CU 0001–COMMERCIAL EXCESS/UMBRELLA LIABILITY COVERAGE ANALYSIS

(October 2025)

Introduction

Table of Contents

Agreement

Definitions

Commercial Excess/Umbrella Liability Coverages

Coverage E–Excess Liability

Insuring Agreement

Exclusions

Coverage U–Umbrella 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 previous edition of this policy was the only American Association of Insurance Services (AAIS) excess/umbrella product prior to the introduction of CU 0002 – Commercial Umbrella Liability Coverage. CU 0002 is now regarded as the basic, primary policy. CU 0001 is used when excess liability considerations need to be addressed.

Related Article: CU 0002–Commercial Umbrella Liability Coverage Analysis

CU 0001 succeeds UM 0200 and has a 09 10 edition date. It primarily acts as an excess liability policy with an added umbrella component. The excess coverage is provided by Coverage E, while Coverage U represents the umbrella coverage applied over the self-insured retention.

TABLE OF CONTENTS

This section describes the policy’s structure and offers guidance on finding a specific section quickly. This analysis presents these main sections in the order they appear in the policy.

This section also states that a state-specific endorsement is attached to the policy, and any other applicable endorsements or schedules are listed on the declarations. It further explains that words or phrases with special meanings are enclosed in quotation marks and detailed in the Definitions section of the policy.

AGREEMENT

The insurance company agrees to provide the coverages described in the policy, subject to all its terms and conditions. This is in consideration of the named insured paying the required premium.

DEFINITIONS

Defined words are used throughout the policy. Limiting these terms to the definitions in the policy helps ensure all parties have a clear understanding of the coverage intended.

1. You and Your

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

You and your also means newly acquired or formed organizations owned or over which a majority interest is held.

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.
• Where similar insurance is available.
• More than 90 days after the organization is acquired or formed, or after the policy period ends, whichever comes first.
• Those situations involving bodily injury or property damage occurring before the organization was acquired or formed.
• Those situations involving personal injury and advertising injury arising from an offense committed before the organization was acquired or formed.

2. We, Us and Our

This is the insurance company providing this coverage.

3. Advertisement

This is an announcement or public notice. The meaning extends to (but is not limited to) those on the Internet or in electronic communications promoting the named insured's products, goods, or services for the following:

• To offer for rent, lease, sale, or other use to potential customers, clients, purchasers, or patrons.
• To encourage potential supporters and facilitate their consideration.

The same criteria apply to website advertisements, but only for the section of the website that features the named insured's products, goods, or services.

4. Auto

This is a land motor vehicle, trailer, or semi-trailer designed to operate on public roads. It includes any machinery and equipment attached to the vehicle. It also includes any other land vehicle subject to compulsory motor vehicle insurance laws or financial responsibility laws in the state where it is licensed or primarily garaged. However, it does not include mobile equipment.

5. Bodily Injury

This is bodily harm, sickness, or disease a person sustains, as well as resulting death. However, it does not include mental or emotional injury, suffering, or distress not directly related to the physical injury.

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

6. Claims-Made

These are liability claim provisions applying to injury or damage claims meeting the following two requirements:

• The claim must be filed against an insured either during the policy period or within an extended reporting period.
• The injury or damage must occur on or after the retroactive date specified on the declarations for the claims-made policy and before the policy expires.

7. Coverage Territory

This definition has two categories:

• Under Coverage E–Excess Liability, follows the underlying coverage territory.
• Under Coverage U–Umbrella Liability, it applies worldwide. However, it does not include any nation, foreign country, or jurisdiction subject to the trade or economic sanctions or embargoes of the United States of America.

8. Covered Contract

There are six types of covered contracts:

• Leases of premises
• Easement or license agreements

Agreements related to construction or demolition work within 50 feet of a railroad are excluded.

• Requirements for indemnifying a municipality as outlined in ordinances. Work performed for the municipality is excluded.
• Sidetrack agreements
• Elevator maintenance agreements
• Any part of any other contract or agreement related to the following:

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

§ This applies only if the contract relates to the conduct of the named insured’s business.

§ Includes contracts indemnifying a municipality for work performed for that municipality.

Tort liability is a type of liability established by law, regardless of whether a contract or agreement is involved.

The following are not included in the definition of a covered contract. If a covered contract contains any of these agreements, they will not be considered covered, even if other parts of the contract remain covered:

• An agreement indemnifying a railroad from liability for bodily injury or property damage caused by construction or demolition operations within 50 feet of any railroad property, when such activities impact a railroad bridge, trestle, track, roadbed, tunnel, underpass, or crossing.
• An agreement indemnifying any party for fire damage to premises rented or borrowed by the named insured.
• An agreement indemnifying architects, engineers, or surveyors against injury or damage caused by any of the following circumstances:
• Maps, drawings, opinions, reports, surveys, change orders, designs, or specifications they create or approve (or neglect to create or approve).
• Directions or instructions provided, or that should have been provided, when the principal cause of injury or damage involves the providing or failing to provide them.
• An agreement in which the insured takes responsibility for any injury or damage arising out of providing or failing to provide professional services. This includes supervisory, inspection, or engineering services. This limitation applies only if the insured is an architect, engineer, or surveyor.

9. Damages

This is financial compensation given to a party that alleges injury.

10. Data Records

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

11. Declarations

These are also referred to as declarations, supplemental declarations, and schedules related to this policy.

12. Designated Insured

This term has many meanings:

• If individual is checked on the declarations, the named insured and their spouse are designated as insureds. However, this only applies if they are engaged in the business owned exclusively by the named insured.

