Insuring Commercial Casualty
The National Alliance for
Insurance Education & Research
Austin, Texas
Legal Liability
© 2009 The Society of CISR, Inc.
Learning Objectives
1. Identify and explain sources of liability
2. Explain the types of legal liability and how
they can be created
3. Describe the types of damages that may
be covered by a liability insurance policy
© 2009 The Society of CISR, Inc.
Liability Defined
• A responsibility or obligation to others,
which courts recognize and enforce
© 2009 The Society of CISR, Inc.
Sources of Liability
• Premises
• Operations
• Products
• Completed Operations
• Ownership, Maintenance or Use of Autos
© 2009 The Society of CISR, Inc.
Sources of Liability
• Ownership, Maintenance or Use of Other
Conveyances
• Employing Workers
• Liquor
• Environmental Impairment
• Professional Activities
• Bailee Liability
© 2009 The Society of CISR, Inc.
Liability Triggers
• Direct Liability: Your Conduct
• Vicarious Liability: Conduct of Others
- Employer and Employee
- Agency and Principal
- Contractor and Subcontractor
- Owner and Manager
- Owner and Independent Contractor
© 2009 The Society of CISR, Inc.
Legal Liability
• Previously defined as a responsibility or
obligation to others, which the courts
recognize and enforce
© 2009 The Society of CISR, Inc.
Types of
Legal Liability
Torts
Negligence
Intentional Torts
Strict Liability
Absolute Liability
© 2009 The Society of CISR, Inc.
Statutes
Modify
Common Law
Contracts
Assumption
of Liability
Breach of
Contract
Torts
• Negligence
Duty Owed
Breach of that Duty
Four Elements
of Negligence
Damages
© 2009 The Society of CISR, Inc.
Proximate Cause
Person required to operate
an automobile safely
Person runs a red light
Duty Owed
Breach of that Duty
Four Elements
of Negligence
Damages
Proximate Cause
Property damage to the other
car and bodily injury to the
other driver
The breach of the duty caused
the BI and PD
© 2009 The Society of CISR, Inc.
Intentional Torts
• Intentional or voluntary act which results in
injury or loss to another
–
–
–
–
–
–
–
Libel
Slander
Wrongful entry or wrongful eviction
Assault and/or battery
Wrongful detention
False arrest
Copyright infringement, trademark
infringement, etc.
© 2009 The Society of CISR, Inc.
Strict Liability
• Concept applied in product liability cases
• Manufacturer, distributor, or seller is liable
for any and all defective or hazardous
products which unduly threaten a
consumer’s health and safety
• Consumer only has to prove the defect
and damages
© 2009 The Society of CISR, Inc.
Absolute Liability
• Liability without regard to fault or
negligence
• Applies when known or unusual conditions
are allowed to exist
• Applies regardless of the care exercised
• Includes dynamite, gasoline, chemicals,
explosives, wild animals in captivity,
domestic animals known to be abnormally
dangerous, etc.
© 2009 The Society of CISR, Inc.
Statutory Liability
• Rule or law enacted by a legislative body
providing direction or prohibition
• Statutes override common law
• Examples:
– Workers Compensation
– Dram Shop or Liquor Liability
– EEOC & Employment Related
– ADA
© 2009 The Society of CISR, Inc.
Contractual Liability
• Agreement between two or more parties
• Obligation to do or not to do a particular
thing
• One party assumes the financial
consequences or certain liabilities of
another
© 2009 The Society of CISR, Inc.
Contractual Liability
• Parties Commonly Involved
– Lessor/Lessee
– Owner/Contractor
– Contractor/Subcontractor
– Manufacturer/Distributor
© 2009 The Society of CISR, Inc.
“Insured Contracts”
• Specific Types of Contracts that will be
Defined in Liability Policies
• Not All Contracts are “Insured Contracts”
• Breach of Contract Not Typically Covered
by Liability Insurance Policies
© 2009 The Society of CISR, Inc.
Damages
• Compensatory
– Sums of money that will compensate for
the loss
– Includes Special Damages and General
Damages
– Represents the combined total of
monetary losses actually sustained by
the plaintiff
© 2009 The Society of CISR, Inc.
Damages
• Special Damages
– Specific dollar amounts that cover
medical bills, lost income, etc.
• General Damages
– Subjective dollar amounts to cover
intangible losses such as pain &
suffering, loss of consortium, etc.
© 2009 The Society of CISR, Inc.
Damages
• Punitive/Exemplary Damages
– Imposed to punish the wrongdoer or
deter conduct in the future
– Statute may restrict the amount or
prohibit insurability
– Policy language may exclude punitive
damages
© 2009 The Society of CISR, Inc.
Summary of Learning Objectives
1. Identify and explain sources of liability
2. Explain the types of legal liability and how
they can be created
3. Describe the types of damages that may
be covered by a liability insurance policy
© 2009 The Society of CISR, Inc.
