal and advertising injury" to that person at whom any of the e employment-related practices described bed in Paragraph (i), (ii) or (iii) above e is directed. This exclusion applies whether the injuryin causing event described in Paragraph agraph (i), ( (ii) or (iii) above occurs before employment, during employment or after employment of that person. This exclusion applies s whether the insured may be liable as an employer or in any other capacity, and to any obligation to share damages es with or repay ay someone else who must pay damages because da ecause of the injury. (15) Professional Services Serv es Arising out of the rising o e rendering of or failure ure to t render any professional ofessional service. This includes but is not limited incl imited to: (a) accounting a) Legal, acc ng services;

or

advertising

(g) Any service, treatment, advice or instruction for the purpose of appearance or skin enhancement, hair removal or replacement, or personal grooming or therapy; (h) Any service, treatment, advice or instruction relating to physical fitness, including cludin service, treatment, advice or instruction in connection with diet, nstruc cardiovascular fitness, bodybuilding or card physical training programs; ph (i) Optometry or optical or hearing aid services the prescribing, rvices including in preparation, aration fitting, demonstration or distribution tion of ophthalmic ophthalm lenses and similar products oducts or hearing heari aid devices; (j)) Body piercing services; ((j g service (k) of pharmacy; k) Services in the practice pra (l) Law enforceme enforcement or firefighting services; and d (m) Handling, ng embalming, disposal, burial, cremation or disinterment of dead bodies. This exclusion applies even if the claims T against any insured allege negligence or a other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the offense which caused the "personal and advertising injury", involved the rendering of or failure to render any professional service. (16) War However caused, indirectly, out of:

arising,

directly

or

(a) War, including undeclared or civil war;

(b) Preparing, eparing, approving, approv ng, or failing to prepare or approve, maps, shop appr e drawings, opinions, ions reports, surveys, field orders, s, change chang orders or drawings or specifications; ations;

(b) Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or

(c) Inspection, supervision, quality control, architectural or engineering activities done by or for you on a project on which you serve as construction manager;

(c) Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.

(d) Engineering services, including related supervisory or inspection services; (e) Medical, surgical, dental, X-ray or nursing services treatment, advice or instruction;

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(17) Recording And Distribution Of Material Or Information In Violation Of Law Arising directly or indirectly out of any action or omission that violates or is alleged to violate: (a) The Telephone Consumer Protection Act (TCPA), including any amendment of or addition to such law; (b) The CAN-SPAM Act of 2003, including any amendment of or addition to such law; (c) The Fair Credit Reporting Act (FCRA), and any amendment of or addition to such law, including the Fair and Accurate Credit Transactions Act (FACTA); or (d) Any federal, state or local statute, ordinance or regulation, other than the TCPA, CAN-SPAM Act of 2003 or FCRA and their amendments and additions, that addresses, prohibits, or limits the printing, dissemination, min n disposal, collecting, recording,, sending, send transmitting, communicating or ng o distribution of material or information. ation. b. "Pollution cost or expense".

f. Prejudgment interest awarded against the insured on that part of the judgment we pay. If we make an offer to pay the applicable limit of insurance, we will not pay any prejudgment interest based on that period of time after the offer. g. All interest on the full amount of any judgment that accrues after entry of the judgment and before we have paid, offered to pay, or deposited in court the part of the judgment that is within the a applicable limit of insurance. These payme payments will not reduce the limits of insurance. ce. 2. When we have the right but not the duty to defend the insured and elect to participate in the defense, we will pay our own expenses but will not o contribute to the expenses of the insured or the cont "underlying insurer". under defend an insured against a "suit" and an 3. If we e defe red again indemnitee insured named as a party ind nitee of the insur d is also a to the th "suit", uit", we will defend defe that indemnitee if all of the he following fo g conditions are met: The "suit" agai against the indemnitee seeks a. T damages for which the insured has assumed the liability of the indemnitee in a contract or agreement that is an "insured contract"; ag

