CU 0002–COMMERCIAL UMBRELLA LIABILITY COVERAGE ANALYSIS

(October 2025)

Introduction

Table of Contents

Agreement

Definitions

Commercial Umbrella Liability Coverages

Coverage L–Bodily Injury Liability and Property Damage Liability

Insuring Agreement

Exclusions

Coverage P–Personal and Advertising Injury Liability

Insuring Agreement

Exclusions

Supplemental Payments

What Must Be Done in Case of Loss

How Much We Pay

Conditions

Nuclear Energy Liability Exclusion

Nuclear Energy Liability Definitions

INTRODUCTION

The American Association of Insurance Services (AAIS) CU 0002–Commercial Umbrella Liability Coverage provides protection for insureds with substantial assets or risks. As a standalone policy, it has separate coverages, exclusions, and conditions, offering excess limits over General Liability, Automobile Liability, Employers Liability, and other underlying liability coverages. Because it is issued as a separate policy, it may contain forms or restrictions not included in the underlying coverage forms.

In some cases, the Commercial Umbrella may be more restrictive than the underlying policies. As with all policies, it is important to thoroughly review and understand the policy's coverages, provisions and conditions.

The CU 0002 can be used with various underlying liability policy forms, such as specific AAIS commercial liability forms, Businessowners or Artisans forms, as well as non-AAIS forms.

NOTE: If the umbrella coverages are more restrictive than the underlying policies, it's important to discuss this with the insurance company underwriter. Can the umbrella be endorsed to align with the underlying coverages? If not, the insured should be promptly informed in writing about any coverage gaps to avoid misunderstandings.

TABLE OF CONTENTS

This section outlines the policy's structure and provides guidance on how to quickly find specific sections. The analysis lists the key sections in the order they appear in the policy.

This section also specifies that a state-specific amendatory endorsement applies to the policy, along with any other relevant endorsements or schedules listed on the declarations page. It also clarifies that words or phrases with special meanings are found in the Definitions section and are enclosed in quotation marks throughout the policy.

AGREEMENT

The insurance company agrees to provide the coverage outlined in the policy, subject to all terms and conditions. This is contingent on the named insured paying the required premium.

DEFINITIONS

Throughout the policy, specific words are defined and may appear in bold or within quotation marks. Limiting their interpretation to these definitions helps all parties better understand the coverage intent. CU 0002 specifies thirty-nine words and terms.

1. You and Your

This refers to the person or persons, entity, or organization on the declarations named as the insured. The cancellation, renewal, nonrenewal, and premium terms apply to only these entities.

'You' and 'your' also refer to newly formed or recently acquired organizations where any of the above entities hold or own a majority interest.

You and your do not include any of the following newly acquired or formed organizations or situations:

• Newly acquired or formed limited liability companies, joint ventures, or partnerships.
• Those organizations which have other similar insurance available to them.
• More than 90 days immediately after the organization is acquired or formed or after the policy period ends, whichever occurs first.
• Incidents involving bodily injury or property damage which occurred prior to the organization being acquired or established.
• Those situations involving personal injury and advertising injury occurring from an act committed prior to the organization's acquisition or formation.

2. We, Us and Our

This is the insurance company providing this coverage.

3. Advertisement

This is an announcement or public notice. It also applies to (but is not limited to) online or electronic communications offering the named insured's products, goods, or services for the following purposes:

• To rent, lease, sell, or use for other purposes to prospective customers, clients, purchasers, or patrons
• To present to prospective supporters and encourage their consideration.

The same standards apply to advertisements on websites, but only for the section that promotes the named insured's products, goods, or services.

4. Auto

This term refers to a land motor vehicle, trailer, or semi-trailer intended for use on public roads, including any attached machinery and equipment. It also covers any other land vehicle that must have motor vehicle insurance or meet the state's financial responsibility laws where it is registered or primarily kept. However, mobile equipment is excluded from this definition.

5. Bodily Injury

This refers to bodily harm, sickness, or disease a person sustains, including resulting death. It excludes mental or emotional injury, suffering, or distress unrelated to a physical injury.

NOTE: Death does not have to occur during the policy period. However, it must result directly from an injury sustained during the policy period.

6. Claims-Made

These are liability claim provisions applying to claims for injury or damage subject to the following requirements:

• The claim must be filed against an insured within the policy's coverage period or during an extended reporting period.
• The injury or damage must happen on or after the retroactive date specified in the declarations of the claims-made policy and before the policy's expiration.

7. Coverage Territory

This represents the entire world, excluding any nation, foreign country, or jurisdiction subject to the trade or economic sanctions or embargoes of the United States of America.

8. Covered Auto

This refers to an auto covered by an underlying liability insurance policy, and this insurance provides additional (or excess) liability coverage limits.

9. Covered Contract

There are six types of covered contracts:

• Leases of premises
• Easement or license agreements

o Agreements related to construction or demolition operations within 50 feet of a railroad are not included.

• Requirements to indemnify a municipality are prescribed in ordinances

o This does not include work done for the municipality.

• Sidetrack agreements
• Elevator maintenance agreements
• Any part of any other contract or agreement relating to the following:

o The named insured assumes the tort liability of another party to cover bodily injury or property damage to a third party.

§ This coverage applies only if the contract is related to the conduct of the insured’s business.

§ Include agreements indemnifying a municipality for work done on behalf of that municipality.

Tort liability is liability imposed by law with or without a contract or agreement.

o The named insured or their employees renting or leasing vehicles, but only if these contracts are related to the named insured’s business.

If a covered contract contains any of the following agreements, these agreements are not considered covered even though the other parts of the contract are still covered:

• An agreement to indemnify a railroad for bodily injury or property damage caused by construction or demolition within 50 feet of any railroad property, particularly when it impacts a railroad bridge, trestle, track, roadbed, tunnel, underpass, or crossing.
• An agreement indemnifying any party against fire damage to premises rented or borrowed by the named insured.

o An agreement covering an auto used by the named insured or any of its employees for rent, lease, or borrowing. This coverage applies only if a driver is provided with the auto.

• An agreement releasing (or holding harmless) any hired party involved in transporting property by auto from liability. This limitation applies only to contracts the named insured signs to use a covered auto on a route approved by a public authority for the contracted party.
• An agreement requiring the named insured or its employees to pay for property damage to a leased or rented auto.
• An agreement indemnifying architects, engineers, or surveyors for injury or damage caused in any way by any of the following:

o Maps, drawings, opinions, reports, surveys, change orders, designs, or specifications they prepare or approve (or fail to prepare or approve)

o Directions or instructions given (or that should have been given) when the principal cause of the injury or damage is giving or failing to give them

• An agreement in which the insured takes responsibility for injury or damage resulting from their professional services or omissions, such as supervision, inspection, or engineering work. This limitation specifically applies when the insured is an architect, engineer, or surveyor.

10. Damages

This refers to monetary compensation awarded to a party claiming to have been injured.

11. Data Records

These include electronic files, documents, and data stored on computers, networks, or other software used with electronically controlled devices.

12. Declarations

These pages are identified as such in this policy; they are also referred to as supplemental declarations and schedules.

13. Designated insured

This term has many meanings:

• If the individual is checked on the declarations, the named insured and their spouse are considered insureds. However, this only applies when they are conducting the named insured’s business in which they solely own.

• If the partnership or joint venture box is checked on the declarations, the named insured, along with its partners, members, and their spouses, are considered insureds. This applies only when they are engaged in the named insured’s business.
• If the limited liability company is selected on the declarations, the named insured and its members are considered insureds. They qualify as insureds only when performing the business of the named insured. Managers of the named insured are also insureds, but only when acting within the scope of their managerial responsibilities.
• If the named insured is listed as a trust and indicated on the declarations, then both the trust itself and its trustees are considered insureds. The trustees are insured only when they are acting in their official capacity as trustees.

NOTE: Trust is not an option under the CU 0052 - AAIS Commercial Umbrella Liability Declarations. If you use this declaration page, please select Other and describe the entity.

• If the named insured on the declarations is an organization different from those listed above, like a Corporation, then the named insured, along with its executive officers and directors, is considered an insured. These officers and directors are insured only when acting within the scope of their duties.

o The named insured's stockholders are also designated insureds but limited to their liability as stockholders.

• Employees authorized to give or receive notices of claims or occurrences

14. Employee

This term includes leased workers. It does not include temporary workers.

15. Executive Officer

This refers to any individual who holds an officer position as defined by the named insured in its charter, bylaws, constitution, or similar document.

16. Impaired Property

This is tangible property that has become either useless or less useful for two main reasons. One reason could be that the property contains products or work of the named insured that are dangerous or deficient. The other reason might be that the named insured has failed to fulfill its contractual obligations.

Impaired property excludes the named insured's products or work. It is considered impaired only if the insured can restore it to usefulness through actions such as repairing, replacing, removing, or fulfilling contractual obligations.

17. Indemnitee

This refers to any party for whom an insured has assumed liability for damages related to bodily injury or property damage under a covered contract.

18. Insured

This term has many meanings. The following apply except concerning owning, maintaining, or using covered autos.

