9.1 - CGL Policy Declarations Flashcards
Describe the information contained in the declarations page of a CGL policy
Items in a CGL policy Declaration
- Insuring company/agent/broker
- Named insured
- Policy period
- Limits of Insurance
- Form of Business
- Type of Business
- Premises owned, rented, or occupied by insured
- Premium
- Endorsements
- Countersigned
-numerous other liability policies and endorsements are required for specific situations
-where possible, IBC forms have been used as a standard for study
-some insurer use variations of these forms or design their own versions
Items in a CGL policy Declaration - 1. Insuring company/agent/broker
-the name of the insuring company and the name of the agent or broker
Items in a CGL policy Declaration - 2. Named insured
-the ‘named insured’ is the party contracting with the insurer
-the first named insured enjoys the benefits of the policy and has the duties and obligation set forth in the contract
-obligations include paying the premium, recording information for premium computation, and having sole authority to request policy changes during the policy term
-the mailing address of the named insured also appears on the declarations
-it does not detail the location of coverage, as premises the insured owns, rents, or occupies are declared separately
Definition - “policy period”
Duration of policy, most often one year in property and casualty insurance. Also called “policy term”
Items in a CGL policy Declaration - 3. Policy period
-the ‘policy period’ is usually written for an annual period
-an insurer may write policies for shorter or longer periods
-varying the term of the policy may affect aggregate limit
-the standard expiration time is 12:01am, standard time, at the mailing address of the named insured
-an insured that changes insurers may have a gap in coverage if the time period and place expressed in a replacing policy are not identical
-for example, if the insured changes its mailing address from Halifax to Edmonton, the change in the time zone will create a coverage gap of a few hours
Items in a CGL policy Declaration - 4. Limits of Insurance
-the ‘limits of insurance’ are inserted for each applicable item and a deductible amount is shown if it is applicable
-the main CGL wording contains the explanation of how limits are to be applied
-the limits categories are as follows:
> each occurrence limit
> personal and advertising injury limit for any one person or organization
> medical expense limit for any one person
> general aggregate limit
> tenants legal liability for any one premises
> products or completed operations aggregate limit
Items in a CGL policy Declaration - 5. Form of Business
-the insured indicates its ‘form of business’, which categorizes the legal nature of the named insured
-Six choice are available:
1. Individual
2. Joint Venture
3. Partnership or limited liability partnership
4. Trust
5. Limited liability company
6. Any other organization
-this information helps to analyze who qualifies as an insured under the policy
-the type of business in which the named insured is involved is described to set a boundary for the risk the underwriter has accepted
Items in a CGL policy Declaration - 6. Type of Business
-the ‘type of business’ is then described
-this is the actual description of the business that the insured is engaged in - for example, garage, restaurant, body shop or hotel
-this helps to describe and set boundaries for the risk that the underwriter has accepted
Items in a CGL policy Declaration - 7. Premises Owned, rented or occupied by insured
-all the premises owned, rented, or occupied by the insured are listed to allow the underwriter to evaluate and rate the risk
-note that the medical payments insuring agreement in the CGL policy wording mentions premises the insured owns or rents as a criterion for coverage
Definition - “advance premium”
(1) The premium charged at the inception of the policy is the advance, provisional, or deposit premium
(2) The premium paid at the inception of a policy but subject to adjustment during the policy period or at the end of the term
Items in a CGL policy Declaration - 8. Premium
-the ‘premium’ base and rate are identified
-the risk is classified and coded according to the IBC or the insurer’s statistical plan
-the revenue a business generates is a popular base used to calculate premium
-the rate is generally expressed on a per-mille (thousand) basis
-for example, an insured may project revenue of $1 million. The prescribed rate is $2 per thousand, making the premium $2000
-the premium for an insurance policy is payable in advance of the policy term
-it is referred to as the “advance premium”
-the advance premium is a deposit premium
-the total premium includes any applicable taxes
-when the premium is substantial, the insured may arrange to pay by instalment
-if necessary, an audit period will be determined - annually, semi-annually, quarterly, or monthly
-further premium may become payable upon premium calculations performed for determined audit periods
-a minimum retained premium is stated because once a policy is issued the insurer must cover the disproportionate initial costs associated with processing the policy
-this amount will not be refunded even if the policy is cancelled by the insured soon after inception
Items in a CGL policy Declaration - 9. Endorsements
-any ‘endorsements’ that apply to the policy are shown on the declaration
Items in a CGL policy Declaration - 10. Countersigned
-the declarations page is ‘countersigned’ by the broker or other authorized representative of the insurer
-the countersignature is a secondary confirmation that the document is authentic
-the primary signature is usually that of the insurer’s chief executive officer
-most insurers preprint the signature of the designated officer on the document