SUPPLEMENTARY PAYMENTS S – COVERAGES A AND B

b. This insurance applies assumed by the insured; ssu

1. We will pay, with respect to any claim we investigate or settle, le, or any "suit" suit" against an insured we defend, nd, when whe the duty uty to defend exists:

c. The obligation to defend, or the cost of the defense of, that indemnitee, has also been assumed by the insured in the same "insured contract";

a. All expenses we incur. ncur. b. Up to $2,000 for cost o $2,00 ost of bail bonds (including ludin bonds related traffic ds for re fic law violations) required req because caus of an "occurrence" rence" we cover. We W do not hav have to furnish these e bonds. bond c. The cost of bonds to release re ase attachments, but only forr bond amounts within ithin the applicable limit of insurance. We e do not ot have to furnish these bonds. d. All reasonable expense expenses incurred by the insured at our request to assist us in the investigation or defense of the claim or "suit", including actual loss of earnings up to $250 a day because of time off from work. e. All court costs taxed against the insured in the "suit". However, these payments do not include attorneys' fees or attorneys' expenses taxed against the insured.

to

such

liability

d. The allegations in the "suit" and the information we know about the "occurrence" are such that no conflict appears to exist between the interests of the insured and the interests of the indemnitee; e. The indemnitee and the insured ask us to conduct and control the defense of that indemnitee against such "suit" and agree that we can assign the same counsel to defend the insured and the indemnitee; and f. The indemnitee: (1) Agrees in writing to: (a) Cooperate with us in the investigation, settlement or defense of the "suit"; (b) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the "suit"; (c) Notify any other insurer whose coverage is available to the indemnitee; and

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(d) Cooperate with us with respect to coordinating other applicable insurance available to the indemnitee; and (2) Provides us with written authorization to: (a) Obtain records and other information related to the "suit"; and (b) Conduct and control the defense of the indemnitee in such "suit". So long as the above conditions are met, attorneys' fees incurred by us in the defense of that indemnitee, necessary litigation expenses incurred by us and necessary litigation expenses incurred by the indemnitee at our request will be paid as Supplementary Payments. Notwithstanding the provisions of Paragraph 2.b.(2) of Section I – Coverage A – Bodily Injury And Property Damage Liability, such payments will not be deemed to be damages for "bodily injury" e and "property damage" and will not reduce the limits of insurance. Our obligation to defend an insured's indemnitee itee ece ry and to pay for attorneys' fees and necessary litigation expenses as Supplementary Payme Payments ends when we have used up the applicable ble limit of insurance in the payment of judgments ments or settlements or the conditions set forth above, bove, or the terms of the agreement ment described in Paragraph f. above, are no longer onger met. me SECTION II – WHO IS AN INSURED RED 1. Except for liability arising out of the ownership, maintenance or use autos": e of "covered "c tos": a. If you are designated nated in the Declarations ations as: (1) An individual, you and your you spouse ouse are insureds, but only with respect to the sured respe th are the conduct of a business ness of which you a e th sole owner. (2) A pa partnership or joint you are an nt venture, ven insured. members, nsured. Your mem rs, yyour partners, and theirr spouses are al also insureds, but only o ins with respect to the con conduct of your business. (3) A limited liability company, you are an ty com insured. Yourr membe members are also insureds, but only with respect to the conduct of your business. Your managers are insureds, but only with respect to their duties as your managers. (4) An organization other than a partnership, joint venture or limited liability company, you are an insured. Your "executive officers" and directors are insureds, but only with respect to their duties as your officers or directors. Your stockholders are also insureds, but only with respect to their liability as stockholders.

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(5) A trust, you are an insured. Your trustees are also insureds, but only with respect to their duties as trustees. b. Each of the following is also an insured: (1) Your "volunteer workers" only while performing duties related to the conduct of your business, or your "employees", other than either your "executive officers" (if you are an organization other than a partnership, rsh joint venture or limited liability company) pany) or your managers (if you are a limited mited lliability company), but only for acts within the scope of their employment by you orr while performing duties related to the perform conduct However, none of duct of your business. b these "employe "employees" or "volunteer workers" are insureds eds for: fo ((a) "Bodily injury" or advertising injury":