• If an individual is checked on the declarations, the named insured and his or her spouse are designated insureds. However, they are such only when they conduct the named insured’s business that he or she solely owns.

• If a partnership or joint venture is checked on the declarations, the named insured and its partners or members and their spouses are designated insureds. They are considered such only when conducting the named insured’s business.
• If a limited liability company is checked on the declarations, the named insured and its members are designated insureds. They are considered such only when conducting the named insured’s business. The named insured’s managers are also designated insureds, but only when they work within the scope of their managerial duties.
• If trust is checked on the declarations, the named insured and its trustees are designated insureds, but only when they work within the scope of their duties.

NOTE: CU 0052–Commercial Umbrella Liability Declarations does not have a space for or to list trusts.

• If the named insured checked on the declarations is an organization other than the ones listed above, the named insured and its executive officers and directors are designated insureds. The executive officers and directors are such only when they work within the scope of their duties.

The named insured's stockholders are also designated insureds. However, this limitation applies only to their liability as stockholders.

The following are also insureds, except for coverage concerning owning, maintaining, or using covered autos.

• The named insured's real estate manager, who is not an employee or a volunteer. This manager can be a person or an organization.
• A deceased named insured’s legal representative, but only for acts within the scope of its duties as such. Any person who has custody of a deceased’s named insured's property is also an insured for liability that arises from maintaining or using that property. However, that status ends when the appropriate legal representative is appointed. The legal representative has all the rights and duties of the named insured under this coverage.
• The named insured's employees but limited to actions while in the course of their employment. The named insured’s volunteers are also insured, but only while they perform duties related to the way the named insured’s business is conducted. Managers of limited liability companies and executive officers of organizations other than limited liability companies, partnerships, or joint ventures are not insureds under this item. However, they are among the first group of insureds mentioned above.

Employees and volunteer workers are not insured for bodily injury or personal and advertising injury under any of the following circumstances:

• The injury is to the named insured, its partners, or members.
• The injury is to a fellow employee while that fellow employee works or performs duties for the named insured.
• The injury is to a volunteer worker who provides duties related to the conduct of the named insured’s business.
• The injury is to designated relatives of an injured fellow employee or volunteer worker as described above.
• Where an obligation exists to reimburse third parties partially or wholly for damages that arise from the injuries described above.
• Employees and volunteer workers are not insureds for property damage to any property the named insured, its partners, members, employees, or volunteers own, occupy, use, rent, have on loan, or over which they exercise care, custody, or control.

Insured refers to the following regarding ownership, maintenance, or use of covered autos:

• The named insured
• Insured parties in the underlying auto insurance are only covered to the extent provided by their policy.
• Liability for the conduct of any party mentioned in the two points above is limited to the extent of that party's liability.

Insured also means any party named as an additional insured in the underlying insurance. This is limited to the extent of the coverage provided by the underlying insurance.

Suppose a partnership, joint venture or limited liability company (current or past) is not named on the declarations. In that case, no party is an insured under this policy as it relates to its conduct.

NOTE: This clarifies that insured status is granted only to parties related to the entities named on the declarations.

19. Leased Worker

This is a person the named insured leases from a labor leasing company, who is bound by a contract or agreement to perform duties related to the conduct of the named insured’s business. A temporary worker is not a leased worker.

NOTE: An agreement between the named insured and the leasing company is necessary for the individual to be recognized as a leased worker.

20. Limit

This is the dollar amount applying to the coverages provided.

21. Loading or unloading

This is a movement of property. It begins when the property is removed from the point where it is accepted for transit by a vehicle, aircraft or watercraft. It continues while the property is in or on such a vehicle. It ends when the property is removed from such a vehicle at the destination. It also includes moving the property by a hand truck or by any mechanical device attached to the transporting vehicle.

22. Mobile Equipment

This is land motor vehicles and their attached machinery and equipment that are or do one or more of the following:

• Used exclusively on the named insured's owned or rented premises. This includes adjoining ways.
• Designed primarily for use off public roads
• Travel on crawler treads
• Self-propelled and designed or used to move any of the following equipment that is either a part of it or is permanently attached to it:

o Power cranes, shovels, loaders, diggers, and drills

o Graders, scrapers, rollers, and other road construction or repair equipment

• Equipment not described above and not self-propelled. They must be used mainly to provide mobility to any of the following permanently attached equipment:

o Air compressors, pumps, generators, spraying, welding, and building cleaning equipment

o Equipment used for geophysical exploration or lighting, and equipment used to service wells

o Equipment that raises or lowers workers, such as cherry pickers

• Land vehicles not described in the first four points above are subject to the condition that they are not used to transport cargo or people

Mobile equipment does not include self-propelled vehicles with any of the following equipment permanently attached:

NOTE: This is because they are considered autos.

• Snow removal, street cleaning, road maintenance, or resurfacing equipment
• Cherry pickers and other equipment mounted on a vehicle chassis that raise or lower workers
• Air compressors, pumps, generators, spraying, welding, and equipment used to clean buildings
• Equipment used for geophysical exploration or lighting, and equipment used to service wells

23. Occurrence

This is an accident. It includes repeated exposure to the same or similar conditions.

24. Personal and Advertising Injury

This injury refers to harm, including bodily injury, resulting from one or more of the following offenses:

• Spoken, written, or electronic publication of material that maligns a person or organization, belittles a person's or organization's goods, products, or services, or violates a person's rights of privacy
• Falsely taking persons into custody, detaining, or imprisoning them
• Willful or wanton prosecution
• The named insured misappropriated advertising ideas in its advertisement
• The named insured infringing on another's trade dress, slogan, or copyright in its advertisement
• Offenses committed by or on behalf of the owner, landlord, or lessor of a room, dwelling, or premises. These include wrongful entry into, wrongful eviction from, or invasion of the right of private occupancy of a room, dwelling, or premises that a person occupies.

The definition of personal and advertising injury includes any consequential bodily injury that may result.

25. Pollutant

This encompasses any irritant or contaminant that is solid, liquid, gaseous, thermal, or radioactive. It covers acids, alkalis, chemicals, fumes, soot, vapor, and waste. Waste refers to materials intended for disposal, recycling, reclamation, or reconditioning. Additionally, it includes electromagnetic, magnetic, or electrical fields, both visible and invisible, as well as particles and sound emissions.

26. Products

These are the products or goods the named insured manufactures, handles, sells, disposes of, or distributes. Additionally, products or goods manufactured, handled, sold, disposed of, or distributed by others under the same name or by a party whose assets the insured has acquired also qualify as products.

Products also include the following:

• Any representations or warranties made at any time regarding the products’ features, including quality, fitness, durability, use, or performance.
• Other parts, materials, equipment, or containers used together with these products. A vehicle does not qualify as a container.
• Either giving or neglecting to provide instructions and warnings.

The following are not products:

• Real property
• Vending machines or other property rented to or placed for others to use but not sold.

27. Products/Completed Work Hazard

The product's hazard pertains to bodily injury or property damage occurring away from locations owned or leased by the named insured. It arises from products the insured has physically transferred or handed over to others.

The completed work hazard refers to bodily injury or property damage occurring away from the locations the insured owns or rents, arising from work performed. It does not cover work the insured abandoned or left unfinished. This work is deemed completed on the earliest of these dates:

• When all work the named insured is responsible for under a contract has been completed.
• When all work that is the named insured’s responsibility under a contract at a job site is finished. This applies in cases where the agreement requires work at multiple sites.
• When parties other than a contractor or subcontractor working at the same job site put the named insured's work to its intended use.

However, work that is otherwise finished but needs additional service, maintenance, correction, repair, or replacement due to a defect or deficiency is deemed complete.

Neither the product's hazard nor the completed work hazard covers bodily injury or property damage arising from any of the following:

• Property in transit unless the injury or damage was caused by a defect in a non-owned vehicle, and that defect resulted from any insured’s loading or unloading.
• Tools, uninstalled equipment, or materials that are abandoned or not in use but still present.
• Any products or work classifications referencing "including products/completed work" on the insurance declarations.

28. Property Damage

This refers to physical damage or destruction of tangible property, including the loss of its use. The physical damage and the resulting loss of use are deemed to occur simultaneously.

Loss of use of tangible property, even without physical damage or destruction, still qualifies as property damage. The timing of this loss is deemed to be the same as the event that caused it.

Tangible property does not include data records, except in relation to auto coverage. In the context of owning, maintaining, or using covered autos, property damage also encompasses any loss, expense, or cost incurred as a result of actions taken to respond to or assess the effects of pollutants.

29. Recreational Vehicle

This is a land motor vehicle intended for recreational use off public roads. It includes golf carts and snowmobiles, but is not limited to these.

30. Retained Limit

This is either the self-insured retention listed on the declarations or the underlying insurance limits available.

31. Self-insured Retention

This is the dollar amount listed on the declarations that the insured must pay before this insurance coverage kicks in. It applies only to incidents or offenses not covered by the underlying insurance. If the underlying insurance had covered the event but had exhausted its limits, this amount does not apply.

32. Silica

This is also known as silicon dioxide. It includes various forms of silica, such as silica sand, silica mixed with other compounds, and silica dust mixed with other dust particles.