• If partnership or joint venture is checked on the declarations, the named insured, along with its partners, members, and their spouses, are considered insureds. However, this applies only when they are engaged in the business of the named insured.
• If limited liability company is checked on the declarations, the named insured and its members are designated insureds. However, this applies only when they are conducting the named insured’s business. The managers of the named insured are also designated insureds, but only if they act within their managerial responsibilities.
• If trust is checked on the declarations, the named insured and its trustees are considered insureds. The trustees are designated insureds only while carrying out their trustee duties.
• If the named insured checked on the declarations is an organization other than those listed above, the named insured and its executive officers and directors are designated insureds. The executive officers and directors are considered designated insureds only when they are acting within the scope of their duties. This does not include partnerships, joint ventures, or limited liability companies.

The named insured's stockholders are also designated insureds, but only with respect to their liability as stockholders.

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

13. Employee

This term includes leased workers but excludes temporary workers.

14. Executive Officer

This includes anyone holding an officer position as defined by the named insured in its charter, bylaws, constitution, or other governing documents.

15. Impaired Property

This refers to tangible property that has become either useless or less useful for one of two reasons.

· This might be due to the property containing products or work of the named insured that are either hazardous or simply defective.

· It might also be because the named insured did not fulfill its contractual obligations.

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

16. Indemnitee

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

17. Insured

This term has several meanings, including the following:

Under Coverage E–Excess Liability:

Insured means the named insured and any insured or additional insured person or organization named on the underlying policies. Their insured status under this policy is limited to the coverage provided by the underlying insurance.

Under Coverage U–Umbrella Liability, insured means the following:

· INDIVIDUAL

The named insured and their spouse. However, this only applies if they are engaged in the business owned exclusively by the named insured.

· PARTNERSHIP OR JOINT VENTURE

The named insured, its partners or members, and their spouses. They are considered such only when conducting the named insured’s business.

· LIMITED LIABILITY COMPANY

The named insured and its members. However, this applies only when they are conducting the named insured’s business. The managers of the named insured are also insureds, but only if they act within their managerial responsibilities.

· TRUST

The named insured and its trustees, but only when they work within the scope of their duties.

NOTE: CU 0051–Commercial Excess/Umbrella Liability Declarations does not have a space for or list trusts. “Other” will need to be selected, and Trust described.

· OTHER

If the named insured is an organization other than those listed above, the named insured and its executive officers and directors are insureds. The executive officers and directors are considered insureds only when they are acting within the scope of their duties.

The named insured's stockholders are also insureds, but only regarding their liability as stockholders.

This does not include partnerships, joint ventures, or limited liability companies.

Coverage U–Umbrella Liability also includes the following as insureds:

• The real estate manager for the named insured, who is neither an employee nor a volunteer, can be an individual or an organization.
• A deceased named insured’s legal representative, but only for acts within such duties. Anyone who has custody of the deceased’s property is also considered an insured for liabilities related to maintaining or using that property.

However, the above terminates once a legal representative is appointed. The legal representative then assumes all rights and responsibilities of the named insured.

• The named insured's employees, but limited to actions while in the course of their employment.
• Volunteers are considered insureds only when they are performing duties associated with the operations of the named insured’s business.
• However, this does not include managers of limited liability companies or executive officers of organizations other than limited liability companies, partnerships, or joint ventures.

Employees and volunteer workers are not considered insureds for bodily injury or personal and advertising injury under any of the following situations:

o The injury is to the named insured, its partners, or members.

o The injury is to a fellow employee while that fellow employee is working or performing duties for the named insured.

o The injury involves a volunteer worker performing duties related to the conduct of the named insured’s business.

o The injury is to designated relatives of an injured fellow employee or volunteer worker, as described above.

o When there is a duty to partially or fully compensate third parties for damages arising from the injuries described above.

o Employees and volunteer workers are not insureds for property damage to any property owned, used, rented, loaned, or under their care by the named insured, its partners, members, or employees.

If a partnership, joint venture, or limited liability company (current or past) is not listed on the declarations, no party is considered an insured under this policy regarding its conduct.

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

18. 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 operation of the named insured’s business. However, a temporary worker is not considered 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.

19. Limit

This represents the limit applicable to the coverage provided.

20. Loading or Unloading

This is movement of property, starting when it is taken from the acceptance point onto a vehicle for transit. The vehicle may be a car, airplane, or boat. The movement continues while the property is on or in the vehicle and ends when it is unloaded at the destination. The definition also includes moving the property with a hand truck or any mechanical device attached to the transportation vehicle.

21. Mobile Equipment

This is land motor vehicles, along with their attached machinery and equipment, that are or perform one or more of the following functions:

• Used exclusively on the premises owned or rented by the named insured, including any adjoining ways.
• Designed primarily for use off public roads.
• Travel using 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, it must be primarily used to supply mobility to any of the following permanently attached devices:

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.

• Equipment not described in the first four points above, but 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 used to 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.
• Land vehicles subject to compulsory or financial responsibility laws or other motor vehicle insurance laws in the state where they are licensed or principally garaged.

22. Occurrence

This is an accident and may involve repeated exposure to the same or similar conditions.

23. Personal and Advertising Injury

This is an injury caused by, resulting or arising from one or more of the following offenses:

• Spoken, written, or electronic publication of material defaming a person or organization, diminishes the value of their goods, products, or services, or violates their privacy rights.
• Falsely detaining, taking into custody, or imprisoning an individual.
• Malicious criminal proceedings.
• The named insured using stolen advertising ideas for its marketing.
• The named insured violating someone else's trade dress, slogan, or copyright in their advertisement.
• Offenses committed by or on behalf of the owner, landlord, or lessor of a room, dwelling, or premises, including wrongful entry, wrongful eviction, or invasion of the right to private occupancy of a person occupying the property.