"personal

and

(i) To you, to your partners or members (if you are a partnership or joint venture), ven ure), to your members (if you are a limited liability company), to a co"employee" in the course of his or mplo her employment or performing duties related to the conduct of your business or to your other "volunteer workers" while performing duties related to the conduct of your business; (ii) To the spouse, child, parent, brother or sister of that co-"employee" or "volunteer worker" as a consequence of Paragraph (a)(i) above; or (iii) For which there is any obligation to share damages with or repay someone else who must pay damages because of the injury described in Paragraph (a)(i) or (ii) above. (b) "Property damage" to property: (i) Owned, occupied or used by; (ii) Rented to, in the care, custody or control of, or over which physical control is being exercised for any purpose by; you, any of your "employees", "volunteer workers", any partner or member (if you are a partnership or joint venture), or any member (if you are a limited liability company). (2) Any person (other than your "employee" or "volunteer worker"), or any organization while acting as your real estate manager.

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(3) Any person or organization having proper temporary custody of your property if you die, but only: (a) With respect to liability arising out of the maintenance or use of that property; and (b) Until your legal representative has been appointed. (4) Your legal representative if you die, but only with respect to duties as such. That representative will have all your rights and duties under this Coverage Part. c. Any organization you newly acquire or form, other than a partnership, joint venture or limited liability company, and over which you maintain ownership or majority interest, will qualify as a Named Insured if there is no other similar insurance available to that organization. However: (1) Coverage under this provision is afforded ded only until the 90th day after you acquire e or form the organization or the end of the he policy period, whichever is earlier; (2) Coverage A does not apply to "bodily injury" dily injury or "property damage" that occurred d before you acquired or formed the organization; ization; and (3) Coverage B does not ot apply to "personal "persona and advertising injury"" arising out of an offense committed before e you acquired or formed the organi organization. 2. Only with respect to liability arising g out of the ownership, maintenance use of "covered nance or u "cov autos": a. You are an insured. b. Anyone a yone else while using ng with your permission permiss "covered vere auto" you own, n, hire or borrow is also an insured nsured except: (1) The owner or anyone else from whom you f hire or borrow a "covered "c vere auto". This exception does nott apply if the "covered ap auto" is a trailer orr semitrailer connected to sem a "covered auto" to" you own. o (2) Your "employee" if the "covered auto" is owned by that "employee" or a member of his or her household.

(4) Anyone other than your "employees", partners (if you are a partnership), members (if you are a limited liability company), or a lessee or borrower or any of their "employees", while moving property to or from a "covered auto". (5) A partner (if you are a partnership), or a member (if you are a limited liability company) for a "covered auto" owned by him or her or a member of his or her h household. ehold (6) "Employees" with respect to "bodily injury" Employ to: o: (a) Any fellow "e "employee" of the insured arising ising out of o and in the course of the fellow employment or w "employee's" "em while performing duties related to the conduct of your busines business; or (b) The spouse,, child, parent, brother or sister of that fello fellow "employee" as a sis of Paragraph (a) above. consequence o c.. A Anyone liable for tthe conduct of an insured described above is also an insured, but only to d the extent of that h liability. 3. Any additional insured under any policy of "underlying insurance" will automatically be an "unde insured sured under this insurance. ct to Section III – Limits Of Insurance, if Subject cov coverage provided to the additional insured is req required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance: a. Required by the contract or agreement, less any amounts payable by any "underlying insurance"; or b. Available under the applicable Limits Insurance shown in the Declarations;

of

whichever is less. Additional insured coverage provided by this insurance will not be broader than coverage provided by the "underlying insurance". No person or organization is an insured with respect to the conduct of any current or past partnership, joint venture or limited liability company that is not shown as a Named Insured in the Declarations.

(3) Someone using a "covered auto" while he or she is working in a business of selling, servicing, repairing, parking or storing "autos" unless that business is yours.

