RAILROAD PROTECTIVE LIABILITY COVERAGE FORM SAMPLE INSURANCE PROPOSAL LANGUAGE

(November 2022)

REPRINT PERMISSION

PF&M subscribers are permitted to reproduce the following sample insurance proposal language when preparing insurance presentations for their commercial insurance customers. Other uses require permission from The Rough Notes Company, Inc.

PROPOSAL DISCLAIMER

The following paragraph or similar language needs to be included in all insurance proposals:

Consult the policy for definitions and limitations. The terms of this proposal do not represent contract terms. The policy is subject to company underwriting practices.

TIPS FOR USING THIS PROPOSAL LANGUAGE

This proposal language is not intended to be an entire insurance proposal. A client specific section that includes the name and address of the insured, the insurance company(s) and the agent, and information about them, a list of locations, limits, deductibles, and similar customer specific items are not included and should be prepared.

The intent of any insurance proposal is not to be a reproduction of the insurance policy but to give a summary of possible coverages.

Paragraphs that explain a coverage form’s unique features may be the most important addition to your insurance proposal and sales effort. Coverage examples can be tailored to your individual customer. Be careful when altering any proposal language not to expand coverage beyond what the policy intends.

This proposal should be combined with proposals for other lines of business, such as commercial property, commercial general liability, workers compensation, and umbrella liability for a complete account proposal.

Related Articles:

Railroad Protective Liability Coverage Form Available Endorsements and Their Uses

Railroad Protective Liability Coverage Form Endorsements Checklist

SAMPLE PROPOSAL LANGUAGE FOR THE INSURANCE SERVICES OFFICE (ISO) RAILROAD PROTECTIVE LIABILITY COVERAGE FORM

INTRODUCTION

The Insurance Services Office (ISO) Railroad Protective Liability Coverage Form insures against claims for bodily injury or property damage and for physical damage to certain property of the named insured that arise out of operations the designated contractor performs. The contractor or subcontractor that does the work purchases the coverage in the railroad’s name and for its benefit.

BODILY INJURY AND PROPERTY DAMAGE LIABILITY COVERAGE INSURING AGREEMENT

The insurance company agrees to pay for damages for covered occurrences of bodily injury and property damage that the insured becomes legally obligated to pay up to the limits of insurance. It has the right and the duty to defend any suit that seeks those damages and may investigate or settle any claim or suit at any time and at its sole discretion. It is not obligated to defend any suit that seeks damages that this insurance does not cover. The company's obligation to pay ends when the limits of insurance are used up by paying judgments and settlements.

EXCLUSIONS

Exclusions must be examined carefully, since many of them have conditions, exceptions, limitations, or restrictions not indicated below. Coverage does not apply to:

• Expected or Intended Injury

Bodily injury or property damage expected or intended by the insured is excluded. There is an exception for bodily injury that results from the insured using reasonable force to protect persons or property.

• Contractual Liability

Bodily injury or property damage in cases where the insured must pay damages based on assuming liability in a written contract or agreement is excluded. Coverage does apply to liability for damages the insured assumed in a covered contract or agreement if the injury or damage occurs after it is executed.

• Completed Work

Bodily injury or property damage that occurs after the work is completed is excluded. Work is considered done on the earliest date that all work called for in the contract is done, the work at the job location is completed, or the part of the work this insurance covers is put to its intended use.

• Acts or Omissions of Insured

Bodily injury or property damage that results solely from any act or omission by the insured or its employees is excluded. This exclusion does not apply to injury or damage that any designated employee of the named insured sustains at the job location. This exception also applies to the contractor's employees, employees of a government authority, or any other contractor injured at the location. There is no exception for the named insured’s employees, other than designated employees.

• Workers Compensation and Similar Laws

Damages that result from any requirement or obligation of the insured that any workers compensation, disability benefits, unemployment compensation, or similar law imposes are excluded. There is an exception for obligations the insured has under the Federal Employers Liability Act.

• Pollution

Bodily injury or property damage that arises out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants at or from any premises, site, or location that any insured ever owned, occupied, rented, or had on loan is excluded. Dumping or disposing of waste at the job location with the insured's knowledge is excluded. Bodily injury and property damage from pollutants brought on the site in conjunction with operations performed or work done is also excluded, subject to certain exceptions.

This exclusion also applies to any loss, cost, or expense that arises out of any requirement to test for, monitor, clean up, remove, contain, treat, detoxify, neutralize, or in any way respond to or assess the effects of pollutants.

• Damage to Owned, Leased, or Entrusted Property

There is no coverage for property damage to property the named insured owns or property it leases or has entrusted to it under a lease or trust agreement.

• War

Bodily injury or property damage caused in any way by war, undeclared war, and civil war is excluded. This includes warlike action by a military force and actions a government takes to prevent or defend against attacks that involve military personnel or agents. This also includes rebellion, revolution, insurrection, or unlawful seizure of power and actions taken to prevent or defend against these acts.