Commercial General Liability
© 2009 The Society of CISR, Inc.
Learning Objectives
1.
Identify the exposure areas that may be
covered by the Commercial General Liability
Policy Coverage Form
2.
Determine “Who is an Insured” in a
Commercial General Liability Policy for
specific situations
3.
Identify the three major coverage sections of
the Commercial General Liability Coverage
Form and describe the general liability
exposure areas included within each section
© 2009 The Society of CISR, Inc.
Learning Objectives
4.
Identify the limits of insurance of the
Commercial General Liability Coverage
Form and apply the limits to specific loss
situations
5.
Apply the various exclusions of the
Commercial General Liability Coverage
Form
© 2009 The Society of CISR, Inc.
Liability Exposures Covered by the CGL
• Premises
– Owners, landlords, and tenants
– Ownership, maintenance or use
– Operations necessary for the premises
© 2009 The Society of CISR, Inc.
Liability Exposures Covered by the CGL
• Operations
– Activities of the operation
– Includes service and repair away from
the premises while in process
© 2009 The Society of CISR, Inc.
Liability Exposures Covered by the CGL
• Product Liability
– Coverage begins when the product has
left the insured’s premises and is no
longer in the insured’s possession
© 2009 The Society of CISR, Inc.
Liability Exposures Covered by the CGL
• Completed Operations
– Coverage begins when the business
operation is completed
© 2009 The Society of CISR, Inc.
Liability Exposures Covered by the CGL
• Contractual Liability
– Liability arising from an “insured
contract” or other contractual obligations
covered by the policy
© 2009 The Society of CISR, Inc.
Liability Exposures Covered by the CGL
• Contingent Liability
– Liability arising out of work performed for
the insured by someone else
– Protects an insured from the negligence
of an “independent”
© 2009 The Society of CISR, Inc.
Liability Exposures Covered by the CGL
• Personal and Advertising Injury
– Named perils as defined in the policy
© 2009 The Society of CISR, Inc.
Who is an Insured?
Organization
Limited
Liability
Company
Trust
Named
Partnership
Named
Entity
Named
LLC
Named
Trust
Joint Venture
Executive
Officers
You
Trustees
Partners
Directors
Members
Members
Stockholders
Managers
Individual
Partnership or
Joint Venture
Named
Individual
Spouse
Spouses
PLUS OTHERS
© 2009 The Society of CISR, Inc.
Who is an Insured?
• Individual
– Includes spouse with respect to the conduct
of the business
• Partnerships or Joint Ventures
– Entity
– Members, partners and their spouses
• Other Organizations
– Entity
– Executive officers, directors and
stockholders
© 2009 The Society of CISR, Inc.
Who is an Insured?
• Limited Liability Company (LLC)
– Entity
– Members and managers
• Trusts
© 2009 The Society of CISR, Inc.
Who is an Insured - Others
Death
Legal
Representative
if Insured Dies
Person or
Organization
With
Temporary
Custody if
Named Insured
Dies
Employees
Volunteer
Workers
Real Estate
Managers
NEWLY ACQUIRED ORGANIZATION
90 Days or End of Policy Period
DOES NOT INCLUDE:
Partnerships
Joint Ventures
Limited Liability Companies
© 2009 The Society of CISR, Inc.
Who is an Insured - Others
• Employees within scope of employment
• Volunteer worker
• Real estate managers
• Person/Organization with temporary
custody if named insured dies
• Legal representative if named insured dies
© 2009 The Society of CISR, Inc.
Who is an Insured - Others
• Newly acquired or newly formed
organizations
– Earlier of 90 days or end of policy period
– No automatic coverage for partnerships,
joint ventures or LLCs
© 2009 The Society of CISR, Inc.
Definitions
• Auto
– Land vehicle
– Includes attached machinery or equipment
– Land vehicle subject to compulsory or financial
responsibility
– Does not include mobile equipment
• Mobile Equipment
– Defined as six types of land vehicles
– Identifies several types of land vehicles that are
autos and not mobile equipment
© 2009 The Society of CISR, Inc.
Definitions
• Property Damage
– Direct damage and loss of use
• Coverage Territory
– United States
– Territories and Possessions
– Puerto Rico
– Canada
– And . . .
© 2009 The Society of CISR, Inc.
Definitions
• Coverage Territory
– Limited Worldwide if:
• Products made or sold in the coverage territory OR
• Arising out of activity of a person whose home is in
the territory but is away for a short time on insured’s
business OR
• Personal and advertising injury take place through the
Internet or similar communications means
AND
• Liability is determined in a suit brought in the
coverage territory or in a settlement agreed to by the
insurance company
© 2009 The Society of CISR, Inc.