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SECTION III – LIMITS OF INSURANCE

SECTION IV – CONDITIONS

1. The Limits of Insurance shown in the Declarations and the rules below fix the most we will pay regardless of the number of:

1. Appeals

a. Insureds; b. Claims made, "suits" brought, or number of vehicles involved; or c. Persons or organizations making claims or bringing "suits". 2. The Aggregate Limit is the most we will pay for the sum of all "ultimate net loss" under: a. Coverage A, except "ultimate net loss" because of "bodily injury" or "property damage" arising out of the ownership, maintenance or use of a "covered auto"; and

2. Bankruptcy tcy a. Bankruptcy krupt Of Insured Bankruptcy insolvency of the insured or of uptcy or insolv the insured's red's estate will not relieve us of our obligations under this Coverage Part. t Of Underlying Insurer b. Bankruptcy B Ins

b. Coverage B. 3. Subject to Paragraph 2. above, the Each he Occurrence Limit is the most we will pay for the e A sum of all "ultimate net loss" under Coverage erty because of all "bodily injury" and "property ce damage" arising out of any one "occurrence". rsonal And A 4. Subject to Paragraph 2. above, the Personal e will pay Advertising Injury Limit is the most we mate net under Coverage B for the sum of all "ultimate ertising loss" because of all "personal and advertising o injury" sustained by anyy one person or organization. ance" with a policy 5. If there is "underlying insurance" period that is nonconcurrent with the policy period al Liability Liab rella Coverage of this Commercial Umbrella w only be e reduced or Part, the "retained limit(s)" will ents for: exhausted by payments dam whic a. "Bodily injury" or "property damage" which urs during dur e policy period of th occurs the this verag Part; or Coverage rson and advertising ing injury" for offenses of b. "Personal du g the th policy period of that are committed during overage Part. this Coverage ying insurance" sura However, if any "underlying is written he ""retained limit(s)" will on a claims-made basis, the auste by claims for that only be reduced or exhausted insurance that are made during the policy period, dur Repo or any Extended Reporting Period, of this Coverage Part. The Aggregate Limit, as described in Paragraph 2. above, applies separately to each consecutive annual period and to any remaining period of less than 12 months, starting with the beginning of the policy period shown in the Declarations, unless the policy period is extended after issuance for an additional period of less than 12 months. In that case, the additional period will be deemed part of the last preceding period for purposes of determining the Limits of Insurance.

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If the "underlying insurer" or insured elects not to appeal a judgment in excess of the "retained limit", we may do so at our own expense. We will also pay for taxable court costs, pre- and postjudgment interest and disbursements associated with such appeal. In no event will this provision increase our liability beyond the applicable Limits of Insurance described in Section III – Limits Of Insurance. Sec

Bankruptcy or insolvency Bank nsolvency of the "underlying insurer" nsurer will not relieve lieve us of our obligations under Part. er this Coverage g Part However, this insuranc insurance will not replace the How "underlying insurance" und nsurance" in the event of bankruptcy of the or insolvency in th "underlying insurer". This insurance will apply as if the "underlying insu insurance" were in full effect. ins 3. Duties In The Event Of Occurrence, Offense, Claim Or Suit aim O a. You must see to it that we are notified as soon a as practicable of an "occurrence" or an offense, regardless of the amount, which may result in a claim. To the extent possible, notice should include: (1) How, when and where the "occurrence" or offense took place; (2) The names and addresses of any injured persons and witnesses; and (3) The nature and location of any injury or damage arising out of the "occurrence" or offense. b. If a claim is made or "suit" is brought against any insured, you must: (1) Immediately record the specifics of the claim or "suit" and the date received; and (2) Notify us as soon as practicable. You must see to it that we receive written notice of the claim or "suit" as soon as practicable. c. You and any other involved insured must: (1) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or "suit";

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(2) Authorize us to obtain records and other information; (3) Cooperate with us in the investigation or settlement of the claim or defense against the "suit"; and (4) Assist us, upon our request, in the enforcement of any right against any person or organization which may be liable to the insured because of injury or damage to which this insurance may also apply. d. No insured will, except at that insured's own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our consent. 4. Legal Action Against Us No person or organization has a right under this Coverage Part: a. To join us as a party or otherwise bring us into o a "suit" asking for damages from an insured; or b. To sue us on this Coverage Part unless allll of its terms have been fully complied with. A person or organization may sue us to recove recover on an agreed settlement or on a final judgment judgmen against an insured; but we will not be liable iable for damages that are not payable under the terms erms of this Coverage Part or that are in excess of the applicable limit of insurance. An agreed settlement settlemen means a settlement and release ease of liability signed by us, the insured and the e claimant or the claimant's legal representative. res 5. Other Insurance a. This insurance iss excess over, and ov d shall shal not contribute with any other insurance, ny of the othe suranc whether primary, excess, her prim xcess, contingent or o on n any an other apply to er basis. basis This condition ondition will not app insurance specifically written as excess over uran this Coverage Part. Cov When n this insurance is excess, cess we will have no duty under der Coverages A or B to defend the insured against any "suit" suit" if any an other insurer has a duty to defend the insured against that "suit". If no other insure insurer defends, we will undertake to do so, but we will be entitled to the insured's rights t against all those other insurers. b. When this insurance is excess over other insurance, we will pay only our share of the "ultimate net loss" that exceeds the sum of: (1) The total amount that all such other insurance would pay for the loss in the absence of the insurance provided under this Coverage Part; and

