Flitner Commercial

  1. Loss Exposures of Commercial Insurance
    • Property Loss Exposure
    • Liability Loss Exposure
    • Personal Loss Exposure
  2. Steps of Risk Management Process
    • Identifying loss exposures
    • Analyzing loss exposures
    • Evaluating the various techniques for treating the loss exposures
    • Selecting the most effective technique(s)
    • Implementing the selected technique(s)
    • Monitoring the program and making needed corrections or adjustments
  3. Noninsurance Risk Management Techniques
    • Avoidance
    • Loss control
    • Retention
    • Noninsurance transfer
  4. Forms of Insurer Ownership
    • Corporations: entity organized under state law and entitled to the same rights as a person, distinct from its owners, who are called stockholders or shareholders
    • Partnerships: for-profit business entity jointly owned by two or more persons who share ownership and profits (or losses), although not necessarily on an equal basis
    • Joint Ventures: business association formed by an express or implied agreement of two or more persons (including corporations) to accomplish a particular project
    • Limited Liability Companies (LLC): form of business entity that provides its owners the limited liability of a corporation and the tax advantages of a partnership
    • Unincorporated Associations: voluntary association of individuals acting together under a common name to accomplish a lawful purpose
  5. Types of Commercial Insurance Policies
    • Monoline (covers one line of business)
    • Package policy (covers two or more lines of business)
  6. Components Included in Commercial Package Policy (CPP)
    • Common policy declarations
    • Common policy conditions
    • Two or more coverage parts
  7. Commercial Property Coverage Part Consists of the Following Documents
    • Commercial property declarations
    • Commercial property coverage forms
    • Cause-of-loss forms
    • Commercial property conditions
    • Endorsements
  8. Types of Property (Comm)
    • Real Property: land and whatever is growing or erected on or affixed to the land
    • Personal Property: all property other than real property
    • Tangible Property: all property that can be touched and that has physical existence, either real or personal
    • Intangible Property: property that cannot be touched because it has no physical existence (eg patents, copyrights or trademarks)
  9. Sections of Building and Personal Property Coverage Form
    • Covered property
    • Property not covered
    • Additional coverages
    • Coverage extensions
    • Limits
    • Deductibles
    • Conditions
    • Additional conditions
    • Optional coverages
  10. Reasons To Exclude Property from CGL Coverage
    • May not be legal to insure some kinds of property
    • Somer property may not be subject to loss by the perils insured against
    • Excluded because they can be insured more advantageously under other forms
  11. Additional Coverages of CGL
    • Debris removal: addn $10,000 per location
    • Perservation of property: up to 30 days
    • Fire department service charge
    • Pollutant cleanup and removal: $10,000 limit per location
    • Increased cost of construction: less of 5% AOI or $10,000
    • Electronic Data: $2,500 per year
  12. Coverage Extensions of CGL
    • Newly acquired of constructed property: $250,000 per building, $100,000 BPP per building
    • Personal effects and property of others: $2,500 each location
    • Valuable papers and records: $2,500 each location
    • Property off-premises: $10,000
    • Outdoor property: limit $1,000, no more than $250 per tree
    • Non-owned detached trailer: $5,000
  13. Causes-of-Loss Forms for Perils Covered in a Commercial Property Policy
    • Basic Form
    • Broad Form
    • Special Form
  14. Causes of Loss Under the Braod Form that are Not Covered Under the Basic Form
    • Falling objects
    • Weight of snow, ice or sleet
    • Water damage
    • Addn Coverage Collapse
  15. Causes of Loss - Basic Form
    • Fire and Lightning
    • Explosion
    • Windstorm and Hail
    • Smoke
    • Aircraft or Vehicles
    • Riot or Civil Commotion
    • Vandalism
    • Sprinkler leakage
    • Sinkholes
    • Volcanic action
  16. Items Covered by the Cause-of-Loss Special Form
    • Causes of loss omitted or excluded under the broad form such as theft
    • Unanticipated losses (any loss other than those specifically excluded)
    • All accidental losses unless the insurer can prove and excluded peril caused the loss
  17. Kinds of Property That Are Covered Only If It is Caused by a Specified Cause of Loss
    • Valuable papers and records
    • Animals in the event of death
    • Fragile articles, not including building glass, containers of property held for sale and lenses
    • Builders machinery and equipment owned or help by insured unless on or within 100 feet of the described premises
  18. Theft Related Exlusions and Limitations of CGL
    • Dishonest acts of the insured, partners, or employees of the insured
    • Voluntary surrendering of possession of property as the result of a fraudulent scheme
    • Loss by theft of construction materials not attached to building unless being held for sale by insured
    • $2,500 limit for furs
    • $2,500 limit for jewelry, watches, and precious metals
    • $2,500 limit for patterns, dies, molds and forms
    • $250 limit for stamps, tickets and letters of credit
