commerical package policy Flashcards
Common Policy Declarations
provides information as to who, what, when, where and how much. It will include the insurance company name, the named insured, policy period, business description, coverage parts, premium, and policy forms. All policies take effect on 12:01 AM at the mailing address of the insured listed in the policy. It contains the list of 7 coverage parts followed by the appropriate premium if there is coverage for the part, but no premium listed if the part is not included in the package.
Common policy conditions
- Cancellation - the first named insured has the right to cancel the policy and receive a premium refund. The insurer must give 30 days written notice for any allowed cancellation or nonrenewal except for nonpayment, but only 10 days notice for nonpayment of premium.
- Changes - only the first named insured may ask for changes.
- Examination of books and records - the insurer may examine books and records up to five years after cancellation of the policy.
Inspections and surveys - can be made by the insurer at any time regarding insurability in the proper amounts of premiums. - Premiums - other responsibility of the first named insured.
- Transfer of rights and duties - can only be done with permission of the insured except in the death of a named insured.
Interline Endorsements (as needed)
- These are endorsements that apply to more than one coverage part and are included in one page.
One or More Coverage Parts:
- Commercial Property Insurance
- Commercial Inland Marine Insurance
- Boiler & Machinery Insurance (Equipment Breakdown Coverage)
- Casualty coverage might include:
- Commercial General Liability Insurance
- Commercial Auto Insurance
- Commercial Crime Insurance
- Each coverage part also includes their own of the following that apply to only that coverage part:
- Declarations and Conditions
- All of the individual coverage forms
- Endorsements
The following are conditions usually found in Commercial Property Conditions (CPC) Forms:
- Concealment, Misrepresentation or Fraud Coverage
- Control of Property
- Insurance Under Two or More Coverages
- Legal Action against the insurer
- Liberalization
- No benefit to bailee
- Other insurance
- Policy period, coverage territory
- Transfer of rights of recovery against others (subrogation)
- These are described under other sections.
Commercial General Liability (CGL)
- All businesses need CGL to cover the risk of liability. It can be written alone or as part of a commercial package policy.
- It can be written as a Claims-made Form or Occurrence Form. The difference is what triggers the coverage, when the covered event occurred or when it was reported to the insurance company.
- Commercial general liability includes three major liability coverages
Coverage A – Bodily Injury and Property Damage Liability
Coverage B – Personal and Advertising Injury Liability
Coverage C – Medical Payments
Coverage A – Bodily Injury and Property Damage Liability
- Provides protection for injury, sickness, disease or death suffered by 3rd parties or property damage because of the insured’s business activities. Included within the scope of BI & PD are the premises, operations, products and completed operations hazards.
Coverage B - Personal & Advertising Injury Liability
- Covers specific acts that result in injury to another, OTHER THAN physical injury.
- Personal Injury includes injuries caused by your business activities that do not involve bodily injury such as libel, slander, or invasion of privacy.
- Advertising injury- involves no physical injury but occurs when the insured inadvertently injures another during the course of advertising their product or service. It includes libel, slander, copyright infringement, also misappropriation of advertising ideas that occur during the course of advertising.
Coverage C - Medical Payments
- Coverage provides medical, surgical, ambulance, hospital, professional nursing or funeral expenses for injuries to 3rd parties (not the insured or employees) that are the result of your business activities or occur on the business premises without regard to fault or negligence that are incurred & reported within 1 year of the date of the accident.
Supplementary Payments
these are the amounts the insurer will pay ‘in addition’ to the stated policy limits for :
- All expenses incurred by the insurance company
- up to $250 for the cost of bail bonds
- cost bonds to release attachments
- reasonable expenses incurred by the insured at the - request of the insurance company to assist in the in the defense of claim including $250 per day for loss of earnings
- court costs assessed against the insured in a suit
any prejudgment or postjudgment interest - defense costs for an insured
- The insurer’s duty to defend ceases when the aggregate limit or the per occurrence limit of the policy is reached by payment toward a claim.
Who is Insured
Who is Insured –depends on the legal entity of the business.