The definition of personal and advertising injury includes any resulting consequential bodily injury.

24. Pollutant

This is any solid, liquid, gaseous, thermal, or radioactive irritant or contaminant. It includes acids, alkalis, chemicals, fumes, soot, vapor, and waste. Waste includes items that need disposal, recycling, reclaiming, or reconditioning. It also includes visible or invisible electromagnetic, magnetic, or electrical fields and particles, as well as sound emissions.

25. Products

These include products or goods the named insured manufactures, handles, sells, disposes of, or distributes. Products are also items produced, handled, sold, disposed of, or distributed by others but traded under the insured's name, or those belonging to a party whose assets the insured has acquired.

Products also include the following:

• Any representations or warranties at any time concerning the products features, including quality, fitness, durability, use, or performance.
• Other parts, materials, equipment, or containers used with such products; a vehicle does not qualify as a container.
• Providing or failing to provide instructions and warnings

The following are not products:

• Real property
• Vending machines or other property the named insured does not sell but instead rents to or places for others to use.

26. Products/Completed Work Hazard

The product's hazard refers to bodily injury or property damage that occurs away from locations owned or rented by the named insured, arising from products the named insured has physically relinquished or handed over to others.

The completed work hazard refers to bodily injury or property damage that occurs away from locations owned or rented by the named insured, arising from the work performed by the insured. It does not include work the named insured abandoned or did not finish.

Work is considered completed on the earliest of the following dates:

• When the insured has fulfilled all obligations specified in a contract.
• When the insured has completed all contractual obligations at all job sites, when the contract involves work at multiple sites.
• When the insured’s work has been put to its intended use. However, this does not include being put to use by another contractor or subcontractor working on the same job site.

Work otherwise complete, except for requiring service, maintenance, correction, repair, or replacement because of a defect or deficiency, is considered complete.

However, the products hazard and the completed work hazard exclude 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 the insured’s loading or unloading.
• Tools, uninstalled equipment, or materials that are abandoned or not in use but still present.
• Any products or work classification that references the phrase "including products/completed work" on the declarations of the underlying insurance.

27. Property Damage

This refers to physical damage or destruction of tangible property. It includes the loss of use of that property. The physical damage and the resulting loss of use are considered to occur at the same time.

Loss of use of tangible property not physically damaged or destroyed still qualifies as property damage. The loss is considered to have occurred at the same time as the event that caused it.

Tangible property does not include data records except for those related to auto coverage provided by Coverage E.

Under Coverage E–Excess Liability, when owning, maintaining, or using covered autos, property damage also includes any loss, expense, or cost related to actions involving response to or assessment of the effects of pollution.

28. Recreational Vehicle

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

29. Self-insured Retention

This is the amount shown on the declarations the insured must pay before this coverage takes effect.

30. 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 combined with other dust particles.

31. Suit

This includes any civil legal action in a court or administrative proceeding seeking damages covered by this insurance. It also includes arbitration or alternative dispute resolution processes involving damages any insured must participate in or agrees to with the insurance company's approval. Consent can be granted by either the underlying insurance provider or the insurer issuing this policy.

32. Temporary Worker

This worker is provided for the named insured and may serve as a substitute for a full-time employee on leave or be hired to handle a short-term increase in workload.

33. Terms

These include all definitions, limitations, conditions, provisions, and exclusions related to this coverage.

34. Underlying Insurance

This is the liability insurance coverage listed on the schedule of underlying insurance. It should appear on the declarations page, showing the limits and policy period. As well, it includes policies issued to replace those during this insurance's policy period. The replacement policies must provide the same or higher limits and cover the same hazards, unless modified by standard revisions or as specified in this insurance company's written agreement.

35. Underlying Insurer

This refers to any insurance company providing an underlying insurance policy, which constitutes the first layer of insurance protection. The Umbrella or Excess policy is regarded as the second layer of protection.

36. Volunteer Worker

This is not an employee. It refers to someone who donates time or services and meets at least one of the following conditions:

• Acts within the scope of duties as determined and directed by the named insured.
• Does not receive any compensation other than reimbursement for specific out-of-pocket expenses.

Volunteer workers are neither temporary nor leased workers.

37. Your Work

This refers to work or operations conducted by the named insured or others on its behalf. It also covers any equipment, material, or parts supplied specifically for this work.

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

COMMERCIAL EXCESS/UMBRELLA LIABILITY COVERAGES

COVERAGE E–EXCESS LIABILITY

1. Insuring Agreement

a. The insurance company makes payments on behalf of the insured only when the amount of loss exceeds the limits of the underlying insurance. The obligation to pay arises from damages resulting from bodily injury or property damage covered under this Insuring Agreement.

There are a few nuances to this agreement:

· Even if the insurance company has no duty to defend, it still has the right to participate in suits with the underlying insurer when this insurance might apply.

· The insurer has no obligation to defend the insured when the policy excludes the cause of loss.

· If the insurance company is obligated to defend, they have the right to investigate any incident or offense related to this coverage and may settle the resulting claim or lawsuit at their discretion.

b. The amount the insurance company pays is outlined in the How Much We Pay section of the policy. Payment obligations start only after the underlying limits are exhausted. These underlying limits can also be reduced by defense costs, but only if the underlying insurance covers defense costs within the coverage limits.

c. The insurance company is not required to defend the insured once it has paid amounts equal to the policy limit. This payment can come from written settlements, judgments, or defense costs that reduce the underlying insurance limit. Aside from the provisions in Supplemental Payments, the insurer is not obligated to provide support, assistance, or cover any additional costs once limits are exhausted.

d. Coverage applies only to the following:

· Bodily Injury or Property Damage and Personal and Advertising Injury meeting all of the following requirements:

o Caused by or arises from an event during the policy period of this insurance.

o Occurs or arises from an event within the coverage territory.

o An event covered by underlying insurance or would have been covered if its limits had not been exhausted by paying claims, defense costs, judgments, and/or settlements.