33. Suit

This includes any civil legal action in a court of law or an administrative proceeding that seeks damages covered by this insurance. It includes arbitration or alternative dispute proceedings that seek damages, which any insured either must submit to or agree to submit to with the insurance company's consent. Either the underlying insurance company or the insurance company providing coverage for this policy can grant the consent.

34. Temporary Worker

This is a worker furnished to the named insured. They may serve as a substitute for a full-time employee on leave or be employed to meet a short-term workload situation.

35. Terms

These are any definitions, limitations, conditions, provisions, and exclusions that apply to this coverage.

36. Underlying Insurance

This liability insurance coverage applies within the specified limits and policy period, as outlined in the schedule of underlying insurance on the declarations. It also covers policies issued to replace existing ones during this policy period. The replacement policies must offer the same or higher limits and insure against the same hazards, unless modifications are made through standard revisions or with the written consent of this policy’s insurance company.

37. Underlying Insurer

This is any insurance company that issues an underlying insurance policy.

38. Volunteer Worker

This is not an employee. This individual donates time or services and meets both of the following criteria:

• Acts within the scope of duties determined and directed by the named insured.
• It is not paid in any way other than reimbursement for specific out-of-pocket costs.

Volunteer workers are neither temporary nor leased workers.

39. Your Work

This is work or operations the named insured performs or that others perform on its behalf. It includes any equipment, material, or parts supplied specifically for the work.

It also covers written warranties or representations regarding the work or operation’s quality, fitness, durability, or performance. Additionally, it includes providing warnings or instructions, or failing to do so.

COMMERCIAL UMBRELLA LIABILITY COVERAGES

COVERAGE L–BODILY INJURY LIABILITY AND PROPERTY DAMAGE LIABILITY

1. Insuring Agreement

a. The insurance company covers amounts on behalf of the insured exceeding the policy's retained limits. However, the insured is legally responsible for these amounts if they result from damages related to bodily injury or property damage covered by this Insuring Agreement.

The company has the right and obligation to defend the insured against lawsuits for damages related to bodily injury or property damage covered by this Insuring Agreement, but only if either of the following conditions is met.

· The underlying coverage does not apply.

· The underlying limits are used up paying judgments, settlements, or claims.

The company may not need to provide a defense, but it retains the right to do so or collaborate with any underlying carrier or the insured in defending lawsuits concerning damages covered by this insurance. It is not required to defend the insured against claims for damages not included in this Insuring Agreement.

The insurance company has the authority to investigate any incident covered by this policy and to resolve claims or lawsuits for which it is required to provide defense.

b. How Much We Pay explains the amounts the insurance company covers as damages.

c. The company is not required to provide additional defense once the applicable limit has been paid, whether through approved settlements or judgments. Besides Supplementary Payments, it is not obligated to offer support, assistance, or pay any extra amounts.

d. Coverage applies only to bodily injury or property damage meeting all the following requirements:

· Occurs during this insurance’s policy period

· Results from an occurrence taking place in the coverage territory

· Does not continue, resume, or alter covered bodily injury or property damage that a designated insured was aware of prior to the start date of this insurance.

The Knowledge of Bodily Injury or Property Damage Condition addresses this issue. If a designated insured knew about bodily injury or property damage occurring before this insurance’s inception date, all continuations, resumptions, and changes in the injury or damage are considered part of the initial occurrence even after the policy expired.

Related Court Case: Known Injury or Damage Not Excluded in Continuous or Progressive Damage Loss

Example: An awning attached to Tiebel's Jewelry Store collapsed and struck Jonathon on his head on January 10, 2024. He fell and was life-lined to the hospital. He never regained consciousness and died on April 2, 2025. His family filed a wrongful death claim against Tiebel's. The policy in effect on January 10, 2024, responded, not the one in effect on April 2, 2025.

e. Bodily injury or property damage occurring during this insurance’s policy period includes any ongoing, resumption, or change in such injury or damage after the policy ends.

f. Damages arising from bodily injury include those for which any party may claim at any time, such as for care, loss of services, or death caused by such injury.

g. A contract or agreement may require coverage for an insured who is also listed as an additional insured under the underlying policy. In these situations, the insurance company's maximum payout for that insured is limited to the amount specified in the contract or agreement. Payments made by the underlying insurance can reduce this limit.

h. Injury or damage caused by an exposure covered by the underlying insurance may have a separate limit, according to its terms. In these cases, this insurance will only cover injury or damage from that exposure if a distinct limit is listed on CU 0052–Commercial Umbrella Liability Declarations Schedule of Underlying Insurance.

2. Exclusions

NOTE: The Editors added titles to enhance clarity.

a. Intended Injury or Damage

Bodily injury or property damage expected, intended, or directed by the insured or resulting from intentional and malicious acts. However, bodily injury that arises from using reasonable force to protect people or property is covered.

NOTE: The primary reason for this exclusion is to keep the insurance company from becoming involved with non-accidental losses. In addition, it is in the public interest. It ensures the insured will not use the insurance coverage for gain, such as theft, to inflict injury on a competitor, as an instrument of revenge, or to cause any other intentional harm. This exclusion's wording continues to be challenged and interpreted by the courts, especially in cases where the action was intentional, but the type and extent of injury or damage that resulted was not.

Related Article: Expected or Intended Injury Exclusion

Related Court Cases:

Intentional Damage Exclusion Barred Claims against Liability Insurer of Store Owner

"Expected or Intended Injury" Exclusion Did Not Apply to Bar Patron's Injuries

b. Contract or Agreement

Bodily injury or property damage the insured assumes under a contract or agreement. However, this exclusion has the following exceptions:

· Liability for damages the insured has without a contract or agreement

· Liability for damages arising from bodily injury or property damage the insured assumes in a covered contract. However, the bodily injury or property damage must occur after the insured has executed the contract.

Damages resulting from contractually required bodily injury and property damage include reasonable attorney fees and necessary litigation expenses incurred by or on behalf of the indemnitee. This coverage is subject to both of the following conditions:

· The covered contract assumes liability for the indemnitee’s defense or defense costs.

· These attorney fees and litigation costs are to defend the indemnitee against lawsuits or legal actions claiming damages covered by this insurance.

Costs of defense are part of Supplementary Payments if all of the conditions under Supplementary Payments 4.b. are met. If not, the reasonable attorney fees and necessary costs of litigation incurred by or for an indemnitee are considered part of damages.

NOTE: Defense costs that are part of damages are included within the limit of insurance instead of outside the limits. As a result, all defense costs reduce the amount available to pay for any settlement or judgment.

c. Employment Retirement Income Security Act (ERISA)

Claims related to violations of the requirements imposed on fiduciaries by the Employment Retirement Income Security Act (ERISA) of 1974. This exclusion also covers violations of amendments to the Act and similar regulations.

d. Mandatory Benefits

Bodily injury in cases where the insured is required to provide benefits under workers compensation, disability benefits, occupational disease, unemployment compensation, or similar laws.

NOTE: The purpose of this exclusion is to prevent duplicate coverage for injuries that workers compensation insurance is meant to cover.

e. Employee – Crew Member

Liability for bodily injury sustained by an employee of the insured while working as a master or crew member on any vessel.

NOTE: Ocean Marine coverage forms and policies cover this exposure.

Related Article: Ocean Marine Insurance Overview

f. Vehicles

Bodily injury or property damage arising out of owning, using, or maintaining autos that are not defined as covered autos.

g. Autos

Liability arising from automobile no-fault laws, uninsured or underinsured motorist coverage, personal injury protection, medical payments, or first-party physical damage coverage.

h. Pollution

Bodily injury or property damage arising from any actual, alleged, or threatened release, escape, seepage, or migration of pollutants under these conditions:

1) Occurring when:

· pollutants are being transported or towed by either the insured or someone acting on the insured’s behalf by a covered auto.

· a covered auto is being loaded or unloaded.

· pollutants are handled (treated, processed, stored, or disposed of) in or on a covered auto.

The pollutants may be (but are not required to be) contained within covered property.

This exclusion has an important exception: damage caused by lubricants, fuel, or operating fluids necessary for a covered auto is covered only if these fluids escape from the part of the vehicle designed to contain them. Therefore, intentional discharges are excluded. This exception depends on the underlying insurance providing such coverage, unless its limits have been reached. The coverage is subject to the same limitations, exclusions, and terms as the underlying insurance.

2) Occurs at or from any location where any insured has ever owned, occupied, rented, or had property loaned from others, except for the following:

· Bodily injury or property damage arising from the heat, fumes, or smoke of a fire which becomes uncontrolled and escapes from its designated area or container.

· Bodily injury occurring inside a building due to smoke, vapor, fumes, or soot from heating, cooling, or dehumidification equipment. This also includes injuries from equipment used to heat water for the building's occupants or their guests. The injury must occur inside the building.

Example: The Adams family continues to occupy a unit in an apartment building undergoing renovations on the other side of the building. Everyone becomes ill from the fumes released from a faulty furnace. The illness leads to permanent injuries, and the family sues its landlord. The landlord’s Commercial Umbrella Liability Coverage insures the bodily injury sustained because it resulted from a faulty heating unit.

