Chapter 8

Question 1

What are the four subsections of a CGL policy?

Answer 1

Coverage A- bodily injury and property damage liability
Coverage B- personal and advertising injury liability
Coverage C- medical payments
Coverage D- tenants legal liability

Question 2

Define negligence

Answer 2

Failure to use the degree of care expected from a reasonable and prudent person

Question 3

Define compensatory damages

Answer 3

A sum of money to which a plaintiff is entitled that makes amends for an actual loss sustained and nothing more

Question 4

What are the exclusions under a CGL policy?

Answer 4

Injury to employees
Automobile, watercraft, and aircraft
Care, custody or control-does not cover personal property of the insured is using it or holding in for someone else
Pollution

Question 5

Define named insured, additional insured, additional named insured, and subsidiary

Answer 5

Named insured-party contracting with the insurer
Additional insured-an entity that is insured with respect to liability arising out of the operations of the named insured only
Additional named insured- effectively the same as a named insured. Policy affords protection for all that entities legal liabilities
Subsidiary- 50% or more is owned by the parent company

Question 6

Explain the policy territory under a CGL wordings

Answer 6

Provides coverage for losses anywhere in the world, but requires lawsuits to be brought in Canada or the United States

Question 7

Define drop-down coverage

Answer 7

A clause in umbrella policies, providing that the umbrella will “drop down” over reduced or exhausted, underlying policy aggregate limits. Some umbrellas maintain their own coverage terms when they drop down; others assume those of the primary policy

Question 8

Explain excess policy

Answer 8

Excess liability insurance supplements coverage by adding other layers of insurance above the primary or underline policy
Excess policies respond once the primary policy is exhausted

Question 9

Explain follow-form and standalone excess liability

Answer 9

Follow-form- provisions of the excess policy will follow the requirements of the primary policy
Standalone-have distinct insurance agreements, conditions, definitions, exclusions, and all the other parts that make up policy wording. It can be identical to primary or more restrictive

Question 10

Explain umbrella insurance

Answer 10

Takes effect when the underlying policy limits are exhausted
Can provide coverage for losses excluded on the underlying policy
Higher liability limits and broader coverage

Question 11

What case brought up excess liability and umbrella policies in regards to defence causes? What was the outcome?

Answer 11

Alie vs Bertrand & frere construction
-From this case, it led to the influence of whether or not a policy will respond to the pay of the judgement
-Covers defence when stands in place of primary

In this case, the Ontario appeals court allocated, the defence cost between the primary and excess insurers

Question 12

What type of occupations would fall under professionals?

Answer 12

Accountants
Lawyers
Insurance brokers
Doctors
Dentists
Other medical practitioners

Question 13

Define professionals

Answer 13

Those who hold themselves out as having a special body of knowledge, skill, or experience

Question 14

Define claims made basis policy

Answer 14

A provision in some insurance and reinsurance contracts covering only claims made during the term of the contract

Question 15

Define occurrence basis policies

Answer 15

Under liability policy a basis for coverage on which the policy responds to a claim for a covered incident that occurred during the policy regardless of when the claim is made

Question 16

Define directors and officers liability insurance

Answer 16

Protection for officers and Directors of a corporation against damages, resulting from negligence or wrongful acts in the course of their duties
Also covers the corporation for expenses incurred in defending lawsuits arising from alleged wrongful acts of officers or directors
These policies always require the insured to retain part of the risk uninsured

Question 17

Define fiduciary

Answer 17

A person to whom the administration of something is entrusted for the benefits of another
The fiduciary has a greater legal obligation than others to discharge duties honestly and diligently

Question 18

Define bailor, Bailee, and bailment

Answer 18

bailor- owner of the property who temporarily transferred the possession of the property to another
Bailee-party who received the property for an agreed period. Bailee owes a legal duty of care to the bailor to take care of such property.
bailment-the active placing or transferring goods for bailor to a Bailee

Question 19

Explain warehouseman legal liability (WLL)

Answer 19

Protects warehouses from loss or damage to the property of others in their care, custody, or control arising from their legal liability for the property
Legal liability can arise out of tort or contract
Underwriters will want to see a copy of the agreement between warehouser and client

Question 20

Explain employers liability insurance

Answer 20

Coverage for the legal liability imposed on an employer to pay damages to an employee injured by the employers negligence.
This is not Worker’s Compensation insurance, where special acts of legislation set out specifically the relationship between the employer and employees in certain circumstances, and the formula by which awards in each case are computed

Question 21

Explain voluntary compensation insurance

Answer 21

Protection the employer may purchase to cover employees who are not covered by Worker’s Compensation insurance

Question 22

What are the situations in which pollution is available under CGL policy?

Answer 22

Legal liability arising of certain hostile fires
Bodily injury or property damage due to an accidental escape of operational fluids that form part of a storage component to hold fluids (example fuel tank)

Question 23

If pollution coverage is offer under a CGL policy what are the conditions?

Answer 23

Loss must be sudden an accidental
Lower limits of coverage and deductibles usually apply
Clean up costs are covered but long-term cost of monitoring the site where the spill occurred are excluded

Question 24

What losses are usually excluded under cyber risk insurance?

Answer 24

Reputation damage
Lost intellectual property
Some class-action lawsuits
Future losses, such as the loss of competitiveness

Question 25

Explain vendors liability

Answer 25

Endorsement that can be added to the manufacturers or distributors CGL policy to protect vendors from injuries incurred by others due to faulty or toxic products they are selling or distributing on behalf of a manufacturer