· Any other injuries or damages from the following:

o Arises from an error, omission, negligent act, incident, injury, event, or offense.

o An event covered by underlying insurance or would have been covered if its limits had not been exhausted by paying claims, defense costs, judgments, and/or settlements.

and subject to the following:

o When the underlying coverage applies on an occurrence basis:

§ The error, omission, negligent act, incident, injury, event, or offense must occur within this insurance’s policy period and coverage territory.

o When the underlying coverage applies on a claims-made basis:

§ The error, omission, negligent act, incident, injury, event, or offense must occur on or after the retroactive date (if any) shown on the declarations and before the policy expires, and within the coverage territory.

o If the underlying coverage is written on a claims-made basis:

§ A claim must be first filed against an insured during this policy period or any extended reporting period. A claim is considered made when one of the following events takes place:

- The insured or an underlying carrier receives notice of a claim and records it. Also, when the insurance company receives and records the notice, provided the underlying company’s limits have been exhausted.

- Any insured receives notice of the claim and notifies the insurance company in writing. This is in cases where the underlying coverage is written on any other claims-made basis.

§ All claims for damages against the same party are considered as if they were filed at the same time as the initial claim made against any insured, regardless of how many claims are submitted.

e. Extended Reporting Periods

• Coverage E–Excess Liability provides the same extended reporting period as the underlying insurance when written on a claims-made basis. This extended reporting period provides excess coverage over the corresponding coverage of the underlying policy.

Additionally, the underlying insurer might require the insured to submit a written request for an extended reporting period, along with payment of an additional premium. In such cases, the named insured must send this written request to the insurance company within the same period specified by the underlying insurance and pay the additional premium by the due date.

• The named insured can buy an extended reporting period for this coverage if the underlying claims-made coverage does not include one under any of these conditions:

o The named insured chooses to cancel or not renew this coverage.

o The insurance company cancels this coverage for any reason other than non-payment of premium.

o The insurance company decides not to renew this coverage.

o The insurance company either renews or replaces this coverage with another claims-made policy with a retroactive date later than the date shown on the declarations of this policy.

o The insurance company renews or replaces this coverage with other coverage not written on a claims-made basis.

• Additional provisions apply with respect to extended reporting periods under Coverage E–Excess Liability:

o The extended reporting period covers injury claims occurring after the retroactive date (if applicable) and before this policy's expiration date.

o The extended reporting period does not alter the coverage provided by this policy or its policy period.

o Once extended reporting periods are in effect, they cannot be canceled.

o Extended reporting periods do not reset or raise the limits for claims covered by this policy. However, this provision does not apply to any extended reporting period endorsed to the policy for an additional charge.

• The insured can endorse the policy to extend the reporting period.

o The premium charge will not be more than 200% of the annual premium charge for the claims-made coverage this policy provides.

o The request must be submitted in writing within 30 days after the policy expiration date or the cancellation date, whichever occurs first.

o The additional premium must be paid by the due date before the extended reporting period takes effect.

§ Once the premium is paid, it is fully earned, which means neither party can cancel it.

• The extended reporting period starts after the policy period ends and lasts three years unless a different duration is specified in the endorsement schedule. Claims covered during this period must meet the following specific requirements:

o The error, omission, negligent act, incident, injury, event, or offense must occur within the coverage territory and must have started on or after the retroactive date (if any) shown on the declarations and before this coverage's policy period ends.

o A claim must first be made during the extended reporting period.

• The extended reporting period purchased is subject to a separate aggregate limit of insurance. It is the same as this policy's aggregate limit and applies to the entire duration of the extended reporting period, regardless of the number of years it is in force.

f. Damages arising from bodily injury include claims made at any time for care, loss of services, or death resulting from such bodily injury.

g. A contract or agreement might require providing coverage for an insured who is also named as an additional insured under the underlying insurance. In such cases, the maximum amount paid by the insurance company on behalf of the additional insured is limited to the amount specified in the contract or agreement. Any payments made by the underlying insurance could decrease that limit.

h. Injury or damage arising from an exposure covered by the underlying insurance may be subject to a separate limit based on its terms. In such cases, this insurance will only cover injury or damage arising from that exposure if a separate limit is specified on CU 0061–Commercial Excess/Umbrella Liability Coverage Supplemental Schedule of Underlying Insurance.

i. This coverage is governed by the terms, conditions, and exclusions of the underlying insurance policies. The only exceptions include the provisions related to coverage terms, renewal or non-renewal agreements, premiums, right of recovery, defense, limits, and coverage under more than one policy.

2. Exclusions

NOTE: The Editors added titles to enhance clarity.

a. Excluded By Underlying Insurance

Injury or damage not covered by the underlying insurance. The only exception is when its limits have been exhausted.

Example: Charlie's Corner Bistro experiences a pollution liability loss that his underlying commercial liability coverage does not cover. CU 0001 also excludes this loss.

b. Employment Retirement Income Security Act (ERISA)

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

c. Mandatory Benefits

Bodily injury in cases where the insured must provide benefits under laws such as workers compensation, disability benefits, occupational disease, unemployment compensation, or similar legislation.

NOTE: The purpose of this exclusion is to prevent duplicate coverage for injuries that should be covered under workers' compensation.

d. Employee – Crew Member

Liability for bodily injury to an employee of the insured who is injured while working as a master or crew member on any vessel.