    • Theft of money
  19. Types of Costs Included in Liability Losses
    • Costs of investigating and defending against the suit
    • Potential medical expenses, lost wages, pain and suffering
    • Costs incurred by the sued organization to reduce chance of additional, related losses in the future (generally not a covered loss)
    • Hidden costs, including time consumed in defending against a claim and adverse publicity (generally not a covered loss)
  20. Elements of Legal Liability
    • Claimant must allege that the organization is legally liable to pay damages
    • Accused organization must then incure expenses to investigate and defend agains the claimants allegation of legal liability
    • If the claimant succeeds in probing legal liability, the loss will include the amount that must be paid as damages
  21. Bases for Legal Liability
    • Tort: civil wrong, other than a breach of contract, against another person; three broad types: negligence, intentional, strict liability
    • Contract
    • Statute
  22. Negligence Tort
    Occurs when a person exposes others to an unreasonable risk or harm because of failure to exercise the required degree of care
  23. Basic Elements of Negligence
    • Duty owned to another person
    • Breach of that duty
    • Occurrence of injury or damage
    • Close causal connection betweeb the negligent act and the resulting harm
  24. Intentional Tort
    • Tort committed by a person who forsees that his or her act will harm another person
    • Does not need to be performed with malicious or hostile intent
  25. Strict Liability Tort
    Liability that is imposed even though the defendant acted neither negligently nor with intent to cause harm
  26. Contractual Liability Arises (Comm)
    • Breech of contract
    • Hold harmless agreement: contractual provision that obligates one of the parties to assume the legal liability of the other
  27. Sources for Liability Exposures (Comm)
    • Permises liability exposure
    • Operations liability exposure
    • Products liability exposure
    • Completed liability exposure
  28. Types of Injury or Damage Covered by Coverage A, B, & C in CGL Coverage Form
    • Coverage A: bodily injury and property damage
    • Coverage B: personal and advertising injury
    • Coverage C: medical expenses and/or funeral expenses of persons injured on the insureds premises or injured from the insureds operations
  29. Insurers Duty to Pay Damages Under Coverage A of Commercial Insurance if the Following are Met
    • Insured must be legally obligated to pay damages
    • Damages must result from BI or PD defined in the policy
    • Policy must apply to BI or PD
    • BI or PD must be caused by an occurence
    • Occurence must take place in the coverage territory
    • BI or PD must occur during policy period
  30. Basic Types of Damage
    • Special damages
    • General damages
    • Punitive damages
  31. Coverage A Exclusions
    • Expected or intended injury exclusion
    • Contractual liability
    • Liquor liability
    • Workers compensation and employers liability exclusion
    • Pollution
    • Aircraft, auto and watercraft
    • Mobile equipment
    • War
    • Damage to property
    • Insureds products and work
    • Personal and advertising injury
    • Electronic Data
    • File legal liability coverage
  32. Exceptions to Pollution Exclusion of CGL Coverage A
    • BI sustained in a building and caused by smoke, fumes, vapor or soot from the heating equipment
    • BI or PD caused by heat, smoke or fumes from a hostile fire
    • BI or PD resulting from the escape of fules, lubricants or other operationg fluids needed to perform normal functions of mobile equipment
    • BI or PD sustained in a building and caused by the release of gases, fumes or vapors from materials brought into that building in connection with operations performed by insured
  33. Exceptions to Aircraft, Auto and Watercraft Exclusion of CGL Coverage A
    • Watercraft while ashore on the insureds premises
    • Non owned watercraft if it is less than 25 feet long and not being used to carry persons or property for a fee
    • Liability assumed under an insured contract from ownership, maintenance, or use of aircraft or watercraft (not autos)
    • Operations of certain types of equipment attached to autos
    • Parking an auto on or next to insureds premises if the auto is not owned by, rented to, or loaned to any insured (Valet parking service)
  34. In Coverage A of CGL, the Damage to Property Exclusion Eliminates Coverage for the Following
    • Property owned, rented or occupied by the insured
    • Premises the insured has sold, given away or abandoned
    • Property loaned to insured
    • Personal property in care, custody or control of insured
    • Particular part of any real property on which work is being done by insured or any contractor or subcontractor working for insured
    • Particular part of any property that must be restored, repaired or replaced because insureds work was incorrectly performed
  35. In Coverage A of CGL, Four Exclusins Relate to the Insureds Products and Work
    • Damage to your product exclusion
    • Damage to your work exclusion
    • Damage to impaired property or property not physically injured exclusion
    • Recalls of products, work or impaired property
  36. Personal And Advertising Injury - Including BI Arising Out Of One Or More Of The Following Offenses