Coverage Sections of the CGL
Coverage Form
• Coverage A – Bodily Injury and Property Damage
– Covered Unless Excluded
• Coverage B – Personal and Advertising Injury
– Named Perils
• Coverage C – Medical Payments to Others
– No Fault Coverage
© 2009 The Society of CISR, Inc.
Coverage Sections of the CGL
Coverage Form
• Coverage A – Bodily Injury and Property Damage
– Caused by an occurrence
– Legal responsibility required
– Duty to defend
– No defense if the loss is not covered
– Exclusions apply
© 2009 The Society of CISR, Inc.
Coverage Sections of the CGL
Coverage Form
• Coverage B – Personal and Advertising Injury
– Caused by a committed offense
– Legal responsibility required
– Duty to defend
– No defense if the loss is not covered
– Named peril coverage
© 2009 The Society of CISR, Inc.
Coverage Sections of the CGL
Coverage Form
• Coverage B – Personal and Advertising Injury
– Injury arising out of one or more of the
following:
• False arrest, detention or imprisonment
• Malicious prosecution
• 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
© 2009 The Society of CISR, Inc.
Coverage Sections of the CGL
Coverage Form
• Coverage B – Personal and Advertising Injury
– Injury arising out of one or more of the
following:
• 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
• The use of another’s advertising idea in
insured’s advertisement
• Infringing upon another’s copyright, trade
dress or slogan in insured’s advertisement
© 2009 The Society of CISR, Inc.
Coverage Sections of the CGL
Coverage Form
• Coverage B – Personal and Advertising Injury
– Exclusions designed to eliminate coverage
for acts within insured’s control
– Internet exclusions apply
© 2009 The Society of CISR, Inc.
Coverage Sections of the CGL
Coverage Form
• Coverage C – Medical Payments to Others
– Caused by an accident
– Legal responsibility NOT required
– Purpose is goodwill and to reduce lawsuits
© 2009 The Society of CISR, Inc.
Coverage Sections of the CGL
Coverage Form
• Coverage C – Medical Payments to Others
– Bodily injury caused by an accident:
• On premises insured owns or rents
• On ways next to premises
• Because of insured’s operations
• Must take place in coverage territory
• Must be reported within one year of
accident
• Exclusions apply
• Separate per person sub-limit of insurance
© 2009 The Society of CISR, Inc.
Coverage Sections of the CGL
Coverage Form
• Supplementary Payments
– Expenses (Defense)
– Bail bonds $250
– Attachment bonds
– Reasonable expenses of insured
– Costs taxed
– Prejudgment and post judgment interest
© 2009 The Society of CISR, Inc.
Coverage Sections of the CGL
Coverage Form
• Damage to Premises Rented to You
– Peril of fire
– Separate per premises sub-limit of
insurance
– Perils other than fire
© 2009 The Society of CISR, Inc.
© 2009 The Society of CISR, Inc.
Products
Completed
Operations
Aggregate
$1,000,000
General
Aggregate
$1,000,000
Personal or
Advertising Injury
Limit
Per Person or
Organization
$500,000
BI & PD
Premises
and
Operations
Each Occurrence
$500,000
Damages to
Premises
Rented To You
Per Premises
Limit
$50,000
Medical
Payments
Per Person
Limit
$5,000
BI & PD
Products &
Completed
Operations
Limits of Insurance
• General Aggregate
• Products-Completed Operations Aggregate
• Importance of Aggregates!
© 2009 The Society of CISR, Inc.
Limits of Insurance
• Each Occurrence Limit
• Personal and Advertising Injury
– Any one person/organization
• Medical Payment Limit
– Any one person
– Subject to Each Occurrence Limit
• Damage to Premises Rented to You
– Per premises limit
– Subject to Each Occurrence Limit
© 2009 The Society of CISR, Inc.
© 2009 The Society of CISR, Inc.
© 2009 The Society of CISR, Inc.
© 2009 The Society of CISR, Inc.
© 2009 The Society of CISR, Inc.
Exclusions
• Expected or Intended Injury
– May use reasonable force
• Contractual
– Still has coverage for damages the
insured would have had without the
contract or agreement
– Still has coverage for an “insured
contract”
© 2009 The Society of CISR, Inc.
WHAT IS AN INSURED CONTRACT?
L
E
A
S
E
+
• Lease of Premises
• Easement/License Agreement Subject to Exception
• Agreement with Municipality Subject to Exception
• Sidetrack Agreement with Railroad
• Elevator Maintenance Agreement
• Tort Liability Assumed by Insured
© 2009 The Society of CISR, Inc.
Exclusions
• Liquor Liability
– If insured is in the business
– Host Liquor is covered
• Workers Compensation
• Employer’s Liability
© 2009 The Society of CISR, Inc.
Exclusions
• Pollution
– Still covers bodily injury caused by smoke, fumes,
vapor or soot from equipment used to heat the building
– Still covers bodily injury or property damage if you are
a contractor and:
• The owner or lessee of the premises, site or
location has been added to your policy as an
additional insured with respect to that additional
insured at that location; and
• Insured has never owned, occupied, rented or
loaned the location to any insured other than that
additional insured
© 2009 The Society of CISR, Inc.