· Bodily injury or property damage the named insured might be responsible for as a contractor applies only if the owner or lessee of the location, site, or premises was added to this policy (or the underlying coverage form or policy) as an additional insured for the named insured's ongoing operations there. This exception applies only when the location, site, or premises have never been owned, occupied by, rented to, or loaned to any insured other than the designated additional insured.

3) Occurring at or from any location or site any insured or others have ever used to handle, store, dispose of, process, or treat waste.

4) The pollutants were transported, handled, stored, treated, disposed of, or processed as waste by any insured or another for whom the named insured is legally responsible.

5) Taking place at or from any location or site where any insured, its contractors, or subcontractors performed operations, but only if the pollutants were brought to the location or site in conjunction with such operations. There are three exceptions:

· Bodily injury or property damage caused by a fire's heat, fumes, or smoke when the fire becomes uncontrolled and spreads beyond its designated area or container.

· Bodily injury or property damage as a result of fuels, lubricants, or other operating fluids needed to perform mobile equipment's normal functions escaping from the reservoir designed to contain them.

This exception does not apply if the injury or damage results from the intentional release of such fluids. Additionally, it does not apply if the fluids brought to the location or site are intended to be released as part of the operations performed by any insured, contractor, or subcontractor.

Examples:

Scenario 1: Franklin is a contractor working on the MegaDome building site. He overdrives his forklift, turns too quickly, and overturns. Oil seeps out of the engine, and hydraulic fluid also leaks. The damage to the site caused by these pollutants is covered.

Scenario 2: Franklin changes the forklift's oil while it is on the site. He lets the oil spill out on the ground, replaces the oil in the forklift, and drives off. This pollution damage is not covered.

· Bodily injury or property damage occurring inside a building caused by the release of gases, fumes, or vapors from materials brought into the building. These materials must be used in operations performed by any insured, contractor, or subcontractor. The injury or damage must occur within the building.

Examples:

Scenario 1: The policyholder hires Prime Time Painters to paint an office building hallway. On the third day, a tenant employee is hospitalized after inhaling paint fumes. This insurance covers the expenses associated with that tenant employee’s illness.

Scenario 2: The named insured hires Prime Time Painters to paint an office building. It uses an ammonia-based paint on the metal fence surrounding the property. An employee of one of the building's tenants returns from lunch, faints from the fumes, strikes her head on the sidewalk, and is rushed to the hospital for treatment. There is no coverage because the incident occurred outside the building.

6) This applies to any location where the insured is engaged in testing, monitoring, abating, cleaning up, removing, containing, treating, detoxifying, neutralizing, responding to, or assessing pollutant effects. It also covers situations where contractors or subcontractors acting on behalf of the insured carry out these activities.

i. Pollution - Abatement

Any loss, cost, or expense arising from any of the following:

· Requests, demands, orders, or mandatory legal or regulatory obligations requiring any insured or others to test, monitor, clean up, abate, remove, contain, treat, detoxify, neutralize, respond to, or evaluate the impact of pollutants in any manner.

· Claims or suits by a government authority (or on its behalf) seeking damages related to testing, monitoring, cleanup, removal, containment, treatment, detoxification, neutralization, response efforts, or assessment of pollutant impacts.

These exclusions do not apply to any of the following:

· Liability for property damage the insured has without such request, demand, order, or statutory or regulatory requirement, or claim or suit brought by or on behalf of a governmental authority

· Any cost or expense covered by or that would have been covered by the underlying auto insurance if its limits were not exhausted. This coverage adheres to the same terms, exclusions, and limitations as the underlying auto insurance.

NOTE: A separate pollution policy should be considered if additional pollution liability coverage is needed.

Related Article: CG 00 42–Underground Storage Tank Policy Analysis

Related Court Cases:

Contaminant Clarified With Respect to Application of Pollution Exclusion

Environmental Cleanup Costs Held Not Covered by CGL Insurance

Pollution Claim by Insured for Damage to His Property by Former Tenant Held Not Covered

Pollution Cleanup Costs Incurred During Policy Period by Subsidiary Acquired Thereafter Held Not Covered

Pollution Exclusion Applied Although Toxic Waste Was Turned Over to Transporter for Disposal

Pollution Exclusion Held Applicable to Cigarette Smoke

j. War

Bodily injury or property damage is explicitly excluded if caused directly or indirectly by the following:

· Any act of war, undeclared war, or civil war

· Warlike action refers to actions taken by a military force. This exclusion also covers measures a government employs to prevent or defend against an anticipated or ongoing attack by any government or authority using military personnel or agents.

· Rebellion, revolution, insurrection, usurpation of power, or actions taken by a government authority to prevent or resist any of these.

k. Aircraft

Business operations (exposures such as international dealings or hazardous materials) may require special review. Bodily injury or property damage arising out of any of the following:

· Owning, maintaining, using, occupying, renting, operating, loaning, entrusting, supervising, loading, or unloading any aircraft owned or operated by, or rented or loaned to, any insured.

· The insured’s negligence or wrongdoing on its part in supervising, hiring, or training others if the bodily injury or property damage arises from any of the activities above.

Example: Priority Plants manages flower farms across Florida, Alabama, and Georgia. To facilitate monthly visits, they purchased an aircraft. When not used for monthly visits, employees can rent the plane. However, the aircraft is poorly maintained, leading to an employee injury during an emergency landing. Insurance coverage does not cover this injury.

This exclusion does not apply to the following:

· Liability assumed under any insured contract applying to ownership, maintenance, or use of aircraft.

· Aircraft with a paid crew can be loaned to or chartered/hired by the named insured. No insured may hold ownership of the aircraft.

· If the underlying aircraft liability insurance covers these exposures or would have, had the limits not been exhausted, this coverage adheres to the same terms, exclusions, and limitations as the underlying aircraft insurance unless stated otherwise.

Related Article: Aircraft Insurance Coverage Analysis

l. Watercraft

Bodily injury or property damage arising from the following:

· Owning, maintaining, using, occupying, renting, operating, loaning, entrusting, supervising, loading, or unloading any watercraft which is owned, operated by, rented, or loaned to any insured.

· The insured’s negligence or misconduct in supervising, hiring, or training others if the bodily injury or property damage arises from any of the activities listed above.

Example: A watercraft the insured owns and rents to its employees for pleasure use is not properly maintained, and an employee is injured when the watercraft sinks. Coverage does not apply to the injury.

This exclusion does not apply to the following:

· Liability assumed under any insured contract that applies to owning, maintaining, or using watercraft

· Watercraft ashore at the named insured's owned, rented, or controlled locations

· Watercraft that the named insured does not own that is/are less than 50 feet long and is/are not used to transport people or property for a fee

Example: Bobby and Bubba of B & B's Barbecue rent a large pontoon boat for an afternoon sales event.

They prepare a hearty barbecue on a sizable charcoal grill. The grill ignites a fire, prompting guests to scatter.

The shift causes the boat to tilt, resulting in several guests falling overboard and sustaining injuries. Coverage applies because the boat was not owned, was less than 50 feet long, and no charge was made for transporting the guests.

· If underlying watercraft liability insurance covered or would have covered these exposures (except that its limits were exhausted), this coverage would follow the underlying watercraft insurance's terms, exclusions, and limitations unless stated otherwise.

m. Liquor

Bodily injury or property damage in which any insured may be liable because of any of the following:

· Causing or contributing to any person becoming intoxicated.

· Furnishing alcoholic beverages to a person who is either under the legal drinking age or is already intoxicated.

· Any law relating to selling, giving, distributing, or using alcoholic beverages.

This exclusion does not apply if the named insured is not in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages.

Example: Denny's Dental Distributors holds a formal company Christmas party and serves alcoholic beverages without requesting payment. Coverage applies if bodily injury or property damage occurs as a result of Denny’s guests consuming alcoholic beverages.

On the other hand, consider the following:

Example: Ace Liquor and Wine Distributors sponsors a fundraiser for a local art museum by holding a wine tasting event. Ace serves food and wine to everyone who contributed to the museum. An attendee who was served several alcoholic beverages was injured on the trip home from the event. There is no coverage if Ace is sued for contributing to the attendee's intoxication because Ace is in the business of distributing alcoholic beverages.

However, this exclusion does not apply if underlying liquor liability insurance is in place or would have covered these exposures, except that its limits have been exhausted. This coverage follows the underlying liquor liability insurance's terms, exclusions, and limitations unless stated otherwise.

Related Court Cases:

Liquor Liability Exclusion Held Applicable to Nonprofit VFW

Liquor Liability Suit Based on Failure to Restrain Patron Did Not Circumvent Exclusion

CGL Policy's Liquor Exclusion Inapplicable to Sales during Festival

n. Employers Liability

Bodily injury to any of the following:

· An employee of the insured when that bodily injury is the result of their employment by the insured or is due to that employee performing duties in conjunction with conducting the insured’s business

· The spouse, children, parents, brothers, or sisters of an employee injured as described above, whose bodily injury is a consequence of that employee's bodily injury

This exclusion applies whether the insured is liable as an employer or in any other capacity. It also applies if the insured must share damages with or repay someone else who must pay damages because of the injury.