    • False arrest, detention or imprisonment
    • Malicious prosecution
    • Wrongful eviction, wrongful entry or invasion of the right of private occupancy committed by or on behalf of its owner
    • Oral or written publication of material that slanders or libels a person or organization or disparages a persons or organization goods, products or services or violate a persons right of privacy
    • Use of anothers advertising ideas in your advertisement
    • Infringing upon another companys copyright or slogan in your advertisement
  37. Supplemental Payments of CGL Consist of the Following
    • Expenses incurred by the insured
    • Up to $250 for the cost of bail bonds required because of accidents or traffic violations involving covered vehicles
    • Cost of bonds to release any property of the insured held by plaintiff to ensure payment of any judgment that may be rendered against the insured
    • Reasonable expenses incurred by the insured at the insurers request, including loss of earnings of the insured must miss work to assist in defense
    • Court cost or other costs assessed in a suit against the insured
    • Interest in judgment awarded against the insured
    • Cost of defending a person or organization that the insured has agreed to hold harmless or indemnigy under an insured contract applies only if no conflict appears to exist between interests
  38. Coverage C of CGL Exclusions Does Not Apply to BI for the Following
    • Any insured other than a volunteer worker
    • Anyone hired to do work for insured or tenant of insured
    • Person injured on that part of named insurers premises that the person normally occupies
    • Person entitled to workers compensation benefit for injury
    • Person injured while taking part in athletics
    • BI included with the products-completed operations hazard
    • BI excluded under Coverage A
    • BI caused by war
  39. Persons or Organizations Insured Under the CGL Coverage Form
    • Named insured and related parties
    • Employees and volunteer workers of the named insured
    • Other persons and organizations
  40. An Employee or Insured is Not Insured for the Following
    • BI or personal and adverising injury to the named insurer, to partners or members or to a co-employee or other volunteer
    • BI or personal injury arising out of providing or failing to provide professional healthcare services
    • Property damage to property owned, occupies or used by named insured, the named insureds employees or volunteer workers
  41. CGL Limits of Insurance
    • General aggregate limit
    • Products-completed operations aggregate limit
    • Personal advertising injury limit
    • Each occurence
    • Damage to premises rented to you
    • Medical expenses
  42. CGL Conditions
    • Bankruptcy condition
    • Duties in the event of occurence, offense, claim or suit
    • Legal action against us condition
    • Other insurance condition
    • CGL is excess
    • CGL is primary
    • Methods of sharing condition
    • Premium audit condition
    • Representation condition
    • Separation of insureds
    • Transfer of right of recover against others to us
    • When we do not renew condition
  43. Methods of Sharing When 2 or More Policies Apply at Same Level
    • Contribution by equal shares: each insurer pays an equal amount until the claim is fully paid or until an insurer exhausts its limits
    • Contribution by limits: each insurer pays that proportion of the claim that the insurers limit bears to the total of all applicable insurance
  44. According to the Representation Condition, the Insured Agrees to the Following
    • Statements in the declarations are accurate and complete
    • Statements in the declaration are based on representations made by the insured to the insurer
    • Insurer has issued the policy in reliance on the insureds representations
  45. Features of Claims-Made CGL Coverage Form
    • Claims-made coverage trigger
    • Retroactive date
    • Extended reporting period
  46. Claims-Made Coverage Trigger
    • Event that triggers coverage under the claims-made CGL form
    • The 1st making of a claim during the policy period
  47. Categories of CGL Endorsements
    • State endorsements
    • Exclusion endorsements
    • Classification endorsements
    • Miscellaneous endorsements
  48. Miscellaneous Liability Coverage Forms Filed By ISO in Addition to CGL Coverage Form
    • Liquor Liability
    • Products/Completed operation liability
    • Owners and contractors protective liability
    • Railroad protective liability
    • Pollution liability coverage forms
  49. Types of Benefits Provided By Workers Compendation Statutes
    • Medical Benefits
    • Disability Income Benefits
    • Rehabilitation Benefits
    • Death Benefits
  50. Types of Disability Income Benefits for Workers Compensation Statutes
    • Temporary partial disability
    • Temporary total disability
    • Permanent partial disability
    • Permanent total disability
  51. Noted Federal Legislative Acts Regarding Workers Compensation
    • US Longshore and Harbor WC Act (LHWCA): provides exclusive remedy for injured maritime workers engaged in longshoring and shipbuilding
    • Jones Act: federal statute that permits injured workers to sue their employer for damages due to employers negligence
    • Federal Employers Liability Act: provides exclusive remedy for injured railroad workers