- Sole proprietor - covers the named insured and spouse
- Partnership - covers the named insured partners and their spouses in connection with conducting business
- Limited Liability Company- covers the named insured and members with regard to conducting business and managers in connection with their duties as managers
- Corporation - covers the named insured, covers executive officers and directors in conducting business, and covers stockholders only for their liability as stockholders
In all CGL policies, the insured employees while conducting their business duties, volunteer workers while performing duties for the business, a real estate manager while performing his duties for the named insured, and if the insured dies, anyone having temporary custody of the insured property or a legal representative with respect to the business are all insured under the commercial general liability policy. Newly formed and acquired organizations owned by the named insured are covered up to 90 days, or until the end of the policy period, or until covered by another policy, whichever occurs first.
Limits of Liability –
- Per occurrence limit – maximum amount payable per occurrence or accident for Coverage A BI and PD and Coverage C Med. Payments; despite the number of claims. It applies to both Premises/Operations & Products/Completed Operations.
- General aggregate limit – maximum the insurer will pay for all losses during a policy period for Coverage A, B and C that applies to Premises/Operations.
- There is a separate Products/Completed Operations aggregate limit
- There is a separate Personal and Advertising Injury limit – it is also subject to the General aggregate limit
- A separate limit is included for Fire Damage Legal – for fire damage to premises rented to the insured that the insured is legally liable for.
- Medical expense limit - the maximum paid under coverage C for one person and is subject to the per occurrence and General aggregate limit.
Conditions
the conditions the insured is obligated to perform include:
Duties in the event of an offense:
1) The insured is responsible to notify the insurer as soon as practical of any occurrence that may result in liability with the details of the occurrence and names and addresses of any injured parties and witnesses.
2) Notify the insurer of any notices of a claim or suit
3) Authorize the insurer to obtain records
4) Cooperate with the investigation, settlement, or defense
5) Assist the insurer to enforce its rights against third parties
6) And not voluntarily make a payment, assume an obligation, on card expense, other than first aid, without the insurer’s consent, unless the insured does it at his own cost.
- Nonrenewal - 30 days written notice before the expiration date.
- Other insurance - if the commercial general liability policy is primary and other primary insurance applies to the same loss, the loss will be provided by contribution by equal shares if specified by all policies involved or contribution by limits if not.
- Contribution by equal shares -requires all policies contribute equally up to the limit of the policy with the lowest limit then the remaining policies share the remainder until each its limit or until the loss is paid.
- Contribution by limits- requires the company to pay a proportion of the loss equal to the proportion between its limit and the total amount of insurance of the involved policies.
- Claims information - this condition is included in a claims-made form. The insurer must give the first named insured information regarding claims for the previous three years including a list of each occurrence that the insurer has been notified about and a summary by policy year of payments made and amounts reserved under any applicable general aggregate limit and products/completed operations aggregate limit. The insurer must provide this no later than 30 days before terminating the policy if the insurer terminates the policy. If not, it must provide the information to the first named insured within 60 days of the end of the policy or within 45 days after a written request.
Definitions
- this section of the policy contains the insurance specific terms used in the policy.
- Auto - a motor vehicle, trailer, or semitrailer, including attached equipment, designed for travel on public roads or subject to financial responsibility laws. The definition does not include mobile equipment.
- Mobile equipment - land vehicles including construction equipment designed for use off public roads, vehicles solely for use on the insured’s premises, vehicles on crawler treads, vehicles primarily to move permanently mounted construction equipment, and vehicles that are not self-propelled to provide mobility to equipment, and any other vehicles that is not for transportation of persons or cargo. Self-propelled equipment such as snowplows, street cleaners, cherry pickers, air compressors, generators and similar equipment mounted on automobile or truck chassis and any vehicles subject to financial responsibility laws are considered to be autos, not mobile equipment.
- Coverage territory - the United States of America including territories and possessions, Puerto Rico, and Canada. All parts of the world are included for injuries or damage from goods or products made or sold in the coverage territory , or from activities of a person from the coverage territory who is out of the territorial business for the insured, or personal and advertising injuries through the internet.
- Loading or unloading - handling property without device other than a hand truck after its received for transfer into or onto an aircraft, watercraft, or auto; while it is in or on an aircraft, watercraft, or auto; or while it is moved from of aircraft, watercraft or auto to its site of delivery.