NOTE: This clarification is especially important due to the increased use of contractors, subcontractors, independent contractors, or leased employees and the uncertainty about who is responsible for injuries to them.

This exclusion does not apply to the following:

· If the underlying employers' liability insurance covers or would have covered these exposures except for exhaustion of its limits, this coverage follows the terms, exclusions, and limitations of the underlying employers' liability insurance unless stated otherwise.

· Bodily injury a domestic employee sustains is covered only if it results from a covered auto. This coverage applies when the domestic employee cannot claim workers compensation benefits. Domestic employees are those employed by the insured to perform domestic or household tasks related to the use or care of the residence premises.

· Liability the insured assumes under a covered contract.

NOTE: Monopolistic states requiring or offering workers compensation coverage do not include employer’s liability coverage. This may create a notable gap in protection.

Related Articles:

Workers Compensation Monopolistic State Funds

Stop Gap–Employer’s Liability Coverage

o. Professional Services

Bodily injury and property damage due to providing or failing to provide any professional service.

p. Employers-Related Practices

Bodily injury due to any of the following:

· Refusing to employ a person or terminating that employee's employment. It also does not apply to on-the-job practices, acts, policies, or omissions related to employment directed towards the person, such as, but not limited to, sexual misconduct, coercion, discipline, defamation, malicious prosecution, demotion, humiliation, reassignment, evaluation, harassment, and discrimination.

NOTE: Malicious prosecution is specifically included in this exclusion because the court in Peterborough Oil Company, Inc. v. Great American Insurance refused to exclude malicious prosecution as an employment-related practice. The court reasoned that if the insurance company did not intend to cover malicious prosecution, it should have listed it. The court determined that this exclusion must be read narrowly, so even with the term “such as” preceding the list, only the items actually listed could be excluded.

· Bodily injury to the person's family member as a consequence of the bodily injury to the person due to actions described above.

This exclusion applies even if the injury occurred before the person became an employee or after the person's termination.

NOTE: This last paragraph is in response to Owners Insurance Company v. Clayton South Carolina Supreme Court where the insurance company was required to pay for damages to a terminated employee who was slandered after the employer terminated her employment.

This entire exclusion applies whether the insured is liable as an employer or in any other capacity, or if it must share damages with or repay someone else who must pay damages due to the injury.

q. Fellow Employee

An employee's liability for bodily injury due to the following:

· A fellow employee's injury caused by an auto applies only if the injury arises from and is in their employment or while performing duties related to the insured's business.

Example: Mindy and Paul are employees at Cini's Pizza and Pasta. Cini's offers both dine-in service and delivery.

Scenario 1: While returning from a delivery, Mindy hits Paul, a fellow worker who is walking across the parking lot, to dump trash into the receptacle. There is no coverage.

Scenario 2: While returning from a delivery, Mindy hits Paul, who just dropped by Cini's to pick up a pizza for his family. There is coverage because Paul is not in the course of his employment at the time of the accident.

· Bodily injury to a fellow employee's family member resulting from the bodily injury to that employee.

r. Racing or Stunt Activities

Bodily injury or property damage due to using autos, mobile equipment, or recreational vehicles in, or to practice or prepare for, organized or pre-arranged racing, speed, pulling, pushing, or stunt activities or contests.

s. Property Damage to Insured’s Property

Damage to property owned, rented, or occupied by the named insured is not covered. Additionally, any costs for repairing, replacing, retrofitting, or maintaining such property, along with expenses to prevent injury or damage to others' property, are also excluded.

Example: Calculatin' Computerz experiences a sudden surge in its business and rents warehouse space from a nearby business. Soon after, a new employee accidentally hits a load-bearing column in the warehouse with a forklift, leading to the building's collapse. City authorities shut down the facility for three weeks to repair the structural damage. The damage to the building is not covered because the warehouse was managed and rented by Calculatin' Computerz.

t. Transportation

Property damage to property the insured transports or owns arising out of owning, using, or maintaining covered autos. This exclusion does not affect liability assumed under a sidetrack agreement.

u. Property Sold, Abandoned, Parted

Property damage to premises the named insured sold, gave away, or abandoned if the damage is related to any part of those premises. This exclusion does not apply to premises that are the insured's work and which it has never occupied, rented, or held for rental.

v. Loaned Property

Damage to property loaned to the insured is excluded, except for liability accepted through a written trailer interchange or sidetrack agreement.

w. Care, Custody, or Control

Property damage to personal property in the insured's care, custody, or control is excluded; however, this exclusion does not apply to liability assumed under a written trailer interchange or sidetrack agreement.

x. Insured’s Work

Property damage to a specific part of real property the insured works on, if caused by that work. This exclusion also applies if a contractor or subcontractor working on behalf of the insured performs the work. However, it does not affect liability assumed under a sidetrack agreement.

y. Faulty Work

Property damage affecting a specific part of any property needing to be restored, repaired, or replaced due to faults in the named insured's work. This exclusion does not apply to property damage covered by the products/completed work hazard or liability taken on under a sidetrack agreement.

z. Products

Property damage to products arising from the product or its parts

Example: Grillz-r-us manufactures gas grills and fuel tanks. Hector buys a Grillz-r-us grill and uses it frequently throughout the summer. One day, the grill malfunctions due to a faulty temperature control, melts down, and causes a fire.

The grill's fuel tank explodes, causing damage to part of the deck and a house wall, and seriously injuring Hector, who was nearby. While Grillz-r-us's umbrella liability coverage covers the bodily injury and property damage, it does not cover the destruction of the grill itself.

NOTE: Grillz-r-us may pursue legal action against the temperature control unit supplier if it is found to have contributed to the malfunction.

aa. Products/Completed Work Hazard

Property damage to the named insured's work resulting from that work and classified as part of the products/completed work hazard. Damage caused by a subcontractor working on the insured's behalf is an exception to this exclusion.

bb. Performance or Contract Delay

Property damage not involving physical injury, destruction, or impairment occurs when the insured or an authorized party fails to fulfill or delays fulfilling a contract. It is also excluded if caused by defects, deficiencies, inadequacies, or unsafe conditions in the insured's work or products.

NOTE: Property damage encompasses loss of use even if there's no physical harm to the property. Consequently, this exclusion indicates that loss of use caused by the insured’s work preventing an item from being used will not be covered.

This exclusion does not apply to loss of use of other property resulting from sudden and accidental physical injury or destruction of the named insured's work or products after they are put to their intended use.

Example: Select Switches manufactures a switch sold to another company, which uses it as a component in its product. If the switch is defective and causes the product to malfunction, the product is considered impaired but not damaged. The downtime resulting from the product not functioning is excluded from the impairment.

cc. Loss of Use

Any loss, expense, or cost incurred by the named insured or others due to the loss of use, disposal, withdrawal, recall, inspection, repair, replacement, adjustment, or removal of the insured's work, products, or impaired property. Expenses related to withdrawals or recalls are also excluded. This exclusion applies if the insured's work, products, or impaired property are withdrawn or recalled from the market or use due to known or suspected defects, deficiencies, or unsafe conditions.

Example: Titanic Tires manufactures automobile tires. The tires develop problems that require immediate recall and replacement. None of the recall expenses are covered.

dd. Personal and Advertising Injury

Any bodily injury arising from personal and advertising injury.

NOTE: Bodily injury arising from personal and advertising injury is covered under Coverage P–Personal and Advertising Injury Liability.

ee. Electronic Data

Any damages, expenses, costs, or losses arising from loss of, loss of use of, damage to, corruption of, inability to access, change, or manipulate electronic data records.

If underlying insurance covers or would have covered these exposures except that its limits were exhausted, this coverage follows the underlying insurance's terms, exclusions, and limitations unless stated otherwise.

NOTE: Electronic data is usually defined as information, facts, or programs used with computer software or any other media used with electronically controlled equipment.

ff. Communication Laws or Regulations

Bodily injury or property damage arising directly or indirectly from any type of actual or alleged violations of any of the following and similar state or local laws or regulations:

· The Telephone Consumer Protection Act (TCPA), including its amendments or additions

· The CAN-SPAM Act of 2003, including its amendments or additions

· The Fair Credit Reporting Act (FCRA), the Fair and Accurate Credit Transaction Act (FACTA), and any of their amendments or additions

· Any other local, state, or federal statute, ordinance, or regulation related to the sending, collecting, disposing of, recording, printing, transmitting, communicating, or distributing material or information.

gg. Lead

Bodily injury or property damage related in any way to any aspect of lead

hh. Silica

Bodily injury or property damage related in any way to any aspect of silica

ii. Asbestos

Bodily injury or property damage related in any way to any aspect of asbestos

NOTE: The lead, silica, and asbestos exclusions apply even if the underlying coverage form or policy provides coverage.

COVERAGE P–PERSONAL AND ADVERTISING INJURY LIABILITY

1. Insuring Agreement

a. The insurance company covers sums the insured is legally required to pay in excess of the policy’s retained limits. These sums cover damages related to Coverage P – Personal and Advertising Injury, as detailed in this Insuring Agreement.