Exclusions
• Pollution
– Still covers bodily injury or property damage arising
out of heat, smoke or fumes from a “hostile fire” –
Premises
– Still covers bodily injury and property damage arising
out of the escape of fuels, etc., needed for the
operation of mobile equipment.
– Still covers bodily injury or property damage arising
out of heat, smoke or fumes from a “hostile fire” –
Operations
– Still covers bodily injury or property damage sustained
within a building and caused by the release of gases,
fumes, etc., from materials brought into that building in
connection with operations being performed by
insured or on insured’s behalf by a contractor or
subcontractor
© 2009 The Society of CISR, Inc.
Exclusions
• Aircraft, Auto or Watercraft
– Still covers watercraft ashore
premise insured owns or rents.
on
– Still covers a non-owned watercraft
that is less than 26 feet long and is not
used to carry people or property for a
charge
© 2009 The Society of CISR, Inc.
Exclusions
• Aircraft, Auto or Watercraft (continued)
– Still provides liability arising out of parking an
auto on or on the ways next to insured’s
premises
Important: The policy does
not provide property damage
coverage for the auto being
parked or property in the
care, custody or control of the
insured!
© 2009 The Society of CISR, Inc.
Exclusions
• Aircraft, Auto or Watercraft (continued)
– Still covers liability assumed in an
“insured contract” for the ownership,
maintenance or use of aircraft or
watercraft
– Still covers bodily injury or property
damage arising out of the use of
“mobile equipment”
© 2009 The Society of CISR, Inc.
Exclusions
• Mobile Equipment
– Coverage applies for the “operation” of
the mobile equipment
– Excludes
transportation
of
mobile
equipment by an auto owned or operated
or rented or loaned to any insured
– Excludes mobile equipment practicing,
preparing, etc., for a race, speed,
demolition or stunting activity
• War
© 2009 The Society of CISR, Inc.
Exclusions
• Damage to Property
– Excludes property the insured owns, rents or
occupies
– Excludes premises the insured sells, gives away
or abandons
– Property loaned to the insured
– Personal property in the care, custody or control
of the insured
– Part of real property on which work being done or
which requires repair, etc. because of the
insured’s incorrectly performed work
© 2009 The Society of CISR, Inc.
Exclusions
• Damage to Your Product
– Resultant property damage, caused by
the insured’s product, is covered
• Damage to Your Work
– Resultant damage is covered
– Covers property damage to insured’s
work if done on insured’s behalf by a
subcontractor
© 2009 The Society of CISR, Inc.
Exclusions
• Damage to Impaired Property
• Recall of Products, Work or Impaired
Property
• Personal and Advertising Injury
• Electronic Data
• Distribution of Material in Violation of
Statutes
• Exclusion Notes
© 2009 The Society of CISR, Inc.
Summary of Learning Objectives
1.
Identify the exposure areas that may be
covered by the Commercial General Liability
Policy Coverage Form
2.
Determine “Who is an Insured” in a
Commercial General Liability Policy for
specific situations
3.
Identify the three major coverage sections of
the Commercial General Liability Coverage
Form and describe the general liability
exposure areas included within each section
© 2009 The Society of CISR, Inc.
Summary of Learning Objectives
4. Identify the limits of insurance of the
Commercial General Liability Coverage
Form and apply the limits to specific loss
situations
5. Apply the various exclusions of the
Commercial General Liability Coverage
Form
© 2009 The Society of CISR, Inc.
Business Auto Coverage
© 2009 The Society of CISR, Inc.
Learning Objectives
1.
Identify the exposures covered by the Business
Auto Policy
2.
Determine who is and who is not an insured in the
Business Auto Policy for specific situations
3.
Explain specific definitions and policy conditions
4.
Identify a covered auto when presented the
appropriate symbol information
5.
Determine whether a newly acquired auto is
covered
© 2009 The Society of CISR, Inc.
Learning Objectives
6. Identify what types of vehicles are granted
coverage through the Liability Extension
7. Apply the liability exclusions found in the
Business Auto Policy
8. Apply the physical damage exclusions found
in the Business Auto Policy
© 2009 The Society of CISR, Inc.
Exposures Covered by the Business
Auto Coverage Form
• Liability for Ownership, Maintenance or Use
– Owned
– Non-Owned
– Hired
• Physical Damage
– Owned
– Hired or Borrowed
© 2009 The Society of CISR, Inc.
Business Auto Policy Structure
© 2009 The Society of CISR, Inc.
Business Auto Coverages
• Policy Coverages
– Liability
– Physical Damage
• Endorsement Coverages
– Medical Payments
– Personal Injury
– Uninsured/Underinsured Motorists
• Additional Forms
© 2009 The Society of CISR, Inc.