- Pollutant - any solid, liquid, gaseous, or thermal substance that is considered an irritant or contaminant.
- Premises/Operations liability - all bodily injury and property damage occurring on the business premises or from products still in the insured’s possession, or work that has not yet been completed or delivered.
- Products/completed operations liability - all bodily injury and property damage occurring off the business premises from the insured’s work or from products completed and delivered.
- Insured’s product - any object other than real property that is manufactured, sold, distributed, or disposed of by the insured including containers, related materials, warranties or representations with respect to the quality or performance of the product, and the providing or failure provide warnings or instructions.
- Insured’s work - includes operations conducted by or for the insured and any materials or equipment in connection with the operation, warranties or representations with respect to the quality performance of the work and the providing or failure to provide warnings or instruction
- Leased worker - a person leased to the insured business by a labor leasing firm.
- Temporary worker - a substitute for a permanent employee on leave, or to meet a short term workload need.
- Employee - includes leased workers, but not temporary workers.
- Volunteer worker - works under the direction of the insured business, but is not paid and not considered an employee.
Exclusions
- Coverage A - exclusions include intentional injury, liability assumed under a contract, liquor liability, anything covered by worker’s compensation, most pollution related losses, or liability from use of autos, aircraft, or watercraft. The policy will cover liability assumed under a contract if it is for things the business would normally be liable for even without the agreement.
- Coverage B (Personal and Advertising Injury) exclusions include knowingly violating others rights, knowingly publishing false material, criminal acts committed by or under direction of the insured, liability assumed under a contract the business would normally not be liable for, breach of contract, failure of work or products to fulfill advertised promises, incorrect descriptions or prices, any liability by an insured in a media, advertising, or Internet business, copyright, patent or trademark infringement other than advertisement of a copyright or slogan, any offense by someone in an internet related business, or by a internet chat room or bulletin board of the insured, or unauthorized use of another’s name or product in an e-mail address or domain name, or out of acts of war, or violations of the law including those related to do not call lists or spam.
- Coverage C (Medical Payments) exclusions include injuries to any insured, tenant or employee of the insured, or a person injured while occupying part of the insured premises, injuries payable under worker’s compensation, injuries that occur to a person taking part in athletics, injuries included in products/completed operations liability, injuries excluded under Coverage A, and injuries related to an act of war.
A claims-made form and an occurrence form.
- There are two types of liability claim form choices:
- Occurrence – pay claims for liability losses that occur during the policy period even if the loss was not discovered or reported for years after the policy expired
- Claims-made– pays for liability losses reported during the policy period (so long as the loss occurred on or after the retroactive date.
- Retroactive Date – to protect against insuring occurrences and before the policy was written, there is a retroactive date. The policy will cover claims reported during the policy period, but only if the occurrence was after the retroactive date. The retroactive date is often the original date the policy with the insurance company was written, but a policy replaces another claims made policy, they may carry forward the same retroactive date to prevent a gap in coverage.
- Mini-tail - if a claims-made form is canceled, not renewed, or replaced with a policy with a later retroactive date or an occurrence form, there is an extended reporting period of 60 days beyond the expiration date of the policy that a claim can be reported to the insurance company. This is often referred to as a mini-tail.
- Basic Extended Reporting Period - if an occurrence is reported during the policy period or the 60 day mini-tail, coverage for the occurrence will extend up to five years.
- Extended Reporting Period Endorsement - if an insured terminates the business or switches to an occurrence form this endorsement will cover any event that occurred during the policy period or is reported or the claim is made during the policy period or including the extended reporting period. This supplemental extended reporting period effectively changes the policy to both a claims-made and occurrence form for one year for a significant additional premium (up to 200%).
The Coverage Trigger
- The Coverage Trigger is what makes a policy respond to a claim.
- Claims-made trigger – the policy in force responds
Based on the date the claim is first made in writing against an insured for injury or damage reported during the policy period (so long as the loss occurred on or after the retroactive date). - Occurrence trigger – the policy in force when the event occurred responds
Based on the date when injury/damage occurs and covers claims made at any time for injuries that occur during the policy period even if the loss is not discovered or reported until months or years after the policy expired.
