Miscellaneous Commercial Insurance Flashcards
- Medical malpractice
- Errors and omissions
- Directors and officers
- Fiduciary liability
- Consent to settle clause
Professional Liability Insurance
Note
Professional liability—liability arising out of rendering or failing to render services of a professional nature—is excluded under CGL policies. Special professional liability policies have been developed for many professionals, including physicians, surgeons, dentists, lawyers, insurance agents, architects, accountants, and directors and officers of corporations. Each policy is tailored to fit a specific occupational need. Most policies are written on a claims-made basis.
Professionals have two kinds of legal duty to their clients. These are to perform the services for which they were hired, and to perform them in accordance with the appropriate standards of conduct.
Because of their special skills, professionals are held to a higher standard of conduct. Since professional liability coverages are written to cover mistakes made by these professionals, these coverage forms do not cover intentional losses such as fraud or embezzlement.
Professional Liability policies can go by several different names. Medical malpractice is the term commonly applied to medical professional liability policies written for medical professionals or institutions, including physicians, nurses, dentists, surgeons, opticians, optometrists, chiropractors, and veterinarians. Errors and omissions (E&O) is a broad term that refers to professional liability policies written for other professionals, such as insurance agents, accountants, architects, stockbrokers, engineers, consultants, and attorneys.
Another type of professional liability policy, the fiduciary liability policy, protects those who manage private pension and employee benefit plans against liability for violation of the Employee Retirement Income Security Act of 1974 (ERISA), which governs employer-sponsored retirement plans.
An insurance agent has liability exposure and needs to be properly insured under an E&O policy. E&O insurance is also appropriate for directors and officers of corporations who may be sued as individuals by stockholders. Directors and officers have no coverage under a CGL for personal liability, and they also have no coverage under the homeowners contract for liability arising out of business pursuits. This exposure is properly insured under a type of E&O insurance called directors and officers liability.
Professional liability—liability arising out of rendering or failing to render services of a professional nature—is excluded under CGL policies. Special professional liability policies have been developed for many professionals, including physicians, surgeons, dentists, lawyers, insurance agents, architects, accountants, and directors and officers of corporations. Each policy is tailored to fit a specific occupational need. Most policies are written on a claims-made basis.
Professionals have two kinds of legal duty to their clients. These are to perform the services for which they were hired, and to perform them in accordance with the appropriate standards of conduct.
Because of their special skills, professionals are held to a higher standard of conduct. Since professional liability coverages are written to cover mistakes made by these professionals, these coverage forms do not cover intentional losses such as fraud or embezzlement.
Professional Liability policies can go by several different names. Medical malpractice is the term commonly applied to medical professional liability policies written for medical professionals or institutions, including physicians, nurses, dentists, surgeons, opticians, optometrists, chiropractors, and veterinarians. Errors and omissions (E&O) is a broad term that refers to professional liability policies written for other professionals, such as insurance agents, accountants, architects, stockbrokers, engineers, consultants, and attorneys.
Another type of professional liability policy, the fiduciary liability policy, protects those who manage private pension and employee benefit plans against liability for violation of the Employee Retirement Income Security Act of 1974 (ERISA), which governs employer-sponsored retirement plans.
An insurance agent has liability exposure and needs to be properly insured under an E&O policy. E&O insurance is also appropriate for directors and officers of corporations who may be sued as individuals by stockholders. Directors and officers have no coverage under a CGL for personal liability, and they also have no coverage under the homeowners contract for liability arising out of business pursuits. This exposure is properly insured under a type of E&O insurance called directors and officers liability.
Note
The CGL coverage form does not cover businesses that sell or serve alcohol (bars, restaurants, liquor stores, etc.) for liability arising from this exposure. Therefore, there is a need for a separate form to cover this liability risk.
This form provides coverage for bodily injury and property damage for which the insured may become liable as a result of contributing to a person’s intoxication. The laws governing this risk exposure vary from state to state.