© 2009 The Society of CISR, Inc.
Who is an Insured?
• Named Insured any Covered Auto
• Others Using Covered Auto With Permission
EXCEPT:
–
–
–
–
–
Owner of hired or borrowed auto
Employee using own vehicle
Anyone in the auto business
Loading & unloading with exceptions
Partner/member using own vehicle
• Vicarious Liability
© 2009 The Society of CISR, Inc.
Definitions
• Accident
• Auto
– Travel on public road
– Attached machinery or equipment
– Land vehicle subject to compulsory or financial
responsibility
– Does not include mobile equipment
– Same definition as the CGL
• Bodily Injury
• Property Damage
© 2009 The Society of CISR, Inc.
Definitions
• Insured Contract
– LEASE + Rental Agreement but not for physical damage
• Loss
• Mobile Equipment
– Same definition as the CGL
• Pollution
– Will discuss in Exclusions
• Trailer
© 2009 The Society of CISR, Inc.
General Conditions
• Other Insurance
TYPE
PRIMARY
Covered Auto – Owned
X
Trailer if Covered Auto & Connected
to an Owned Covered Auto
X
EXCESS
Covered Auto - Not Owned
X
Trailer if Covered Auto & Connected
to any Motor Vehicle Not Owned
X
Liability Assumed Under Contract
© 2009 The Society of CISR, Inc.
X
General Conditions
• Policy Period and Coverage Territory
– Policy period shown on declarations
• Territory
– United States of America
– Territories & possessions
– Puerto Rico
– Canada
– And . . .
–
© 2009 The Society of CISR, Inc.
General Conditions
• Worldwide if:
– Covered auto
– Private passenger type
– Leased, hired, rented or borrowed without a
driver for 30 days or less; And
– Insured’s liability is determined in a suit in
the policy territory or accepted by the
insurance company
© 2009 The Society of CISR, Inc.
Covered Autos
• Symbols Designate Coverage
Coverages
Covered
Autos
Limit
Premium
Liability
$500,000
$
Personal Injury Protection (Or
Equivalent No-Fault Coverage)
Separately Stated In Each Personal Injury Protection Endorsement Minus $ Ded.
$
Added Personal Injury
Protection (Or Equivalent
Added No-Fault Coverage)
Separately Stated In Each Added Personal Injury Protection Endorsement Minus $
Ded.
$
Auto Medical Payments
$
$
Uninsured Motorists
$
Underinsured Motorists (When
Not Included in Uninsured
Motorists Coverage)
$
Physical Damage
Comprehensive Coverage
Actual Cash Value Or Cost Of Repair, Whichever Is Less, Minus $250 Deductible For
Each Covered Auto, But No Deductible Applies To Loss Caused By Fire Or Lightning.
See Item Four For Hired Or Borrowed “Autos”.
$
Physical Damage Specified
Causes of Loss Coverage
Actual Cash Value Or Cost Of Repair, Whichever Is Less, Minus $25 Deductible For
Each Covered Auto For Loss Caused By Mischief OR Vandalism. See Item Four For
Hired Or Borrowed “Autos”.
$
Physical Damage Collision
Coverage
Actual Cash Value Or Cost of Repair, Whichever Is Less, Minus $500 Deductible.
$
Physical Damages Towing and
Labor
$ For Each Disablement Of A Private Passenger “Auto”
$
PREMIUM FOR ENDORSEMENTS
$
*ESTIMATED TOTAL PREMIUM
$
*THIS POLICY MAY BE SUBJECT TO FINAL AUDIT
© 2009 The Society of CISR, Inc.
Covered Autos
• Symbols May Differ From Coverage to Coverage
Coverages
Liability
Covered
Autos
2, 8, 9
Limit
$500,000
Personal Injury Protection (Or
Equivalent No-Fault Coverage)
Separately Stated In Each Personal Injury Protection Endorsement Minus $ Ded.
Added Personal Injury
Protection (Or Equivalent
Added No-Fault Coverage)
Separately Stated In Each Added Personal Injury Protection Endorsement Minus $ Ded.
Auto Medical Payments
Premium
$ 1,459.00
2
$ 5,000
$
125.00
7
Actual Cash Value Or Cost Of Repair, Whichever Is Less, Minus $250 Deductible For
Each Covered Auto, But No Deductible Applies To Loss Caused By Fire Or Lightning. See
Item Four For Hired Or Borrowed “Autos”.
$
320.00
Uninsured Motorists
Underinsured Motorists (When
Not Included in Uninsured
Motorists Coverage)
Physical Damage
Comprehensive Coverage
Physical Damage Specified
Causes of Loss Coverage
Physical Damage Collision
Coverage
Physical Damages Towing and
Labor
Actual Cash Value Or Cost Of Repair, Whichever Is Less, Minus $25 Deductible For Each
Covered Auto For Loss Caused By Mischief OR Vandalism. See Item Four For Hired Or
Borrowed “Autos”.