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(2) The total of all deductible and self-insured amounts under all that other insurance. 6. Premium Audit a. We will compute all premiums for this Coverage Part in accordance with our rules and rates. b. Premium shown in this Coverage Part as advance premium is a deposit premium only. At the close of each audit period we will compute the earned premium for that period and send notice to the first Named Insured. end no The due date for audit and retrospective premiums miums is the date da shown as the due date on the bill. If the sum of the advance and audit premiumss paid for the policy period is greater than the earned arned premium, we will return the excess to the first Named Insur Insured. e c. The first Named Insured must keep records of the we need for premium he information i ne computation, mputa o , and a d send se d us copies at such times as we may request. a 7. Repr Representations Fraud tions Or Fr this you agree: By accepting a is policy, po a. The statements in the accurate and complete; a

Declarations

b. Tho Those statements are based representations you made to us; epre

are upon

c. We have issued this policy in reliance upon your representations; and d. This policy is void in any case of fraud by you as it relates to this policy or any claim under this policy. 8. Separation Of Insureds Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Coverage Part to the first Named Insured, this insurance applies: a. As if each Named Insured were the only Named Insured; and b. Separately to each insured against whom claim is made or "suit" is brought. 9. Transfer Of Rights Of Recovery Against Others To Us If the insured has rights to recover all or part of any payment we have made under this Coverage Part, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring "suit" or transfer those rights to us and help us enforce them.

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14. Expanded Coverage Territory

10. When We Do Not Renew If we decide not to renew this Coverage Part, we will mail or deliver to the first Named Insured shown in the Declarations written notice of the nonrenewal not less than 30 days before the expiration date. If notice is mailed, proof of mailing will be sufficient proof of notice. 11. Loss Payable Liability under this Coverage Part does not apply to a given claim unless and until: a. The insured or insured's "underlying insurer" has become obligated to pay the "retained limit"; and b. The obligation of the insured to pay the "ultimate net loss" in excess of the "retained limit" has been determined by a final settlement e or judgment or written agreement among the insured, claimant and us. 12. Transfer Of Defense When the underlying limits of insurance have ave been n used up in the payment of judgments ments or ransferre settlements, the duty to defend will be transferred to us. We will cooperate in the transfer of control to us of any outstanding claims or "suits" seeking damages to which this insurance rance applies which would have been covered d by the "underlying insurance" had the applicable used e limit not been b sed up. 13. Maintenance Of/Changes hang To Underlying derlyin Insurance Any "underlying insurance" urance" must mus be maintained intain in full effect without reduction or limits uction of coverage cover lim except for or the reduction on of the aggregate aggrega limit mit in accordance ance with wit the provisions visions of such "underlying "unde insurance" nce" that results from rom payment of claims, cl settlement which this insurance ment or judgments to o whi applies. Such exhaustion ustion or reduction reductio is not a failure to maintain "underlying insurance". Failure to nsur nce maintain "underlying insurance" anc will not invalidate insurance provided under der this Coverage Part, but insurance provided under this th Coverage Part will apply as if the "underlying insurance" were in full l i effect. If there is an increase in the scope of coverage of any "underlying insurance" during the term of this policy, our liability will be no more than it would have been if there had been no such increase.