SUPPLEMENTARY PAYMENTS

The insurance company pays the following with respect to claims it investigates or settles or suits against the insured it defends:

• All expenses it incurs to do so
• The insured’s court costs but not attorney fees or expenses that the court imposes that are its responsibility
• Interest that accrues on the full amount of any judgment after it is entered and before the insurance company pays, offers to pay, or deposits with the court the part of the judgment that is its responsibility. Interest applies to only the part of the judgment within the limits of insurance.
• Cost of bonds to release attachments. This is limited to bond amounts within the limit of insurance that applies.
• Expenses the insured incurs for first aid administered to others at the time of an accident for bodily injury that this insurance covers
• Reasonable expenses the insured incurs when the insurance company asks it to help investigate or defend a claim or suit. This is limited to up to $250 per day in lost earnings if the insured must be away from work.
• Prejudgment interest on the part of any judgment the insurance company pays that is the insured’s responsibility

PHYSICAL DAMAGE TO PROPERTY COVERAGE INSURING AGREEMENT

The insurance company agrees to pay for physical damage to property this insurance covers. The damage must arise from acts or omissions at the job location in conjunction with the operations performed or work done and must occur during the policy period. The named insured must own the property, lease it, or have the property entrusted to it under a lease or trust agreement. It must be of a type usual to the railroad’s operations and described in the coverage form.

EXCLUSIONS

Exclusions must be examined carefully, since many of them have conditions, exceptions, limitations, or restrictions not indicated below. Coverage does not apply to:

• Completed Work

Physical damage to property that occurs after the work is completed is excluded. Work is considered done on the earliest date when all work the contract calls for is done, the work at the job location is completed, or the part of the work this insurance covers is put to its intended use. There is an exception for physical damage to property caused by the presence of tools, uninstalled equipment, or unused materials.

• Acts or Omissions of Insured

There is no coverage for physical damage to property caused solely by any insured’s acts or omissions. This exclusion does not apply to acts or omissions of any designated employee of the named insured.

• Nuclear Incidents or Conditions

Coverage does not apply to physical damage to property that nuclear reaction, radiation, or contamination causes in any way.

• Pollution

There is no coverage for physical damage to property due to discharge, dispersal, seepage, migration, release, or escape of pollutants that the corresponding exclusion under Bodily Injury and Property Damage Liability Coverage excludes.

WHO IS AN INSURED

These railroad parties are included as insureds:

• The named insured
• The named insured's executive officers and directors, limited to their duties as officers and directors
• The named insured's stockholders, limited to their liability as stockholders
• Any railroad that operates over the named insured's tracks

LIMITS OF INSURANCE

The limits apply separately to each consecutive annual period and to any remaining period of less than 12 months. This begins with the inception date on the declarations, unless extended after issuance for any additional period of less than 12 months. If that occurs, the additional period is treated as part of the last preceding period for the purpose of determining the limits of insurance.

• The most the insurance company pays are the limits of insurance on the declarations. This is regardless of the number of insureds, claims made, suits brought, or number of parties that make claims or bring suits.
• The most the insurance company pays for all bodily injury, property damage, and physical damage to property in any single occurrence is the Each Occurrence Limit on the declarations. This is subject to the Aggregate Limit.
• The most the insurance company pays for the total of damages for all bodily injury, property damage, and all physical damage to property is the Aggregate Limit on the declarations. Coverage ends when this limit is used up by paying claims during the policy period.
• Payment for physical damage to property is for the smaller of the property’s actual cash value at the time of loss or the cost to repair or replace it with similar property. This is subject to the Each Occurrence Limit.

CONDITIONS

These conditions apply to both coverages:

• Assignment

Any interest assigned is not binding on the insurance company unless it issues an endorsement that acknowledges and agrees to the assignment.

• Bankruptcy

The insurance company is not relieved of its obligations if the insured or its estate becomes bankrupt or insolvent.

• Cancellation
• The named insured can cancel by providing the insurance company with advance written notice of its intent to do so.
• The insurance company can cancel by giving the named insured, the contractor, and any governmental authority or other contractor that is involved written notice of cancellation. The notice must be mailed or delivered at least 60 days before the cancellation takes effect.
• The notice of cancellation states the cancellation date. This is the date that the policy period and coverage ends.
• In case of cancellation, the insurance company refunds any unearned premium on a pro rata basis or a less than pro rata basis, depending on the details of the cancellation. The cancellation is effective even if a refund is not made or offered. If the notice of cancellation is mailed and is not delivered, proof of mailing is sufficient proof of notice.
• Changes

This coverage form includes all the terms and agreements between the named insured and the insurance company with respect to the coverage provided. The named insured can make changes in terms with the insurance company's consent. Terms can be changed only by endorsements the insurance company issues.

• Inspections and Surveys

The insurance company can make inspections and surveys at any time, report its findings to the named insured, and recommend changes it feels should be made. However, it is not obligated to do so. Anything it does in this regard relates only to its findings of the risk’s insurability and the premiums to charge. It does not make safety inspections or attempt to perform duties of parties that provide for the health or safety of workers or the public. It does not warrant that conditions are safe or healthful or comply with any law, regulation, code, or standard. This condition does not apply to inspections or recommendations with respect to certifying boilers, pressure vessels, or elevators under any state or municipal statute, ordinance, or regulation.