7
Actual Cash Value Or Cost of Repair, Whichever Is Less, Minus $500 Deductible.
$ For Each Disablement Of A Private Passenger “Auto”
PREMIUM FOR ENDORSEMENTS
*ESTIMATED TOTAL PREMIUM
*THIS POLICY MAY BE SUBJECT TO FINAL AUDIT
© 2009 The Society of CISR, Inc.
$
598.00
Symbol 1
• Can be used for liability only
• Triggers liability coverage for any auto
• Provides the broadest coverage available
© 2009 The Society of CISR, Inc.
Symbols 2, 3, and 4
• Used for owned autos
– Symbol 2 Owned Autos
– Symbol 3 Owned Private Passenger Autos
Only
– Symbol 4 Owned Other than Private
Passenger Autos
• Autos owned at inception and newly acquired
• Can be used for all coverages (Towing for
private passenger autos only)
© 2009 The Society of CISR, Inc.
Symbol 5
• Owned autos required to have no-fault
benefits
• Covers autos owned at inception and
newly acquired if required to have no-fault
© 2009 The Society of CISR, Inc.
Symbol 6
• Owned autos required to have uninsured
motorists coverage and not able to reject
coverage
• Covers autos owned at inception and
newly acquired if required to have
uninsured motorists coverage
© 2009 The Society of CISR, Inc.
Symbol 7
• Specifically described autos only
• Can be used for all coverages
• Includes liability for non-owned trailer
attached to a scheduled auto
• Potential problem with newly acquired!
© 2009 The Society of CISR, Inc.
Symbol 8
• Hired autos
• Can be used for liability and physical
damage
• Does not include auto leased, hired, rented
or borrowed from employees, partners or
members, or members of their households
© 2009 The Society of CISR, Inc.
Symbol 9
• Non-owned autos
• Liability only
• Autos the named insured does not own, lease,
hire, rent or borrow & used in connection with
your business.
• Includes autos owned by named insured’s
employees, partners, members or any
members of their households.
© 2009 The Society of CISR, Inc.
Symbol 19
• Mobile equipment subject to compulsory or
financial responsibility laws
© 2009 The Society of CISR, Inc.
Covered Auto Designation
Symbol CA 99 54
• Use to customized coverage
• Examples of use
– Mopeds, Motorcycles, or Motor Homes
– Isolate a Specific Type of Vehicle for
Coverage: “All Owned Vehicles With a
Model Year of 2005 or Newer”
© 2009 The Society of CISR, Inc.
© 2009 The Society of CISR, Inc.
Newly Acquired
• Symbol 1, 2, 3, 4, 5, 6, or 19
• Newly acquired autos of the same described type
automatically have that coverage for the
remainder of the policy period
© 2009 The Society of CISR, Inc.
Newly Acquired
• Symbol 7
• Coverage for Newly Acquired Only If:
– The company insures all owned autos for
that specific coverage; Or
– It is a replacement unit and the auto it
replaced had that coverage
– And it is reported to the insurance
company within 30 days
© 2009 The Society of CISR, Inc.
Certain Trailers, Mobile Equipment, and
Temporary Substitute Autos
• Liability for Trailers:
– Load capacity under 2000 lbs.
– Designed for travel on public roads
– No automatic physical damage
© 2009 The Society of CISR, Inc.
Certain Trailers, Mobile Equipment, and
Temporary Substitute Autos
• Liability for Mobile Equipment:
– Carried or towed by covered auto
– Not covered if moving under its own
power (covered under CGL)
© 2009 The Society of CISR, Inc.
Certain Trailers, Mobile Equipment, and
Temporary Substitute Autos
• Liability for Temporary Substitute Autos
– Any non-owned auto used with permission
of owner
– As a temporary substitute of a covered
auto you own
– Because your covered auto is out of
commission due to: breakdown, repair,
service, loss or destruction
© 2009 The Society of CISR, Inc.
Liability Coverages
• Insuring Agreement
– Legal obligations
– Bodily injury and property damage
– Including covered pollution expenses
– Company’s choice to defend or settle
– No duty to defend if there is no coverage
© 2009 The Society of CISR, Inc.
Liability Coverages
• Supplementary Payments
– Defense costs
– $2,000 bail bonds required as result of an accident
– Attachment bonds
– Reasonable expenses incurred at request of carrier
($250 day)
– Tax costs from defended suit
– Post judgment interest (not pre judgment)
© 2009 The Society of CISR, Inc.
Liability Coverages
• Out-of-State Coverage
– If covered auto is driven in a state that
requires higher liability limits or
additional benefits, the policy will
automatically provide these coverages
–
© 2009 The Society of CISR, Inc.