NOTE: Ocean Marine coverage forms and policies provide coverage for this exposure.

Related Article: Ocean Marine Insurance Overview

e. Auto

Liability enforced by laws such as automobile no-fault, uninsured or underinsured motorist laws, personal injury protection, medical payments, or first-party physical damage coverage.

f. Pollution

Bodily injury or property damage arising from any aspect of pollutants. However, this exclusion does not apply to bodily injury or property damage that the underlying insurance covers or would have covered if its limits had not been exhausted. Additionally, this coverage is subject to the provisions, limitations, and exclusions of the underlying insurance.

g. Pollution - Personal and Advertising Injury

Personal and advertising injury arising from any aspect of pollutants.

h. Pollution - Abatement

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

· Requests, demands, orders, or legal requirements that any insured or others test for, monitor, clean up, abate, remove, contain, treat, detoxify, neutralize, respond to, or assess the effects of pollutants in any way.

· Claims or lawsuits filed by a government authority (or on its behalf) seeking damages related to testing, monitoring, cleaning, removing, containing, treating, detoxifying, neutralizing, responding to, or evaluating the effects of pollutants in any way.

This exclusion does not apply to any loss, cost, or expense that underlying insurance covers or would have covered if the limits had not been exhausted. Additionally, this coverage is subject to the provisions, limitations, and exclusions of the underlying insurance.

i. Racing or Stunt Activities

Coverage does not apply to bodily injury or property damage arising from using autos, mobile equipment, watercraft, aircraft, or recreational vehicles in organized or pre-arranged racing, speed contests, pulling, pushing, stunt activities, or competitions. Additionally, there is no coverage for bodily injury or property damage that may occur during practice or preparation for these events.

Example: Mike at Mike's Machinery Movers restores muscle cars in his spare time. He runs them on his own quarter-mile drag strip on his large country land. During a test run, the vehicle loses control, crashes through the fence, and damages his neighbor's machine shed. The property damage is covered because Mike's test was not part of an official or organized event.

j. Communication Laws or Regulations

Bodily injury, property damage, personal and advertising injury, or any related injury covered by underlying insurance (including claims-made policies), resulting directly or indirectly from actual or alleged violations of any of the following state or local laws or regulations, or similar statutes.

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

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

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

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

k. 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.

Example: Leo at Leo's Lawnmowers decides not to hire Louie, a mechanic, because he heard a rumor that Louie had a history of faking workers compensation injuries and taking extended periods off work. Louie finds out the real reason he was not hired and sues Leo. Leo has to defend himself at his own expense because of this exclusion.

· 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.

l. War

Bodily injury or property damage caused directly or indirectly by any act of war, undeclared war, or civil war.

It includes the following:

· warlike action by a military force.

· actions a government takes to prevent or defend against an anticipated or ongoing attack by any government or authority using military forces or agents.

· rebellion, revolution, insurrection, usurpation of power, or actions a government authority takes to hinder or defend against any of these.

m. Data Records

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

If the underlying insurance covers these exposures or would have covered them, provided its limits were not exhausted, this coverage adheres to the same terms, exclusions, and limitations of the underlying insurance unless specified otherwise.

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

n. Lead

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

o. Silica

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

p. Asbestos

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

Example: The city of Leesville condemns the derelict apartment building and arranges for its implosion, but first uses an asbestos abatement contractor to remove asbestos. Despite performing the abatement operation under the direction of an asbestos abatement expert, one of the abatement firm's employees is exposed to and ingests asbestos fibers. The bodily injury the employee sustained is not covered because of this exclusion.

q. Medical Payments

Medical payments or expenses paid, regardless of who is at fault. This exclusion applies regardless of whether the underlying insurance covers those payments or expenses.

COVERAGE U–UMBRELLA LIABILITY

1. Insuring Agreement

a. The insurance company covers amounts on the insured's behalf that exceed the self-insured retention or other insurance the insured has, which provides coverage for injury or damage included in this policy’s Insuring Agreement. However, it does not apply to insurance the insured purchased specifically to act as excess over the coverage provided by this policy.

· Coverage applies to damages the insured is legally responsible for paying, due to bodily injury, property damage, or personal and advertising injury covered under this policy.

· The insurance company has the right and obligation to defend the insured against lawsuits seeking damages for bodily injury, property damage, or personal and advertising injury covered by this Insuring Agreement.

· Even if the insurance company has no duty to defend, it still has the right to participate in suits with the underlying insurer when this insurance might apply.

· The insurer has no obligation to defend the insured when the policy excludes the cause of loss.

· If the insurance company is obligated to defend, they have the right to investigate any incident or offense related to this coverage and may settle the resulting claim or lawsuit at their discretion.

b. The amount the insurance company pays is outlined in the How Much We Pay section of the policy. Payment obligations start only after the underlying limits are exhausted. These underlying limits can also be reduced by defense costs, but only if the underlying insurance covers defense costs within the coverage limits.

c. The insurance company is not obligated to defend the insured once it has paid an amount equal to the policy limit. Payments may come from either written settlements it agrees to or from judgments. Apart from the provisions under Supplemental Payments, the insurance company is not required to provide support, assistance, or pay any other amounts.

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

· Occurs during this insurance’s policy period.

· Results from an event occurring within the coverage territory.

· Does not continue, resume, or alter covered bodily injury or property damage a designated insured was aware of before this insurance’s inception.

The Knowledge of Bodily Injury or Property Damage Condition explains this issue. If a designated insured was aware of bodily injury or property damage that occurred before this insurance began, any ongoing, resumed, or altered injury or damage is regarded as part of the original incident, even after the policy expired.