a. If a "suit" is brought in a part of the "coverage territory" that is outside the United States of America (including its territories and possessions), Puerto Rico or Canada, and we are prevented by law, or otherwise, from defending the insured, the insured will initiate a defense of the "suit". We will reimburse the insured, under Supplementary Payments, for any reasonable and necessary expenses on incurred for the defense of a "suit" seeking damages ges to which this insurance applies, that we would have paid had we been able to exercise cise our right and duty to defend. If the insured sured becomes becom legally obligated to pay sums because of damages to which this cause o insurance applies of the "coverage pplies in a part o territory" that iss outside the United States of ter U America (including its territories and Ame ding possessions), Puerto ossess o Rico or Canada, and we are prevented by law, aw or otherwise, from paying such sums on the insured's behalf, we p will reimburse for such sums. w burse the insured in All payments b. A ts or reimbursements we make for damages because of judgments or settlements will be made in U.S. currency at the prevailing exchange rate at the time the insured became ex legally obligated to pay such sums. All legal payments or reimbursements we make for aym expenses under Supplementary Payments will be made in U.S. currency at the prevailing exchange rate at the time the expenses were incurred. c. Any disputes between you and us as to whether there is coverage under this policy must be filed in the courts of the United States of America (including its territories and possessions), Canada or Puerto Rico. d. The insured must fully maintain any coverage required by law, regulation or other governmental authority during the policy period, except for reduction of the aggregate limits due to payments of claims, judgments or settlements. Failure to maintain such coverage required by law, regulation or other governmental authority will not invalidate this insurance. However, this insurance will apply as if the required coverage by law, regulation or other governmental authority was in full effect.

You must notify us in writing, as soon as practicable, if any "underlying insurance" is cancelled, not renewed, replaced or otherwise terminated, or if the limits or scope of coverage of any "underlying insurance" is changed.

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SECTION V – DEFINITIONS 1. "Advertisement" means a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters. For the purposes of this definition: a. Notices that are published include material placed on the Internet or on similar electronic means of communication; and b. Regarding web sites, only that part of a web site that is about your goods, products or services for the purposes of attracting customers or supporters is considered an advertisement. 2. "Auto" means: a. A land motor vehicle, trailer or semitrailer designed for travel on public roads, including any attached machinery or equipment; or b. Any other land vehicle that is subject to o a compulsory or financial responsibility law w or other motor vehicle insurance law where it is licensed or principally garaged. However, "auto" does not include e "mobile "mob equipment". 3. "Bodily injury" means bodily injury, disability, sability, sickness or disease sustained ined by a person, including death resulting from m any of these at any time. "Bodily injury" includess mental anguish or other mental injury resulting from injury". m "bodily injury 4. "Coverage territory"" me means anywhere ere in the world with the exception n of any country or jurisdiction which is subject to trade or o other economic econ sanction or embargo United States of o by the Un America. 5. "Covered ed auto" means only nly those "autos" to which "underlying lying insurance" applies. plies. 6. "Employee" yee" "Employee" ee" worker".

includes does not

a "leased worker". " include i clude a "temporary

7. "Executive officer" means a person p so holding any of the officer positions created eate by your charter, constitution, bylaws or any other similar governing ot document. 8. "Impaired property" means tangible property, other than "your product" or "your work", that cannot be used or is less useful because: a. It incorporates "your product" or "your work" that is known or thought to be defective, deficient, inadequate or dangerous; or b. You have failed to fulfill the terms of a contract or agreement;

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if such property can be restored to use by the repair, replacement, adjustment or removal of "your product" or "your work", or your fulfilling the terms of the contract or agreement. 9. "Insured contract" means: a. A contract for a lease of premises. However, that portion of the contract for a lease of premises that indemnifies any person or organization for damage by fire to premises while rented ted to t you or temporarily occupied by you with permission of the owner is not an th per "insured contract"; red co b. A sidetrack detrack agreement; agreeme c. Any easement license agreement, except in sement or lice connection n with construction or demolition operations on or within 50 feet fee of a railroad; d. An obligation, as required b by ordinance, to d indemnify a municipality, in connection indem cipality, except exc with ith work wo for a municipality; cipality An elevator maintenance agreement; e. A evator maintena That part contract or agreement entered f. T rt of any con into, as part your business, pertaining to the in rt of you rental or lease, by you or any of your eas "employees", of any "auto". However, such ccontract or agreement shall not be considered an "insured contract" to the extent that it obligates you or any of your "employees" to oblig payy for "property damage" to any "auto" rented or leased by you or any of your "employees". g. That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement. Paragraphs f. and g. do not include that part of any contract or agreement: (1) That indemnifies a railroad for "bodily injury" or "property damage" arising out of construction or demolition operations, within 50 feet of any railroad property and affecting any railroad bridge or trestle, tracks, road-beds, tunnel, underpass or crossing; (2) That pertains to the loan, lease or rental of an "auto" to you or any of your "employees", if the "auto" is loaned, leased or rented with a driver; or