• Other Insurance

The coverage form is primary insurance. The insurance company does not seek contribution from any other insurance available, unless a different contractor than the one listed on the declarations provides it for the same operation and job location. It then shares with the other insurance based on one of two options.

• If the other insurance permits contribution by equal shares, this insurance does as well. Each insurance company contributes equal amounts until it uses up its limit of insurance or the loss is paid, whichever occurs first.
• If the insurance does not include contribution by equal shares, contribution is by limits. With this approach, each company's share is the ratio of its applicable limit of insurance to the total applicable limits of insurance by all insurance companies. Under Contribution by Limits, contribution is proportionally by limits. Ratios are determined based on each company's limit as a percentage of the total applicable limits. The loss is then apportioned between the various insurance.
• Premium and Premium Audit
• Premiums are calculated according to the insurance company's rules and rates.
• The premium base is contract cost. This is the total cost of the operations described on the declarations.
• The advance premium is only a deposit premium. At the end of each audit period, the insurance company determines the actual earned premium for the period and notifies the contractor listed on the declarations. The due date for the company to receive the premium billed is the due date on the billing notice. However, if the advance and audit premiums are more than the earned premium, the insurance company refunds the excess to the contractor.
• The named insured railroad is never responsible to pay premiums.
• Transfer of Rights of Recovery Against Others to Us

Any rights the insured has against others to recover all or part of any payment the insurance company made transfer to the company. The insured must preserve those rights and not do anything after the loss to impair them. The insurance company can request that the insured bring suit or transfer those rights to it and help it enforce them.

• When We Do Not Renew

If the insurance company decides to not renew, it mails or delivers written notice of the non-renewal to the first named insured on the declarations at least 30 days before the expiration date. If the notice is mailed, proof of mailing is sufficient proof of notice. There is no requirement to notify the contractor of the non-renewal, even though it pays for the coverage.

These conditions apply to only Bodily Injury and Property Damage Liability Coverage:

• Legal Action Against Us

No party may join the insurance company in any way, bring it into a suit that claims damages from an insured, or sue it unless all of the coverage form’s terms and conditions have been complied with. The insurance company can be sued to recover on an agreed settlement or on a final judgment against the insured that this coverage form insures and that is within the limit of insurance that applies.

• Duties in the Event of Occurrence, Claim, or Suit
• Tell the insurance company about any occurrence that may result in a claim as soon as possible. Include information with respect to how, when, and where the event took place and the names and addresses of all injured parties and any witnesses. Indicate the nature and location of any injury or damage as a result of the occurrence.
• Immediately record the details of any claim made or suit brought, the date it was received, and notify the insurance company as soon as possible. This is in addition to giving it written notice of the claim or suit on a timely basis.
• Immediately send the insurance company copies of demands, notices, summonses, and legal documents received in conjunction with the claim or suit.
• Authorize and grant approval for the insurance company to obtain records and other needed information.
• Cooperate with the insurance company as it investigates or settles the claim or defends against the suit.
• Assist the insurance company when it asks for help to enforce any right against any person or organization that may be liable to the insured for injury or damage that this insurance covers.
• Do not make any voluntary payments, assume any obligations, or incur any expenses other than first aid without the insurance company's consent.
• Separation of Insureds

Other than the limits of insurance, the insurance provided applies to each named insured as if it was the only named insured and separately to each insured against whom a claim is made or a suit is brought.

These conditions apply to only coverage for Physical Damage to Property:

• Appraisal

If the insured and the insurance company cannot agree on the value of damaged property or the amount of a loss, either may make a written demand for an appraisal within sixty days after the proof of loss is filed. At that point, each party selects a competent appraiser. The two appraisers then select a competent and impartial umpire. Each of the appraisers then separately states the value of the property and the amount of loss. Any differences are submitted to the umpire. Any decision any two parties agree to binds all parties. The insured and the insurance company each pay the cost of their appraisers and share the expenses of the appraisal and the umpire equally. The insurance company still retains its right to deny the claim.

• No Benefit to Bailee

No party other than the insured that has custody of the property benefits from this coverage.

• Insured's Duties in the Event of a Loss
• Protect the property, regardless of whether the loss is covered or not. Otherwise, coverage does not apply to any further loss to the property. The insurance company treats reasonable costs the insured incurs to protect property as expenses incurred at the company’s request.
• Submit a sworn proof of loss to the insurance company as soon as possible after the loss. It must include the information the company needs to settle the loss. In addition, the insured must make the damaged property available for the insurance company to examine when it asks to do so.

• Legal Action Against Us

No party can sue the insurance company unless all of the coverage form’s terms are fully met and until 30 days after the proof of loss is filed and the amount of loss determined.

• Payment of Loss

The insurance company must pay the loss in money. However, the insured cannot abandon damaged property to the company. This means that the company has the option to pay money or to repair or replace the damaged property but the insured cannot demand payment by giving the damaged property to the company.

DEFINITIONS

Refer to the coverage form for a list and description of definitions.