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

Conversely, bodily injury or property damage occurring during this policy period that is not a continuation, resumption, or change of any injury or damage known to the insured before the policy began will be covered. In such cases, coverage extends to any continuation, resumption, or change in bodily injury or property damage occurring after the policy has ended.

Example: Jack's Janitorial Services' Commercial Excess/Umbrella Liability Coverage with Macho Mutual has expired, and the renewal is now with Super Stock Insurance Company. A month before the Macho policy ended, Jack hit and injured an employee of a customer while cleaning their office. The injury caused complications that resulted in expenses for more than a year after the incident. Although most of these charges occurred after the Macho policy expired, Macho was still liable for paying them.

e. Coverage applies to personal and advertising injury arising from offenses committed while conducting the named insured's business. These offenses must occur during the policy period and within the coverage territory.

f. Damages arising from bodily injury include claims made by any party at any time for care, loss of services, or death resulting from such injuries.

g. Coverage U—Umbrella Liability does not apply to claims covered by Coverage E—Excess Liability, nor to claims that Coverage E would have covered if the underlying insurance limits had not been exhausted.

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 deliberate and malicious acts, is not covered. However, bodily injury caused by using reasonable force to protect individuals or property is covered.

Example: Harvey is fed up with the neighborhood teenagers making fun of him and keeping him up late at night with loud noises, slamming his front screen door, and threatening him. He decides to retaliate by rigging the door so that a shotgun will fire to the side, hoping to scare them away once and for all. However, the plan goes tragically wrong when the shotgun is dislodged, discharges unexpectedly, and injures two of the perpetrators. Although Harvey had no intention of hurting anyone, the injuries caused by his deliberate act were excluded.

NOTE: The primary reason for this exclusion is to prevent the insurance company from getting involved with non-accidental losses. Additionally, it serves the public interest. It ensures the insured will not use the coverage for gain, such as theft, to hurt a competitor, seek revenge, or cause any other intentional harm. The language of this exclusion is still being challenged and interpreted by courts, especially in cases where the action was intentional, but the resulting injury or damage 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 is excluded.

However, this exclusion includes the following exceptions:

· When liability for damages caused by the insured remains even without a contract or agreement.

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

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

• The covered contact assumes liability for that indemnitee’s defense or related defense costs.
• Such attorney fees and litigation expenses are meant to defend the indemnitee against lawsuits or legal actions claiming damages covered by this insurance.

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

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

c. Employment Retirement Income Security Act (ERISA)

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

d. Mandatory Benefits

Bodily injury in cases where the insured must provide benefits under laws such as workers compensation, disability benefits, occupational disease, unemployment compensation, or similar legislation.

NOTE: The purpose of this exclusion is to prevent duplicate coverage for injuries that should be covered under workers compensation.

e. Employee – Crew Member

Liability for bodily injury to an employee of the insured who is injured while working as a master or crew member on any vessel.

NOTE: Ocean Marine coverage forms and policies provide coverage for this exposure.

Related Article: Ocean Marine Insurance Overview

f. Auto

Liability enforced by laws such as automobile no-fault, uninsured or underinsured motorist laws, personal injury protection, medical payments, or first-party physical damage coverage.

g. Pollution - Personal and Advertising Injury

Personal and advertising injury arising from any aspect of pollutants.

h. Pollution - Abatement

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

• Requests, demands, orders, or legal requirements that any insured or others test for, monitor, clean up, abate, remove, contain, treat, detoxify, neutralize, respond to, or assess the effects of pollutants in any way.
• Claims or lawsuits filed by a government authority (or on its behalf) seeking damages related to testing, monitoring, cleaning, removing, containing, treating, detoxifying, neutralizing, responding to, or evaluating the effects of pollutants in any way.

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

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

i. War

Bodily injury or property damage caused directly or indirectly by any act of war, undeclared war, or civil war.

It includes the following:

· warlike action by a military force.

· actions a government takes to prevent or defend against an anticipated or ongoing attack by any government or authority using military forces or agents.

· rebellion, revolution, insurrection, usurpation of power, or actions a government authority takes to hinder or defend against any of these.

j. Vehicles

Bodily injury or property damage arising from owning, maintaining, using, occupying, renting, operating, loaning, entrusting, supervising, loading, or unloading autos, mobile equipment, recreational vehicles, watercraft, or aircraft

k. Liquor

The insurance company does not cover bodily injuries or property damage for which any insured might be held responsible, because of:

· Causing or contributing to any person becoming intoxicated.

· Providing alcoholic beverages to someone who is either under the legal drinking age or already intoxicated.

· Any law that pertains to the sale, delivery, distribution, or use of alcoholic beverages.

A key exception to this exclusion: it does not apply if the named insured is not engaged in manufacturing, distributing, selling, serving, or providing alcoholic beverages.

Example: Serendipity Seeds and Grain owns a large yacht that it rents out to others. However, it fails to properly maintain the yacht, and a renter is injured while trying to maneuver it into its mooring. The coverage does not cover the injuries sustained by the person.

Examples:

• Francine's Finery hosts a company Christmas party and provides alcoholic beverages free of charge.
• Sam at Sam's Steel Salvage takes Salvatore out for lunch and covers the cost of a bottle of wine to accompany the meal.

Both examples are covered if bodily injury or property damage occurs as a result of consuming alcoholic beverages since neither situation involves manufacturing, distributing, selling, serving, or providing alcoholic beverages.