  52. Alternative Methods for Meeting the Employers Obligations Regarding Workers Comprensation
    • Private Insurance
    • Assigned Risk Plans
    • State Funds and Employers Mutuals
    • Self Insurance
    • Pools
  53. Types of State Funds and Employers Mutuals
    • Competitive state fund: owned and operated by state; competes with other private insurance in the state
    • Monopolistic state fund: owned and operated by state; other insurers are not allowed to write in the state
    • Employers mutual insurance companies
  54. Sections of the Standard WC and Employers Liability Policy Form
    • Information Page General Section
    • Part One: WC Insurance
    • Part Two: Employers Liability Insurance
    • Part Three: Other States Insurance
    • Part Four: Your duties if Injury Occurs
    • Part Five: Premium
    • Part Six: Conditions
  55. Exclusions to Employers Liability Insurance
    • Aimed at eliminating coverage for claims that would be covered under various other statutes
    • Injury outside of US or Canada unless the employee is temporarily outside of US or Canada
    • Liability assumed under contract (covered by CGL)
    • Punitive damages for injury or death to illegally employed person
    • BI to employees employed in violation of the law with the knowledge of the insured
    • BI intentionally caused by the insured
    • Damages arising out of employment practices
    • Fines or penalties imposed for violation of federal and state law
  56. Types of Limits of Liability Defined in Employers Liability Insurance
    • BI by accident limit
    • BI by disease - policy limit
    • BI by disease - each employee
  57. Types od Premium Adjustments in WC Ratemaking
    • Experience rating plan
    • Retrospective rating plan
    • Premium discount
    • Merit or schedule rating factors
    • Rate deviations
    • Expense constants
    • Deductibles
    • Dividend plans
  58. Experience Rating Plan
    Plan that increases or reduces the premium for a future period based on the insureds own loss experience for a period in the recent past
  59. Retrospective Rating Plan
    Plan that increases or decreases the premium for a policy period based on the insureds own losses during the same period
  60. Forms of Excess Liability Policies
    • A following form is subject to the same terms as the underlying policy limits on if the loss is covered by the underlying insurance
    • A self-contained policy is subject to its own terms where coverage applies to a loss that exceeds the underlying limits only if the loss is covered under the terms of the excess policy
    • A combination of the following form and the self-contained policy
  61. Three basic characteristics of liability insurance that are not shared by property insurance
    • Difficulty in estimating probable maximum loss (PML) for liability exposures
    • Layering of liability coverages
    • Effect of aggregate limits
  62. Basic Functions of the Umbrella Liability Policy
    • Provide additional limits above the occurence limits of the insureds primary policies
    • Takes the place of the primary insurance when primary aggregate limits are reduced or exhausted
    • Covers some claims that are not covered by primary policies (subject to retention)
  63. Drop Down Coverage
    Coverage for claims that are not covered by an underlying policy due to: type of claim not being covered; underlying policys aggregate limits being depleted by previous claims
  64. Self-Insured Retention
    Amount that is deducted from claims that are payable under and umbrella policy and that are not covered at all by the primary policy
  65. When Self-Insured Retention Does Not Apply
    • When paying in excess of a claim covered by the primary policy
    • Dropping down to pay a claim because the primary policys aggregate limit has been exhausted
  66. Common Differences Between Professional Liability and CGL Policies
    • Claims made trigger: PL prefers CM. ISO CGL uses a 5 year extended reporting period
    • Consent to settle requirements: PL insured is frequently given right to participate in decisions to settle a claim
    • Selection of defense counsel: PL gives the insured right to select counsel subject to insurers approval
    • Deductibles: PL is usually subject to a deductible
  67. Exclusions Common to Most Professional Liability Policies
    • Contractual liability
    • Punitive damages
    • Insureds dishonest, criminal, or malicious acts
  68. Examples of Wrongful Acts Usually Covered Under Employee Practices Liability Insurance
    • Sexual harassment
    • Wrongful termination
    • Unlawful discrimination
  69. Examples of Insurance agents and brokers errors and omissions liability
    • Failure to properly advise the client regarding insurance needs
    • Failure to obtain insurance for a client in a timely manner
    • Failure to renew a policy at expiration wihtout giving prior notice to client
    • Failure to properly adivse the client regarding appropriate limits
  70. Directors and Officers Liability
    Covers corporation's directors and officers against liability for their "wrongful acts" that would not be covered under a CGL or auto policy. Also covers the sums that the insured company is required or permitted by law to pay to the directors and officers as indemnifications. Written on a claims-made basis.
Card Set
Flitner Commercial
Exam 5 TIA Flitner Commercial