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(3) That holds a person or organization engaged in the business of transporting property by "auto" for hire harmless for your use of a "covered auto" over a route or territory that person or organization is authorized to serve by public authority. 10. "Leased worker" means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. "Leased worker" does not include a "temporary worker". 11. "Loading or unloading" means the handling of property: a. After it is moved from the place where it is accepted for movement into or onto an aircraft, watercraft or "auto"; b. While it is in or on an aircraft, watercraft or "auto"; or c. While it is being moved from an aircraft, aft, watercraft or "auto" to the place where it is finally delivered; but "loading or unloading" does not include nclud the movement of property by means of a mechan mechanical device, other than a hand truck, that at is not no attached to the aircraft, watercraft or "auto". ". 12. "Mobile equipment" means any ny of the following cluding any attached attache types of land vehicles, including machinery or equipment: a. Bulldozers, farm machinery,, forklifts and other ed for use principally ncipally off public vehicles designed roads; b. Vehicles maintained to ned for use solely on n or next n premises you own or rent; cles tha c. Vehicles that travel on crawler treads; hicles self propelled or not, d. Vehicles, whether self-propelled inta prov obil maintained primarily to provide mobility to permanently manently mounted: mounte (1) Power loaders, diggers or wer cranes, shovels, shove , loa drills; or re (2) Road construction or resurfacing equipment such as graders, scrape scrapers or rollers; cribed in i Paragraph a., b., c. e. Vehicles not described or d. above that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types: (1) Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment; or (2) Cherry pickers and similar devices used to raise or lower workers;

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f. Vehicles not described in Paragraph a., b., c. or d. above maintained primarily for purposes other than the transportation of persons or cargo. However, self-propelled vehicles with the following types of permanently attached equipment are not "mobile equipment" but will be considered "autos": (1) Equipment designed primarily for: (a) Snow now removal; r (b) Road maintenance, but not construction or resurfacing; or (c) Street cleaning; cleaning (2) Cherryy pickers and a similar devices mounted on automobile mobile or truck chassis and used to raise or lower wer workers; and Air compressors, (3) A sors, pumps and generators, including spraying, inclu aying, welding, building cleaning, clean g, geophysical g p sica exploration, lighting and d well servicing equipment. However,, "mobile equipment" does not include H e land vehicles la es that tha are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. Land vehicles subject to a pr compulsory or financial responsibility law or com other motor vehicle insurance law are considered "autos". 13. means an accident, including 3 "Occurrence" "Oc continuous or repeated exposure to substantially the same general harmful conditions. 14. "Personal and advertising injury" means injury, including consequential "bodily injury", arising out of one or more of the following offenses: a. False arrest, detention or imprisonment; b. Malicious prosecution; c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor; d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; e. Oral or written publication, in any manner, of material that violates a person's right of privacy; f. The use of another's advertising idea in your "advertisement"; or g. Infringing upon another's copyright, trade dress or slogan in your "advertisement".