The company also has the right and duty to defend the insured against claims or suits seeking damages for personal and advertising injury under this Insuring Agreement in the following circumstances:

· The underlying coverage does not apply.

· The underlying limits are exhausted by paying judgments, settlements, or claims.

The company may not be obligated to provide a defense; however, it retains the right to defend or engage with any underlying carrier or the insured in defending lawsuits against the insured for damages covered by this insurance. There is no obligation to defend the insured against lawsuits for damages not covered by this insurance policy.

b. The insurance company also has the option to investigate any incidents covered by the policy and settle claims or lawsuits which fall under its duty to defend. How Much We Pay describes the amounts the company pays as damages.

c. The company is not obligated to defend once it has paid amounts up to the limit specified by written settlements it agrees to or judgments. Aside from Supplemental Payments provisions, it is not required to offer support, assistance, or pay any additional amounts.

d. Coverage applies to only personal and advertising injury if the offense:

· Was committed during this insurance’s policy period

· Took place in the coverage territory

2. Exclusions

The insurance company is not obliged to pay for the following:

a. Pollution – Personal and Advertising Injury

Personal and advertising injury arising at any time from the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants.

b. Pollution - Abatement

Any loss, cost, or expense arising from either of the following:

· Any request, demand, order, or legal requirement for an insured or others to test for, clean up, treat, respond to, or assess the effects of pollutants in any manner.

· Any claim or lawsuit filed by or on behalf of a government authority related to testing, cleanup, treatment, response to, or assessment of pollutants.

NOTE: Language regarding personal injury liability coverage in earlier editions led to numerous efforts to include different pollution-related losses. These were often described as trespassing, wrongful entry, or invasion of the right to private occupancy. However, personal and advertising injury liability coverage was never meant to cover pollution damages or cleanup expenses. This exclusion clearly states that there is no coverage for pollution exposures stemming from the personal and advertising injury provisions in this policy.

c. War

Personal and advertising injuries resulting directly or indirectly from acts of war, including undeclared and civil war, are excluded. This encompasses military operations and extends to government actions aimed at preventing or responding to anticipated or actual attacks by any government or authority using military forces or agents. Furthermore, it covers injuries caused by rebellion, revolution, insurrection, usurpation of power, or any actions taken by government authorities to obstruct or defend against such events.

d. Professional Services

Liability for personal and advertising injury arising from providing or neglecting to provide professional services.

e. Employment Related Practices

Bodily injury or personal and advertising injury to a person due to any of the following:

· Refusing to employ a person or terminating that employee's employment.

· On-the-job practices, acts, policies, or omissions related to employment—including sexual misconduct, coercion, discipline, defamation, malicious prosecution, demotion, reassignment, humiliation, evaluation, harassment, discrimination, or any omissions directed at that person.

· Consequential damage to a person’s family members resulting from injuries sustained by that individual, as described above.

· This exclusion is applicable whether the injury occurred before the person became an employee, during their employment, or after they were terminated.

· The exclusion applies regardless of whether the insured is liable as an employer or in any other role, and whether they must share or repay damages caused by the injury.

f. Intentional Acts

Personal and advertising injury resulting from the insured's act of causing or directing an action, knowing it will lead to such injury.

Example: Questioning Quinn, a journalist for Movie Monthly, covers stories about movie stars. Despite Suzie Starlett having obtained a restraining order against Quinn, Movie Monthly pressures Quinn to secure the story, no matter what the consequences. If Suzie decides to sue Movie Monthly for violating the restraining order, it would not be covered by the insurance policy.

g. Criminal Acts

Personal and advertising injury arising out of a criminal act the insured commits or directs.

Example: Bob Breakingnews fails to obtain details of an incident for a story. The Nose For News Gazette tells Bob to break into a building and copy the confidential files containing the details needed to run the story. There is no coverage if the break-in is discovered and the Gazette is sued. However, if Bob broke in without the Gazette's knowledge, coverage would apply to the Gazette but not to Bob.

h. Liable and Slander

Personal and advertising injury due to either of the following:

· When personal and advertising injury arises from material published by or at the insured's direction, which the insured knew was false.

Example: An article in the Tumbleweeds Truth reports a well-known politician's son was detained for driving under the influence. However, at the time of publication, the Truth knew it was merely a traffic stop, and the entire article was a fabrication. There will be no coverage if the politician’s son chooses to sue the newspaper.

· When personal and advertising injury arises from oral or written publication of material first beginning before the coverage inception date.

Example: This coverage is effective 01/01/2025. The official date of a publication is 01/02/2025, but an advance copy was released on 12/28/2024. Since the first publication took place before the 01/01/2025 effective date, there is no coverage if a suit is filed seeking damages for personal and advertising injury.

In both circumstances above, the publication can be either oral or written.

i. Breach of Contract

Personal and advertising injury arising out of breach of contract is excluded. However, this exclusion does not apply if there is an implied contract to use another party's advertising idea in the named insured's advertisement.

Example: Johnny On The Spot Printing was contracted to design, print, and mail a promotional brochure for Brad's Bowling Bonanza. This project was time-sensitive. Unfortunately, Johnny failed to meet the mailing deadline by several days. As a result, Brad sued for breach of contract, but there was no coverage for the incident.

j. Goods, Products, Services

Personal and advertising injury arising from the named insured's goods, products, or services, not meeting the quality or performance claims made in its advertisements.

Example: Ollie Overweight sues FatOut because its weight loss product guaranteed weight loss, but Ollie gained weight instead. Coverage does not apply in this case.

k. In the Business of Media

This coverage does not include personal and advertising injury caused by an offense committed by an insured in advertising, broadcasting, publishing, or telecasting. Additionally, there is no coverage if the insured’s business creates or determines website content for others or provides internet search, access, content, or services.

However, this exclusion does not cover parts of the personal and advertising injury definitions that involve false arrest, detention, imprisonment, or malicious prosecution. It also excludes activities related to landlords, such as wrongful eviction, entry, or invasion of private property. An insured who only advertises using frames, borders, or links online is not classified as engaging in advertising, broadcasting, publishing, or telecasting as a business.

l. Incorrect Descriptions

Personal and advertising injury arising from inaccurate descriptions of goods, products, or services as stated in the named insured's advertisement.

Example: Beulah's Bundled Ads is suing Cain’t Get It Right News for lost revenue due to the paper incorrectly placing the decimal point in the sale price of a product in an advertisement. This loss is excluded.

m. Agreement or Contract Assumption

The insured assumes personal and advertising injury liability through an agreement or contract, but coverage also exists for liability the insured incurs without a contract or agreement.

n. Infringement of Property Rights

Personal and advertising injury is excluded when arising out of any infringement of copyright, patent, trademark, trade secret, or other intellectual property rights.

NOTE: Personal and advertising injury is excluded when arising out of any infringement of copyright, patent, trademark, trade secret, or other intellectual property rights.

However, this exclusion does not apply to the following:

· When the named insured's advertisement infringes on copyright, trade dress, or slogan

· When the use of another party’s advertising idea in the named insured’s advertisement is considered infringement of intellectual property rights

Related Court Case: Insurer is Obligated to Defend Copyright Infringement Claim

o. Social Media

Personal and advertising injury arising out of an electronic chatroom, bulletin board, blogs, or social networking sites, but only those which the insured owns, hosts, or controls.

p. Misleading Potential Customers

Personal and advertising injury arising out of the named insured's efforts to deceive customers or potential customers online. This exclusion applies if the deception involves unauthorized use of someone else's name or product in the insured's email, domain, or metatag.

q. Communication Laws or Regulations

Personal and advertising injury arising directly or indirectly by any violations, whether actual or alleged, of any of the following and similar state or local laws or regulations.

• The Telephone Consumer Protection Act (TCPA), including its amendments or additions
• The CAN-SPAM Act of 2003, including its amendments or additions
• The Fair Credit Reporting Act (FCRA), the Fair and Accurate Credit Transaction Act (FACTA), and any of their amendments or additions
• Any other local, state, or federal statute, ordinance, or regulation pertaining in any way to sending, collecting, disposing of, recording, printing, transmitting, communicating, or distributing material or information.

r. Lead

Personal and advertising injury related in any way to any aspect of lead

s. Silica

Personal and advertising injury related in any way to any aspect of silica

t. Asbestos

Personal and advertising injury related in any way to any aspect of asbestos

SUPPLEMENTAL PAYMENTS

1. Payments

When the insurance company has the duty to defend, it covers all costs associated with investigating, settling claims, or defending lawsuits.

· Court costs of a suit in which the court rules are the insured's responsibility. This item does not include attorney fees or expenses.

· All expenses the insurance company incurs.

· Reasonable expenses the insured incurs at the insurance company's request to assist in investigating or defending a claim or suit. This also covers up to $250 per day in lost wages if the insured has to be away from work.

NOTE: These can be very costly to the insured, especially when a court assesses the proceeding's costs and expenses against the negligent party.

· Prejudgment interest is awarded by the court but applies only to the portion of the judgment covered by the insurance company. The insurance company does not pay prejudgment interest that accrues after it has paid its full limits.

· Interest that accrues on the full judgment amount after it is entered, but before the insurance company either pays, offers payment, or deposits its share with the court, not exceeding the insurance limits.