On the other hand, consider the following:

Example: Bubba's Beer Distributors sponsored a fundraiser for a local semi-professional football team by hosting a beer-tasting event. At this event, beer is served to everyone who contributes to the team. An attendee, after being served several beers, was injured while traveling home from the event. There is no coverage for Bubba if he is sued for contributing to the attendee's intoxication. This is because Bubba’s business is involved in distributing beer, a type of alcoholic beverage.

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

l. Bodily injury

· To an employee of the insured when that bodily injury results from their employment by the insured or occurs while performing duties related to conducting the insured’s business.

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

This exclusion applies regardless of whether the insured is liable as an employer or in any other capacity. It also covers situations where the insured must share damages or reimburse someone else who is responsible for paying damages related to the injury.

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

However, this exclusion does not apply to liability the insured assumes under a covered contract.

m. Professional Services

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

n. 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.

· Employment termination.

· 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.

NOTE: Malicious prosecution is included because the court in Peterborough Oil Company, Inc. v. Great American Insurance declined to omit 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 explicitly listed it. The court concluded that this exclusion must be interpreted narrowly, so that even with the phrase “such as” preceding the list, only the items explicitly enumerated could be considered excluded.

· Consequential injury to a family member resulting from injuries that individual sustains as described above. This exclusion applies regardless of whether the injury occurred before employment, during employment, or after employment termination.

NOTE: This final paragraph is in response to Owners Insurance Company v. Clayton South Carolina Supreme Court, where the insurance provider was obliged to cover damages for a terminated employee who was defamed following her dismissal by the employer.

Exclusion n. applies regardless of whether the insured is liable as an employer or in any other capacity, or if they must share damages or reimburse someone else who is responsible for paying damages due to the injury.

o. Property Damage to Insured’s Property

Property damage to property owned, rented, or occupied by the insured is not covered. This also includes any costs or expenses incurred by the insured or third parties to repair, replace, retrofit, or maintain such property, even if these actions are intended to prevent injury or damage to property of others.

Example: Bob's Bobcats Sales and Service experiences a business boom and needs to rent additional warehouse space in the neighboring building. One of Bob's employees hits a load-bearing column with a bobcat, causing part of the building to collapse shortly afterward. The building must be closed for three weeks until the structural damage is repaired. The damage to the building is excluded because the warehouse was controlled by and rented to Bob's Bobcats.

p. Products

Damage to products caused by the product itself or its components.

Example: Household Appliances manufactures a range of kitchen appliances, including a deep-fryer. Henrietta purchases one and is initially pleased with its performance. However, one day the thermostat malfunctions, causing the unit to overheat. This leads the fat to ignite, resulting in a fire that destroys her kitchen and causes her minor injuries.

The fire also destroys the deep fryer itself. While Household Appliances’ Excess/Umbrella Liability Coverage applies to the damage to the kitchen and Henrietta’s injuries, it does not cover the destroyed deep fryer.

NOTE: Households may have a cause of action against the thermostat supplier if it is clearly established that the thermostat malfunction caused the injury and damage.

q. Insured’s Work

Property damage to specific parts of real property caused by work performed by the named insured. This exclusion also applies if a contractor or subcontractor working for the named insured performs the work.

However, this exclusion does not apply to liability assumed under a sidetrack agreement.

r. Faulty Work

Property damage to a specific part of any property that requires restoration, repair, or replacement due to faults in the named insured's work. However, property damage covered by the products/completed work hazard and liability assumed under a sidetrack agreement are not excluded.

s. Care, Custody, or Control

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

t. Performance or Contract Delay

Property damage not involving physical injury or destruction of property, or damage to impaired property, is excluded if it arises from the named insured or their representative failing to fulfill a contract or causing delays. Additionally, the coverage does not apply if the damage is due to defects, deficiencies, inadequacies, or unsafe conditions in the insured's work or products.

NOTE: Property damage includes loss of use even when the property is not physically harmed. Therefore, this exclusion means that the loss of use caused when the insured’s work prevents an item from being used is not covered.

Example: Iggy's Injectors manufactures a fuel injection and ignition system. One of his customers is Morrie's Mowers. Morrie uses the system as a component in a line of its lawn mowers. The system turns out to be defective, and the mowers do not work. In this case, the system is impaired but not damaged, and the downtime sustained when it does not work is excluded.

However, the loss of use of other property due to sudden and accidental physical injury or destruction of the named insured's work or products after they have been put to their intended use is not excluded.

u. Loaned Property

Property damage to property loaned to the named insured is excluded. However, liability assumed under a written trailer interchange or sidetrack agreement is not excluded.

v. Property Sold, Abandoned, Parted

Property damage to premises the named insured sold, gave away, or abandoned is excluded if the damage arises from any part of those premises. However, this exclusion does not apply to premises that are part of the insured's work but were never occupied, rented, or held for rental.

w. Loss of Use

Any loss, expense, or cost incurred by the named insured or others due to loss of use, disposal, withdrawal, recall, inspection, repair, replacement, adjustment, or removal of the named insured's work, products, or impaired property. This also includes expenses related to withdrawals or recalls, as well as when work, products, or impaired property is withdrawn or recalled from the market or use due to known or suspected defects, deficiencies, or unsafe conditions.

Example: Building on the earlier example of Iggy's Injectors above, Iggy immediately recalls all the fuel injection and ignition systems. None of the recall expenses are covered.

x. Data Records

Any damages, expenses, costs, or losses arising from the loss, inability to use, damage, corruption, or inaccessibility of electronic data records, including their modification or manipulation.

NOTE: Electronic data generally refers to information, facts, or programs used with computer software or any other media associated with electronically controlled equipment.

y. Products/Completed Work Hazard

Property damage to the named insured's work arising from that work, and is included in the products/completed work hazard coverage, is excluded.