Liability Exclusions
• Expected or Intended Injury
• Contractual other than an Insured Contract
• Workers Compensation, Disability
Benefits, Unemployment Compensation
Law or Similar Law
• Employee Indemnification or Employer’s
Liability
© 2009 The Society of CISR, Inc.
Liability Exclusions
• Care, Custody or Control
– Property damage to property owned by
the insured
– Property damage to property
transported by the insured
– Property damage to property in the
care, custody or control of the insured
© 2009 The Society of CISR, Inc.
Liability Exclusions
• Handling of Property
– Before it is being loaded onto a covered
auto
– After it has been finally delivered
– There IS coverage in between
© 2009 The Society of CISR, Inc.
Liability Exclusions
• Movement of Property by Mechanical
Device
– Unless the mechanical device is a hand
truck; or
– The mechanical device is attached to
the covered auto
© 2009 The Society of CISR, Inc.
Liability Exclusions
• Operations of Mobile Equipment
– Does cover, however, the movement
over the road or the locomotion.
• Completed Operations
– Covered CGL
© 2009 The Society of CISR, Inc.
Liability Exclusions
• Pollution
– Will Cover
• Pollution that comes from the part of the
auto part designed to hold it and it is
necessary for the operation of the vehicle;
OR
• The pollutant is not cargo AND it is released
from an accident from a covered auto AND
it occurs away from a premise owned or
rented to an insured.
© 2009 The Society of CISR, Inc.
Liability Exclusions
• War
– Exclusion only applies to liability assumed in a
contract or agreement
• Racing
© 2009 The Society of CISR, Inc.
Physical Damage
• Coverage is granted (or not granted) by
the Symbol indicated on the declarations
• Pays for loss to covered auto
• Caused by:
– Comprehensive
– Specified Perils
– Collision
© 2009 The Society of CISR, Inc.
Physical Damage
• Comprehensive
– Any cause except collision with another
object or upset
– Includes glass breakage
– Includes loss by hitting animal or bird
– Includes loss by falling object or missile
© 2009 The Society of CISR, Inc.
Physical Damage
• Specified Perils
– Fire, lightning or explosion
– Theft
– Windstorm, hail or earthquake
– Flood
– Mischief or vandalism
– Sinking, burning, collision or derailment of any
conveyance transporting the covered auto
© 2009 The Society of CISR, Inc.
Physical Damage
• Collision
– With another object
– Overturn of covered auto
• Towing
– Only for private passenger type auto
© 2009 The Society of CISR, Inc.
Physical Damage
• Coverage Extensions
– Transportation Expense
• Private passenger auto type
• Resulting from total theft
• 48-hour waiting period
• $20 per day/$600 maximum
© 2009 The Society of CISR, Inc.
Physical Damage
• Coverage Extensions
– Loss of Use Hired/Rented
• Insured legally responsible
• Written agreement
• No driver furnished
• Covered physical damage loss
• $20 day/$600 maximum
© 2009 The Society of CISR, Inc.
Physical Damage Exclusions
•
Nuclear hazard, war, insurrection, rebellion,
revolution, etc.
•
Racing
– Organized
– Practicing or racing or while auto being
prepared
•
Wear and tear, freezing, mechanical
breakdown, road damage to tires, unless
caused by another covered loss.
– For example, theft
© 2009 The Society of CISR, Inc.
Physical Damage Exclusions
•
Equipment excluded
–
–
–
–
–
•
Tapes, records, CDs, visual or data devices
Speed measuring or jamming equipment
Electronic equipment unless designed for
the reproduction of sound
Accessories used with electronic equipment
Exceptions to exclusions
Diminution in value
© 2009 The Society of CISR, Inc.
Physical Damage Loss
Settlement
•
Smallest of:
– ACV
– Cost to repair/replace with like kind &
quality
•
Depreciation will be applied
•
Excludes betterment
•
Deductible
© 2009 The Society of CISR, Inc.
Summary of Learning Objectives
1.
Identify the exposures covered by the Business
Auto Policy
2.
Determine who is and who is not an insured in the
Business Auto Policy for specific situations
3.
Explain specific definitions and policy conditions
4.
Identify a covered auto when presented the
appropriate symbol information
5.
Determine whether a newly acquired auto is
covered
© 2009 The Society of CISR, Inc.
Summary of Learning Objectives
6. Identify what types of vehicles are granted
coverage through the Liability Extension
7. Apply the liability exclusions found in the
Business Auto Policy
8. Apply the physical damage exclusions found
in the Business Auto Policy
© 2009 The Society of CISR, Inc.
Workers Compensation
© 2009 The Society of CISR, Inc.
Learning Objectives
1.
Describe the legal concepts of the Workers
Compensation system
2.
Explain the use of the Information Page to activate
coverage related to Items 3.A., 3.B., and 3.C.
3.
Name and describe four different benefits paid by
Workers Compensation
4.
