COMPARE: AAIS CU 0001–COMMERCIAL EXCESS/UMBRELLA LIABILITY COVERAGE 09 10 EDITION TO AAIS UM 0200–COMMERCIAL UMBRELLA/EXCESS LIABILITY COVERAGE 04 00 EDITION

(October 2023)

INTRODUCTION

The American Association of Insurance Services (AAIS) developed CU 0001–Commercial Excess/Umbrella Liability Coverage 09 10 Edition to replace UM 0200–Commercial Umbrella/Excess Liability Coverage 04 00 Edition. It also developed a new coverage form, CU 0002–Commercial Umbrella Liability Coverage. AAIS now considers CU 0002 to be its primary umbrella liability coverage form. As a result, CU 0002 is the subject of the primary analysis and
CU 0001 is analyzed in the topic section.

CU 0002–Commercial Umbrella Liability Coverage Analysis

CU 0001–Commercial Excess/Umbrella Liability Coverage Analysis

UM 0200 was previously the only umbrella coverage that AAIS provided. As a result, it is important to understand the changes made when AAIS introduced CU 0001 to replace UM 0200. This article compares CU 0001 to UM 0200. Each section is addressed in CU 0001’s order.

DEFINITIONS

CU 0001 eliminated the following terms:

Advertising Injury
Basic Territory
Claim
Insured Contract
Other Insurance
Personal Injury

CU 0001 added the following terms:

Advertisement
Covered Contract
Data Records
Executive Officer
Indemnitee
Personal and Advertising Injury
Self-insured Retention
Silica
Volunteer Worker

CU 0001 made significant changes in the following terms:

It broadened You and Yours to include any newly formed or acquired organization for up to 90 days.
It broadened Auto to include land vehicles subject to financial responsibility laws.
Coverage Territory is different, depending on the coverage, and is more restricted under both. Under Coverage E, it is the same territory as in the underlying insurance. Under Coverage U, it is the world except places subject to trade embargoes. CU 0001 removed the requirement in UM 0200 that suits be brought in a limited territory.
Insured under Coverage E is unchanged. Insured under Coverage U has the following changes:

Added Trustees
Removed mobile equipment insureds
In addition to the limitation in UM 0200, employees and volunteers are not insureds for injury to partners and members, family members of all excluded insureds, and third party damage obligations.
CU 0001 moved Newly Acquired Organization from being an insured to you and yours. As a result, Newly Acquired Organizations become named insureds.

CU 0001 broadened Mobile equipment to include equipment not described and not specifically excluded as long as the equipment is not used to transport persons or cargo.
Property Damage is now more restrictive than it was in UM 0200 because it excludes data records as tangible property. Under Coverage E, auto related coverage data records and auto-related pollutant clean up requests are considered property damage.
Suit is broadened to include various types of proceedings that may be required when a suit is brought.
CU 0001 includes most civil proceedings as long as the insurance company is involved in any agreement.
Temporary Worker is broadened to include workers furnished for seasonal or short-term needs.

COMMERCIAL EXCESS/UMBRELLA LIABILITY COVERAGES

This section is now Commercial Excess/Umbrella Liability Coverages. It was Principal Coverages in UM 0200.

COVERAGE E

Insuring Agreement Changes

The lead language pays on behalf of the insured. It does not mention paying up to the limit.
CU 0001 explains when the insurance company has a right and duty to defend and how that defense works.
The claims made and extended reporting periods are greatly enhanced. However, they appear to apply to only “other injury” and not to bodily injury, property damage, or personal and advertising injury. This is a significant change because UM 0200 only limited claims made to such coverage as underlying insurance provided.
Bodily injury damages include care, loss of services, and death. This was moved from the definition of bodily injury in UM 0200.
Parties that contracts require to be additional insureds on underlying insurance are automatically covered.
Underlying insurance may require a separate limit for a specific coverage. In that case, it applies only if the limit is entered on the schedule of underlying insurance.

Exclusions Changes

The exclusions in UM 0200 were in a separate section. They are now part of the specific coverage section. CU 0001 changed the following exclusions:

· e. Liability imposed by auto no-fault laws is broadened. It also excludes first party physical damage, personal injury protection, and auto medical payments.

· f. Pollution is modified. It is now absolute except when the underlying insurance provides coverage. In that case, it follows the underlying insurance’s terms.

· h. Pollution expenses is modified, except when underlying insurance provides coverage. In that case, it follows the underlying insurance’s terms.

n. Lead exclusion is broadened to more explicitly state that there is no coverage.

CU 0001 added the following exclusions:

k. Employment-related practices
l. War
m. Data records (unless covered by underlying insurance)
o. Silica
p. Asbestos
q. Medical payments/expenses (provided without fault)

COVERAGE U

Insuring Agreement Changes

The lead language pays on behalf of the insured. It does not mention paying up to the limit.
CU 0001 uses self-insured retention instead of retained limit.
CU 0001 explains when the insurance company has a right and duty to defend and how that defense works.
Personal injury and advertising injury are combined as personal and advertising injury.
CU 0001 eliminates the advertising, publishing, broadcasting, or telecasting exclusion in personal injury. It is now in exclusions.

Bodily injury damages include care, loss of services, and death. This was moved from the definition of bodily injury in UM 0200.