· Cost of appeal bonds or bonds to release attachments is limited to the insurance coverage applicable to the bond amount. The insurance company is not obligated to apply for or provide the bonds.

NOTE: The cost of the excess amount of the bond is the insured’s expense.

· Bail bond costs are covered only if they arise from an incident this policy covers, with a maximum of $2,000. The insurance company is not obligated to apply for or provide the bonds.

2. Additional Limits

Payments made under this section are in addition to the policy’s limits of insurance.

NOTE: This provision is important because these expenses can be substantial and could reduce the available limits if they were included in the insurance limits that apply.

3. Expenses

In some cases, the insurance company has the right to defend the insured and can choose to participate in the defense, but it is not obligated to do so. When it exercises this right, it covers its own expenses but does not contribute to the costs of the insured or the underlying carrier.

4. Indemnitees

The insurance company may be called upon to defend the insured against a suit where the insured's indemnitee is also named in the suit. In that case, the company does the following:

· Defends the indemnitee

· Pays attorney fees it incurs to defend that indemnitee

· Pays the necessary litigation expenses it incurs

· Pays necessary litigation expenses the indemnitee incurs at its request

Additionally, the actions and payments above are subject to all of the following conditions:

· The suit against the indemnitee must pursue damages in which the insured agreed to assume liability in an insured contract or agreement.

· This policy’s insurance must apply to the liability the insured assumed.

· The insured must have assumed the obligation to defend or cover the defense costs within the same insurance contract or agreement.

· Based on what the insurance company knows about the occurrence and the allegations in the lawsuit, there should be no evident conflict between the interests of the insured and the indemnitee.

· Both the insured and the indemnitee need to request the insurance company to manage the defense for the indemnitee in the lawsuit and must agree to have the same legal representative representing both parties' interests.

· The indemnitee must agree to do all of the following:

o Cooperate with the insurance company during the time it investigates, defends, or settles the suit.

o Promptly send the company copies of any demands, notices, summonses, or legal documents it receives related to the suit.

o Notify any other insurance company that has coverage which may be available to the indemnitee.

o Cooperate with the insurance company to coordinate such other insurance.

o Provide the insurance company with written authorization to obtain records related to the suit.

o Give the insurance company other information related to the suit.

• Give the insurance company written authorization to conduct and control the indemnitee's defense in the suit.

These payments are not considered damages for bodily injury or property damage if the insured meets the following conditions. As a result, they do not reduce the limits available to pay losses. This voids the provisions of Coverage L's exclusion 2. b. 2). agreeing to pay such expenses but only as damages.

The insurance company's obligation to defend the indemnitee ends when it exhausts the applicable insurance limit by paying judgments or settlements, or when these conditions and agreements are not met.

WHAT MUST BE DONE IN CASE OF LOSS

1. Cooperation

The named insured must cooperate with the underlying insurance companies and comply with all the terms and conditions of the underlying policies. All insureds involved in a loss must cooperate with the insurance company as it investigates and settles claims or defends suits.

2. Notice

The named insured must notify its insurance company as soon as practicable if there is an occurrence or offense that might be covered. The same requirement applies if an insured becomes aware of anything that might become a claim under this coverage.

The notice must include certain information, such as the name of the insured and the policy number, as well as the time, place, and circumstances of the occurrence or offense. Additionally, the named insured must provide the names and addresses of all known and potential claimants and witnesses.

3. Voluntary Payments

Volunteer payments cannot be made, assumed, or obligations or costs assumed by any insured except at its own expense.

4. Other Duties

The named insured has additional duties if an occurrence or offense might lead to a claim. It must send the insurance company copies of all legal papers, demands, and notices on a timely basis. When requested, it must also cooperate with and help the insurance company do all of the following:

· Enforce the insurance company's rights of recovery against all parties that may be liable to an insured for the injury or damage.

· Obtain and give evidence.

· Make arrangements for all witnesses to attend.

HOW MUCH WE PAY

1. Limits

The most paid for all damages are the limits on the declarations. This is regardless of the number of insureds, persons, or organizations that sustain injury or damage, claims made or suits brought, or vehicles or watercraft involved in an accident.

Example: Ashland Jewelers is a partnership. A customer sues Ashland Jewelers after discovering the diamond in her engagement ring is an imitation. The angered bride-to-be also files separate actions against the partners individually. Each partner sends their copy of the notice of the suit to the insurance company. The claims adjuster informs them the limit of insurance available to respond to the lawsuit is the each occurrence limit.

2. Aggregate Limit

The Aggregate Limit is the most paid for the total of all damages under Coverages L and P. The exception is that it does not apply to damages for bodily injury or property damage arising out of owning, maintaining, using, loading, or unloading covered autos.

3. Each Occurrence Limit

The Each Occurrence Limit is subject to the Aggregate Limit. It is the most paid for the total of all damages under Coverage L due to bodily injury or property damage arising from any one occurrence.

4. Personal and Advertising Injury Limit

The Personal and Advertising Injury Limit is subject to the Aggregate Limit. It is the most paid for the total of all damages under Coverage P due to personal and advertising injury that any one person or organization sustains.

5. Non-concurrent Underlying Insurance

Underlying insurance may not be concurrent with this policy’s policy period. In that case, only claims for occurrences or offenses that are covered by the underlying insurance and take place during this insurance's policy period are considered to determine the extent to which any aggregate limit in the underlying insurance is reduced or exhausted.

The available limits of underlying insurance written on a claims-made basis are reduced or exhausted by only claims made during the policy period or any applicable extended reporting period.

6. Application of Aggregate Limit

The Aggregate Limit applies separately to each 12 consecutive month period. This begins with the inception date on the declarations. It also applies separately to any remaining policy period of less than 12 months. If the policy is extended after it is written, the additional period is treated as part of the most recent preceding period when determining limits.

CONDITIONS

1. Appeals

The insurance company may appeal a judgment exceeding the underlying limit if the underlying carrier does not appeal. If it does, it is liable for the expenses it incurs in conjunction with the appeal. This is in addition to its limit.

NOTE: This condition allows the umbrella carrier to protect its interest. There are situations when an underlying insurance company or a self-insured decides not to appeal a judgment. If the judgment exceeds the umbrella’s retained limit, the umbrella carrier can make the appeal at its own expense. This is crucial in situations where the underlying carrier believes the verdict will exceed its limits and chooses not to invest additional time and money in a lost cause.

2. Assignment

Assigning the policy requires the insurance company's approval and written consent.

3. Bankruptcy of an Insured

The insurance company is still obligated and is not relieved of any of its obligations if an insured declares bankruptcy or becomes insolvent.

NOTE: This means the umbrella continues as though the insured is still solvent.

4. Bankruptcy of Underlying Insurer

Umbrella coverage does not replace the underlying insurance if the underlying carrier is bankrupt or insolvent. It remains in effect as if the underlying insurance were still in effect.

5. Cancellation and Nonrenewal

This condition refers to the state-specific endorsement listed on the declarations.

6. Change, Modification, or Waiver of Policy Terms

Waivers or changes to the policy's terms are valid only when the insurance company agrees to them in writing.

7. Conformity with Statute

Any terms in the policy that conflict with laws in the state where the policy is issued are amended to conform to those laws.

8. Examination of Books and Records

The insurance company is permitted to examine any part of the named insured's books and records related to the coverage provided by this policy during the policy period and for up to three years after coverage ends.

9. Inspections

The insurance company or others acting on its behalf may inspect the named insured's property and operations at any time. However, it is not obligated to do so. Such inspections and any recommendations resulting from the report are intended only for the company's benefit. They do not guarantee that the named insured's property or operations are safe, healthy, or in compliance with any laws, rules, or regulations.

10. Knowledge of Bodily Injury or Property Damage

This is determined to have occurred at the earliest of the following when any designated insured:

· Receives a suit, claim, or demand for damages alleging bodily injury or property damage.

· Reports the bodily injury or property damage to the insurance company or any other carrier.

· Become aware of anything suggesting that bodily injury or property damage has occurred or is occurring.

NOTE: This condition is very important because it determines which insurance policy must respond. The Insuring Agreement for Coverage L covers only bodily injury and property damage that was first known to a designated insured after the policy inception date.

11. Legal Action against Us

The insurance company cannot be sued unless all policy terms are met, and the amount of an insured's liability is determined by a final judgment in a trial or by a written agreement between the insured, the party that brings the claim for damages, and the insurance company.

There is no coverage for any injury or damage that this policy excludes or that exceeds the limit applicable.

No party has the right to join or implead the insurance company in any action brought to determine an insured's liability.

NOTE: The insurance company may be sued to recover an agreed settlement or final judgment against an insured. However, it is not liable for damages that the policy does not insure or exceeds the applicable insurance limit.

An agreed settlement is a settlement and release of liability agreement signed by the company, the insured, and the claimant or its legal representative.

12. Maintenance of Underlying Insurance

The following conditions apply to the underlying insurance:

· The named insured must maintain and keep all underlying insurance in effect during this policy's term.

· If the underlying insurance is not properly maintained for any reason, this policy responds as if the required underlying insurance is still in force.