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15. "Pollutants" mean 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. 16. "Pollution cost or expense" means any loss, cost or expense arising out of any: a. Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, "pollutants"; or b. Claim or suit by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of, "pollutants". 17. "Products-completed operations hazard": a. Includes all "bodily injury" and "property erty damage" occurring away from premises mise you u own or rent and arising out of "your product" produc or "your work" except: (1) Products that are still in your physical possession; or (2) Work that has not yet or et been completed o abandoned. However, r, "your work" will be deemed completed at the earliest of the following times: (a) When alll of the work called led for in your contract has been co completed. d (b) When all off the work to be done ne at the job site hass been completed complete iff your you contract calls for work at more than one contr th on job jo site. (c) that part off the work done at a job c) When W w site has been p put to its intended use by any person or or organization other than aniza another contractor racto or subcontractor working on the same am project. Work that may need service, maintenance, s correction, repair but which pair or replacement, re is otherwise complete, will be treated as completed. b. Does not include "bodily injury" or "property damage" arising out of: (1) The transportation of property, unless the injury or damage arises out of a condition in or on a vehicle not owned or operated by you, and that condition was created by the "loading or unloading" of that vehicle by any insured; or

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(2) The existence of tools, uninstalled equipment or abandoned or unused materials. 18. "Property damage" means: a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or b. Loss of use of tangible property that is not physicallyy injured. All such loss of use shall be inju deemed ed to occur at the time of the "occurrence" urrenc that caused it. With respect maintenance or spect to the e ownership, ow use of "covered overed autos", autos property damage also includes "pollution lution cost co or expense", but only to the extent that exists under the at coverage ex "underlying insurance" existed but "unde ance" or would have h forr the exhaustion off the underlying e underlyin limits. For of thiss insurance, with respect to Fo the he purposes pur insura other ownership, m maintenance or use of othe than han the ownersh "covered autos", data is not tangible "cov autos electronic electro property. rop As u used in thiss definition, electronic data means def information, facts or programs stored as or on, info created or used on, or transmitted to or from crea computer software (including systems and compu applications software), hard or floppy disks, CDplicati ROMs, Ms tapes, drives, cells, data processing devices or any other media which are used with de electronically controlled equipment. ele 19. "Retained limit" means the available limits of "underlying insurance" scheduled in the Declarations or the "self-insured retention", whichever applies. 20. "Self-insured retention" means the dollar amount listed in the Declarations that will be paid by the insured before this insurance becomes applicable only with respect to "occurrences" or offenses not covered by the "underlying insurance". The "selfinsured retention" does not apply to "occurrences" or offenses which would have been covered by "underlying insurance" but for the exhaustion of applicable limits. 21. "Suit" means a civil proceeding in which damages because of "bodily injury", "property damage" or "personal and advertising injury" to which this insurance applies are alleged. "Suit" includes: a. An arbitration proceeding in which such damages are claimed and to which the insured must submit or does submit with our consent; or

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b. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent or the "underlying insurer's" consent. 22. "Temporary worker" means a person who is furnished to you to substitute for a permanent "employee" on leave or to meet seasonal or shortterm workload conditions. 23. "Ultimate net loss" means the total sum, after reduction for recoveries or salvages collectible, that the insured becomes legally obligated to pay as damages by reason of settlement or judgments or any arbitration or other alternate dispute method entered into with our consent or the "underlying insurer's" consent. 24. "Underlying insurance" means any policies of insurance listed in the Declarations under the Schedule of "underlying insurance". 25. "Underlying insurer" means any insurer who provides any policy of insurance listed in the Schedule of "underlying insurance". 26. "Volunteer worker" means a person who is not your "employee", and who donates his orr her wo work and acts at the direction of and within the scope of duties determined by you, and is not paid d a fee, salary or other compensation n by you or anyone else for their work performed d for you.

b. Includes: (1) Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your product"; and (2) The providing of or failure to provide warnings or instructions. c. Does not include vending machines or other property rented to or located for the use of others but ut not sold. 28. "Your work": rk": a. Means: ns: (1) Work operations performed by you or on rk or operation your behalf; and equipment furnished in ((2) Materials,, parts or equipm connection with such work o or operations. b. Includes: Includ (1) Warranties or representations made at any Warra rese time respect to the fitness, quality, me with respec durability, performance or use of "your ability, perform work"; and (2) The providing of or failure to provide (2 vid warnings or instructions.

27. "Your product": a. Means: (1) Any goods or pro products, other her than real property, manufactured, sold, manufacture d, handled, distributed or disposed of by by: (a) You; You (b) b) Others Othe trading under your name; or (c) c) A person or organization whose w business or assets bu ts you yo have acquired; and (2) Containers materials, ners (other than vehicles), vehic parts or equipment furnished fur he in connection with such goods or prod products.

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