Exclusions Changes

The exclusions in UM 0200 were in a separate section. They are now part of the specific coverage section. CU 0001 changed the following exclusions:

b. Contractual liability is excluded except for covered contracts. This could broaden or restrict item 18. that applies to only personal property in the insured’s care, custody, or control, and also item 31.
f. Liability imposed by auto no-fault laws is broadened. It also excludes first party physical damage, personal injury protection, and auto medical payments.
g. and h. Pollution are modified. They separate the pollution exclusion and pollution clean up expense exclusion into two separate exclusions. This does not change the wording and intent.
k. CU 0001 removes the reference to personal and advertising injury in the liquor exclusion.
l. This exclusion applies to both employees is in the course of their employment, and while those employees perform duties that are part of the insured’s business. This makes this exclusion more restrictive.
n. This exclusion now applies before, after, or during the person's employment. This makes it more restrictive.
o. Property damage to real property is broadened to be any property. It specifically excludes any costs to improve such property, even if they make the property safer.
dd. Breach of contract also excludes personal injury.
ee. Failure of goods to conform also excludes personal injury.
ff. The exclusion of advertising injury for entities in the advertising business is broadened to also exclude the Web and the Internet. However, there are numerous exceptions.
hh. Wrong price also excludes personal injury.

CU 0001 added the following exclusions:

s. Property damage to personal property in the insured’s care, custody, or control
u. Property damage to personal property loaned to the named insured
v. Property damage to property that was abandoned, sold, or given away
x. Data records
z. Violation of various regulations that relate to communications
aa. Personal injury and advertising injury committed with knowledge that injury would occur
bb. Personal injury and advertising injury due to criminal acts
hh. Personal injury and advertising injury contractual liability
ii. Personal injury and advertising injury violations of intellectual property rights
jj. Personal injury and advertising injury from various types of Internet sites the insured hosts
ll. Lead
mm. Silica
nn. Asbestos

CU 0001 removed the following exclusions:

· 25. Personal injury and advertising injury from willful violations of ordinances, statutes, or regulations. This is similar to exclusions aa. and bb.

· 31. Tort Liability assumed under contract. This is similar to the added contractual exclusions in items b. and hh.

SUPPLEMENTAL PAYMENTS

This was Defense Coverage in UM 0200. Items 1., 2., 3., 4., and 5. in UM 0200 are now part of the insuring agreements in CU 0001.

Item 6. paragraphs in UM 0200 make up most of Supplemental Payments in CU 0001.

The following are the differences between Item 6. and Supplemental Payments Item 1:

Court costs taxed against the insured do not include attorney fees or expenses.
c. and d. are combined. The maximum daily earnings are $250 per day. It was $100 per day in UM 0200.
g. This is the same as h. The limit on bail bonds is $2,000. It was $500 in UM 0200.

CU 0001 adds the following items:

Item 2. Under Coverage E. The limits are reduced if Supplementary Payments reduce the underlying insurance limits.
Item 3. The insurance company pays it owns expenses when it decides to participate in a defense. It does not share in the insured’s expenses or the underlying insurance’s expenses.
Item 4. This explains when and how the insurance company pays an indemnitee’s defense costs.

WHAT MUST BE DONE IN CASE OF LOSS

CU 0001 made the following changes:

· Under Coverage E, the named insured must cooperate with underlying carriers. This is not the case under Coverage U because there should not be any underlying carriers.

· Other Duties is changed significantly. The insured is now not expected to help settle claims or conduct suits. HOW MUCH WE PAY

CU 0001 made a number of changes in this section:

General Aggregate changes

CU 0001 eliminated the paragraph added at the end of item one.
Under Coverage E, if defense costs are within the underlying insurance’s limits, any defense cost the insurance company pays under Coverage E contributes to the General Aggregate.

Occurrence Changes

CU 0001 addresses Coverages E and U together instead of separately.
Under Coverage E, if defense costs are within the underlying insurance’s limits, any defense cost the insurance company pays under Coverage E contributes to the Occurrence Limit.
CU 0001 eliminates the reference to Coverage U paying in excess of the retained limit.
The items that refer to exhaustion or reduction of limits under Coverage E still apply. However, defense costs are added to damages when they are part of the underlying insurance.
CU 0001 adds item 7. It explains how the policy responds if any underlying insurance is not concurrent with this policy.

CONDITIONS

CU 0001 made the following changes:

CU 0001 combines the Excess Insurance and Conditions sections in UM 0200.
CU 0001 broadens appeals. It lets the insurance company appeal actions covered under the self-insured items under Coverage U.
Bankruptcy of Underlying Insurer applies to only Coverage E. in CU 0001. It applied to both coverages in
UM 0200.
Cancellation and Nonrenewal in CU 0001 replaces Cancellation in UM 0200. It refers to state-specific amendatory endorsements instead of the four-paragraph condition in UM 0200.
Legal Action Brought Against Us in CU 0001 is similar to the same condition in UM 0200. However, it has an additional paragraph that states that injury or damage is not covered or damages in excess of the policy limit are not paid.
CU 0001 changes Maintenance of Underlying Insurance to apply to only Coverage E. It also states that this insurance does not replace underlying insurance if the insured does not maintain such underlying insurance.

CU 0001 added the following conditions:

Transfer of Defense
Separate Insureds
Premium
Insurance Under More Than One Policy
Loss Payable
Extended Coverage Territory