· Cancellations, non-renewals, or material changes in underlying coverage or limits must be reported to the insurance company immediately.

· The insurance company’s liability will not exceed what it would have been if the underlying insurance had remained active or with the original limits and coverage.

Payments for judgments, settlements, or expenses for occurrences or offenses during the policy period that reduce or deplete any aggregate limit in the underlying coverage are not the same as failing to maintain such underlying insurance.

Additionally, any statement in this condition does not limit the insurance company's right to cancel or non-renew.

Related Article: Maintaining Underlying Limits

Related Court Case: Agency's Inaction Results in Gap between Primary and Umbrella

13. Misrepresentation, Concealment or Fraud

This insurance becomes void if the named insured or any other insured has done any of the following at any time:

· Intentionally concealed or misrepresented a material fact or situation that relates to this insurance, to the subject of this insurance, or the insured's interest in it

· Engaged in fraud or false swearing concerning any matter relating to this insurance or its subject matter

NOTE: This condition clarifies that the named insured agrees the information on the declarations is both accurate and complete when they accept the coverage issued. It also affirms the information is based on representations it made to the insurance company in the application, and the company relied on that information when it issued the policy.

14. Subrogation

If the insurance company pays under this policy, it may require the insured to assign their rights of recovery against third parties that may have caused the loss to the company. The company is not obligated to make any payments if any insured impairs or otherwise affects those rights. However, an insured may waive its rights of recovery against a third party in writing prior to a loss occurring.

NOTE: Once the insurance company pays under this insurance, any rights an insured has to recover any payments from others responsible for causing the loss transfer to the company. An insured must not jeopardize those rights. In addition, if the insurance company requests, the named insured may be required to assist in bringing a suit, transferring those rights, or helping to enforce them.

Example: The massive chandelier in the atrium of the Felix Office building crashed to the floor. Thankfully, nobody was killed, but 30 people sustained significant injuries. Felix’s primary and umbrella carriers responded to the claims and lawsuits. Their investigation aimed to determine the cause of the chandelier's fall.

They discovered that Mayberry Enterprises, the prior owner, had withheld critical information regarding the chandelier’s stability and its attachments and had provided false information in its disclosure notice. Felix has rights of recovery against Mayberry, but the carriers who pay the losses assume those rights and sue Mayberry Enterprises instead of Felix.

15. Transfer of Defense

• Once the underlying carrier pays its limits in judgments or settlements, the obligation to defend transfers to the umbrella carrier.
• The umbrella carrier agrees to cooperate in transferring control of any unresolved claims or lawsuits to them.

16. Separate Insureds

Apart from the limits specified under How Much We Pay, the insurance coverage applies to each insured who is sued or against whom a claim is filed.

17. Premium

All premiums are determined based on the insurance company's rules and rates.

The premium on the declarations may be a deposit premium. If this is the case, the insurance company calculates the actual earned premium for each audit period and bills the named insured for any additional premium due.

The premium billed must be paid by the due date on the billing notice. If the deposit premium exceeds the audited earned premium, the insurance company will refund the difference to the named insured.

The named insured must maintain records and information needed by the insurance company to calculate the premium. They must send the company copies of these records and information when requested.

18. Insurance under More than One Policy

This insurance is excess coverage over any other insurance. It only contributes when a policy is explicitly written as excess over this insurance.

Example: Pilgrim's Pressure Cookers manufactures pressure cookers. It has the following insurance:

Company A: Commercial Liability Coverage Form with a $1,000,000 Aggregate Limit

Company B: Umbrella Liability Policy with a $1,000,000 Aggregate Limit

Company C: Excess Layer with a $2,000,000 Aggregate Limit

A Pilgrim's sales representative is demonstrating the company's new line of pressure cookers at a consumer fair when one of them explodes. The claims for damages and injuries total $4,000,000.

In this case:

· Company B does not respond to the loss until Company A pays its obligations.

· Company B responds before Company C because Company C's coverage is a second layer of excess insurance protection.

The umbrella carrier is not obligated to defend against a suit if another carrier has that obligation. However, it will defend if no other carrier does. It then becomes entitled to the insured's rights against those carriers.

This insurance pays only its share of the ultimate net loss. That is the amount that exceeds the amounts any other primary sources of coverage owe, including any deductibles and/or self-insured retentions.

19. Loss Payable

The insurance company does not pay until and unless the insured or its underlying carrier pays the retained limit. The insured's obligation to pay part of the final loss must have been determined by a final settlement or judgment after litigation or by a written agreement between the company, the claimant, and the insured.

20. Extended Coverage Territory

• A suit may be brought in a country where the insurance company is not allowed to defend the insured. In that case, it reimburses the insured for any defense costs and other necessary expenses incurred that would have been its responsibility if it could have defended. These payments are made as Supplementary Payments to the extent that this policy applies and are not part of the limit.
• If a claimant is awarded damages covered by this insurance at a location outside the coverage territory, the company reimburses the insured for amounts it paid.
• Payments or reimbursements are in United States currency. The rate of exchange for damages paid is based on the exchange rate at the time the insured became obligated to pay the damages. The exchange rate for all such expenses under Supplementary Payments expenses is based on the date the insured incurs the expenses.
• Disputes between the named insured and the insurance company about the coverage provided must be filed in courts in the United States, its territories and possessions, Canada, or Puerto Rico.
• The named insured must carry and maintain any coverage any governmental authority requires throughout the policy period. Not doing so does not invalidate this insurance, but it applies as though the required coverage were in place.

This requirement does not apply to any reduction in limits that may occur due to payments of settlements, judgments, or expenses arising from covered occurrences or offenses. These are not failures to maintain the required coverage.

NUCLEAR ENERGY LIABILITY EXCLUSION

1. Exclusion

This insurance does not apply to bodily injury or property damage under any liability coverage as follows:

· Where an insured under this policy is also an insured (or would be an insured under any such policy except that it ended because its limit was used up) under a Nuclear Energy Liability policy issued by any of the following:

• Nuclear Energy Liability Insurance Association
• Mutual Insurance Association
• Mutual Atomic Energy Liability Underwriters
• Nuclear Insurance Association of Canada
• Any of their successors

· That results from the hazardous properties of nuclear material and in cases where any person or organization must maintain financial protection in accordance with the Atomic Energy Act of 1954 or any amendatory law. This also includes cases where the insured is entitled to indemnity from the United States of America or any of its agencies under any agreement it enters into with any person or organization. This exclusion applies even if the entitlement was nullified in any way by the issuance of this policy.

This insurance also does not apply under any liability coverage to bodily injury or property damage that results from the hazardous properties of nuclear material, based on the following:

· The nuclear material is at (or has been discharged or dispersed from) any nuclear facility owned or operated by or on behalf of an insured.

· The nuclear material is contained in spent fuel or waste that an insured or others that act on its behalf ever possessed, handled, used, stored, processed, disposed of, or transported.

· The bodily injury or property damage arises out of an insured furnishing services, materials, parts, or equipment in connection with planning, constructing, maintaining, operating, or using any nuclear facility. However, for such facilities in the United States of America, its territories or possessions, or Canada, this exclusion applies only to property damage to that nuclear facility and any property at that facility.

2. Definitions

These definitions apply specifically to the Nuclear Energy Liability Exclusion:

Hazardous Properties

These are properties that have radioactive, toxic, or explosive characteristics.

Nuclear Material

This is source material, special nuclear material, or by-product material.

Source Material, Special Nuclear Material, and By-product Material

Each of these terms has the meaning given to it in the Atomic Energy Act of 1954 or subsequent or amendatory laws.

Spent Fuel

This is any solid or liquid fuel element or fuel component used in or exposed to radiation in a nuclear reactor.

Waste

This means any waste material that contains by-product material. It does not mean tailings or wastes produced by the extraction or concentration of uranium or thorium from any ore processed primarily for its source material content. It also means waste that results from the operation of nuclear reactors or equipment designed or used to separate uranium or plutonium isotopes, process or utilize spent fuel, or handle, process, or package waste.

Nuclear Facility

This refers to the following:

· any nuclear reactor

· any equipment designed or used to:

o separate uranium or plutonium isotopes

o process or utilize spent fuel

o handle, process, or package waste

o process, fabricate, or alloy special nuclear material if the insured holds over 25 grams of plutonium or uranium-233, or over 250 grams of uranium-235 at the equipment location.

· any structure, basin, excavation, location, or place designed or used for waste storage or disposal, including the site where they are situated, all activities carried out there, and all premises involved in these operations.

Nuclear Reactor

This is any apparatus designed or actually used to sustain nuclear fission in a self-supporting chain reaction or that contains a critical mass of fissionable material.

Property Damage

This includes all forms of radioactive contamination of property.

NOTE: The Nuclear Energy Liability Exclusion is broad, covering incidents and materials associated with nuclear energy of all kinds. The purpose is to exclude any bodily injury or property damage covered by any nuclear liability insurance policy and to exclude coverage for companies required by federal laws and acts related to nuclear energy to maintain financial protection. It also excludes all medical payments, as well as nuclear discharges, leaks, waste, or work conducted at any nuclear facility.