This form may also be called dram shop coverage. A dram shop literally refers to a bar, tavern, or place where alcoholic beverages are served.
The CGL coverage form does not cover businesses that sell or serve alcohol (bars, restaurants, liquor stores, etc.) for liability arising from this exposure. Therefore, there is a need for a separate form to cover this liability risk.
This form provides coverage for bodily injury and property damage for which the insured may become liable as a result of contributing to a person’s intoxication. The laws governing this risk exposure vary from state to state.
This form may also be called dram shop coverage. A dram shop literally refers to a bar, tavern, or place where alcoholic beverages are served.
- Not covered by the CGL
- Businesses that sell or serve
- Bodily injury or property damage as result of contributing to a person’s intoxication
- Also called dram shop (A dram is a unit of measurement equal to oneeight of an ounce.)
Liquor Liability
The CGL excludes losses arising out of wrongful termination, discrimination, sexual harassment, and other employment-related practices. This coverage is provided by employment practices liability (EPL) insurance.
EPL covers a company and its directors, officers, and current and former employees against claims or lawsuits regarding inappropriate workplace behavior. The policy covers legal costs, whether the
company wins or loses the suit. Here are some examples of actions that are covered by an EPL policy:
■ Discrimination ■ Harassment ■ Failure to promote ■ Retaliation ■ Wrongful termination
- Not covered by CGL
* Only policy that covers discrimination
Employment Practices Liability
Aviation Liability insurance for owners of aircraft includes coverage for:
■ Legal liability to third parties (other than passengers)
■ Bodily injury to passengers
■ Property damage
■ Medical payments
Aviation physical damage coverage, called aircraft hull insurance, is much like the comprehensive and collision coverages provided by auto insurance. It covers the complete aircraft, including its airframe, engines, controls, and electronic navigation and communications equipment. It does not cover personal effects. Either a fixed dollar or a percentage of the loss deductible usually applies. Coverage can be provided while the aircraft is:
■ in the air or on the ground;
■ on the ground only; or
■ not in motion under its own power.
The declarations indicate what coverage applies and any special restrictions or deductibles.
- Similar to auto collision and comprehensive
- Also called hull coverage
- May be covered:
- in the air or on the ground;
- on the ground only; or
- not in motion under its own power
Aviation Physical Damage Coverage
A commercial umbrella policy provides coverage in three situations:
- Policy Limits apply to lose
- a loss is excluded under a underlying contact
- Previous losses reimbursed under an underlying policy
■ The policy limits applying to a loss under an underlying policy have been exhausted.
■ A loss is excluded under an underlying contract but not excluded under the umbrella. (The insured must first meet the retention—deductible limit.)
■ Previous losses reimbursed under an underlying policy have reduced its aggregate limit so that a subsequent loss is not fully covered.
- Businesses that need high limits
- Requires underlying policies
- Primarily excess coverage
Commercial Umbrella
__is property insurance that covers high severity, low frequency perils—the exact opposite of what is
normally accepted by insurance companies
Difference in Conditions (DIC) Insurance
- Unique property coverage written for catastrophic exposures
- High deductibles
- No coinsurance requirements
Difference in Conditions
__is provided by carriers that do not need to be filed with a state insurance department in order to offer coverage.
Surplus Lines insurance
Although there are variations from one state to another, generally, three conditions must be met before surplus lines insurance may be obtained from an unauthorized insurer:
- Summary
Obtain insurance from a licensed surplus lines producer, agent, or broker - can’t obtain insurance from authorized insurers
- ## can’t solely get surplus lines for better or lower premium than an authorized insurer can provide.■ The business must be obtained through a licensed surplus lines producer, agent, or broker.
■ It is determined after a diligent search that the full amount of insurance cannot be obtained from authorized insurers who market the insurance in the state.
■ Coverage may not be obtained as a surplus lines coverage solely for the purpose of obtaining a better contract or a lower premium than an authorized insurer can provide.