Describe the four most common types of Employers
Liability claims
5.
Describe the uses of Major Workers Compensation
and Employer Liability Endorsements
© 2009 The Society of CISR, Inc.
Concepts of Statutes
• Elimination of negligence theory in favor of
no-fault method of recovery
• Subject to statutory benefits
• Benefits are partial and final
• Employers assume the cost of
occupational injuries an diseases arising
out of and in the course of employment
• Exclusive or sole remedy
© 2009 The Society of CISR, Inc.
Statutory Considerations
• All states have compulsory Workers
Compensation requirements except New
Jersey and Texas
• Funding sources
– Insurance companies
– Competitive state funds
– Monopolistic state funds
• ND, OH, WA, WY [NOWW]
– Self insurance
© 2009 The Society of CISR, Inc.
© 2009 The Society of CISR, Inc.
Workers Compensation and
Employers Liability Policy
• Information Page
– Item 1. Named insured
– Item 2. Policy period
– Item 3. Coverage triggers
• 3.A. Workers Compensation
• 3.B. Employers Liability
• 3.C. Other States Insurance
© 2009 The Society of CISR, Inc.
Workers Compensation and
Employers Liability Policy
• Item 3.A. Workers Compensation
– Include ALL states where the insured
has KNOWN operations or EXPECTS to
have operations
– Activates Workers Compensation laws
for those states listed
– Cannot list monopolistic states
© 2009 The Society of CISR, Inc.
Workers Compensation Benefits
• Medical: Usually unlimited
• Disability: Lost wages, waiting period and
compensation for scheduled injuries
• Rehabilitation: Physical & vocational training
• Death Benefit: Payable to dependent
© 2009 The Society of CISR, Inc.
Employers Liability
• Item 3.B. Employers Liability
– Applies to all states listed on Information Page
in 3.A.
– Limits can be increased from minimum limits
• Bodily Injury by Accident $100,000 Each Accident
• Bodily Injury by Disease $500,000 Each Limit
• Bodily Injury by Disease $100,000 Each Employee
© 2009 The Society of CISR, Inc.
Employers Liability
• Types of Claims
– Third Party Claim (Action Over)
– Care and Loss of Services
– Consequential Bodily Injury
– Dual Capacity Claims
© 2009 The Society of CISR, Inc.
Employers Liability
• Twelve Exclusions
• Defense Costs in Addition to Limits of
Liability
• No Coverage, No Defense
© 2009 The Society of CISR, Inc.
Item 3.C. Other States Insurance
• Suggested Wording
All states, U.S. Territories, and Possessions
except North Dakota, Ohio, Washington and
Wyoming, Puerto Rico, the U.S. Virgin Islands,
and states designated in Item 3.A. of this
Information Page.
© 2009 The Society of CISR, Inc.
Item 3.C. Other States Insurance
• Applies Only to States Listed
• Must Begin Work AFTER Effective Date
• “At Once” Notification
• 30 Days to Notify After Renewal
© 2009 The Society of CISR, Inc.
Federal Endorsements
• Longshore and Harbor Workers Act
– Maritime employments in and around
navigable waters of the United States
– Land-based jobs such as longshore,
harbor workers, shipbuilders, ship
repairers, etc.
© 2009 The Society of CISR, Inc.
Federal Endorsements
• Maritime Coverage Endorsement
– Masters or crews of vessels
– American crewmembers on American
ships
– Based on negligence
© 2009 The Society of CISR, Inc.
Federal Endorsements
• Outer Continental Shelf Land Act Coverage
Endorsement
– Extends Longshore and Harbor Workers
Coverage to oil & gas rigs on outer
continental shelf
– Limit is 10 miles for Texas; 3 miles for
all other states
© 2009 The Society of CISR, Inc.
Other Endorsements
• Foreign Coverage Endorsement
– Employees hired in U.S.
– Traveling or temporarily outside U.S. (90
days)
– Includes endemic disease
– Includes excess repatriation
© 2009 The Society of CISR, Inc.
Other Endorsements
• Employers Liability Coverage Endorsement
– Provides Employers Liability in
Monopolistic States
– Coverage can also be added to the
CGL with a Stop Gap Endorsement
© 2009 The Society of CISR, Inc.
Other Endorsements
• Sole Proprietors, Partners, Officers and
Others Coverage Endorsement
– When allowed by statute
© 2009 The Society of CISR, Inc.
Summary of Learning Objectives
1.
Describe the legal concepts of the Workers
Compensation system
2.
Explain the use of the Information Page to activate
coverage related to Items 3.A., 3.B., and 3.C.
3.
Name and describe four different benefits paid by
Workers Compensation
4.
Describe the four most common types of Employers
Liability claims
5.
Describe the uses of Major Workers Compensation
and Employer Liability Endorsements
© 2009 The Society of CISR, Inc.
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© 2009 The Society of CISR, Inc.