However, damage caused by a subcontractor to the work or part of the work they are responsible for on behalf of the named insured is not excluded.

z. Communication Laws or Regulations

Bodily injury, property damage, personal and advertising injury, or any related injury covered by underlying insurance (including claims-made policies), resulting directly or indirectly from actual or alleged violations of any of the following state or local laws or regulations, or similar statutes.

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

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

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

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

aa. Intentional Act

Personal and advertising injury arising from an act committed or directed by the insured, knowing it will result in such injury.

Example: Hollywood Weekly hires Bob to gather stories for its publication. In his pursuit of a particular movie star, Bob becomes overly aggressive and ends up receiving a restraining order. Despite this, Hollywood Weekly insists Bob continue his attempts to obtain the story, regardless of the repercussions. If the movie star decides to sue Hollywood Weekly for pressuring Bob to ignore the restraining order, Hollywood will not have coverage for that lawsuit

bb. Criminal Acts

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

Example: Continuing with the Hollywood Weekly example, Bob is not provided with the details of an incident needed for a story. So, Hollywood Weekly instructs him to break into a building and copy confidential files. If the break-in is discovered, Hollywood will not have coverage if they are sued. However, if Bob breaks in secretly without Hollywood’s knowledge, Hollywood remains covered while Bob is on his own.

cc. False Advertising

Personal and advertising injury arising from oral or written material published by or under the insured's direction, which the insured knew to be false, is excluded.

Example: An article in All Trash Fit To Print reports a prominent businessman's son was arrested for drunk driving. However, All Trash knew it was only a traffic stop that did not result in a ticket or citation. There is no coverage if the businessman’s son decides to sue All Trash.

Personal and advertising injury arising from oral or written publication of material that began before the coverage inception date is also excluded.

Example: Coverage is effective 01/01/2023. An official publication date of 01/02/2025 has been announced, but an advance copy was released on 12/28/2024. Since the first publication took place before the effective date, there is no coverage if a suit is filed seeking damages for personal and advertising injury.

dd. Breach of Contract

Personal and advertising injury arising from breach of contract is excluded.

However, this exclusion does not apply if there is an implied contract involving the use of another party's advertising idea in the named insured's advertisement.

Example: Pronto Printing contracted to design, print, and mail a promotional brochure for Hugh's Hardware. The project was time-sensitive, but Pronto was not prompt and missed the mailing deadline by several days. Hugh’s sued Pronto for breach of contract, but unfortunately, there is no coverage.

ee. Goods, Products, Services

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

Example: Two-ton Tommy sues WeightBeGone because its weight loss product promised weight loss, but he only ended up gaining weight. There is no coverage for this suit.

ff. In the Business of Media

Personal and advertising injury committed by an insured in the fields of advertising, broadcasting, publishing, or telecasting is excluded. It also includes situations where the insured’s business creates or manages website content for others, or offers Internet search, access, content, or services.

However, this exclusion does not apply to the parts of the definition of personal and advertising injury involving false arrest, detention, imprisonment, or malicious prosecution. It also does not apply to activities related to landlords, such as wrongful eviction, entry, or invasion of private occupancy.

If the insured only places advertising that includes frames, borders, or links on the Internet, they are not considered to be engaged in the business of advertising, broadcasting, publishing, or telecasting.

gg. Incorrect Descriptions

Personal and advertising injury arising from incorrect descriptions of goods, products, or services stated in the named insured's advertisement is not covered.

Example: Ace Advertising sues Crosstown Truth for lost revenue caused by an incorrect decimal point in a product sale price for an ad. This loss is not covered.

hh. Agreement or Contract Assumption

Personal and advertising injury liability assumed by the insured in an agreement or contract is excluded. However, coverage applies if liability exists even without a contract or agreement.

ii. Infringement of Property Rights

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

NOTE: There is no requirement that the named insured, an insured, or even someone who acts on behalf of either does the infringing. All infringement is excluded.

This exclusion does not include the following:

· When the concept of another person is included in the advertisement for the named insured.

· When the advertisement of the named insured violates copyright, trade dress, or slogan rights.

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

jj. Social Media

Personal and advertising injury arising out of an electronic chatroom, gripe sites, bulletin boards, blogs, or social networking sites, but only if the insured owns, hosts, or controls them.

kk. Misleading Potential Customers

Personal and advertising injury arising from the named insured's attempt to deceive other customers or potential customers through the Internet. This exclusion applies when the deception involves the unauthorized use of another party’s name or product in the named insured's email address, domain, or metatag.

ll. Lead

Bodily injury, property damage, personal and advertising injury, or loss, cost, or expense related in any way to any aspect of lead.

mm. Silica

Bodily injury, property damage, personal and advertising injury, or loss, cost, or expense related in any way to any aspect of silica.

nn. Asbestos

Bodily injury, property damage, personal and advertising injury, or loss, cost, or expense related in any way to any aspect of asbestos.

SUPPLEMENTAL PAYMENTS

NOTE: The Editors added titles to enhance clarity.

1. Payments

When the insurance company has the duty to defend, it covers all of the following costs when it investigates, settles claims, or defends suits:

• Court costs of a suit, the court rules are the insured's responsibility. This does not include attorney fees or expenses.
• All expenses incurred by the insurance company.
• Reasonable expenses the insured incurs at the insurance company's request to assist in investigating or defending a claim or lawsuit. This also covers up to $250 per day in lost wages if the insured has to be absent from work.

NOTE: These can be very costly for the insured, particularly when a court imposes the costs and expenses of the proceeding on the negligent party.

• Prejudgment interest the court awards, but only on the portion of the judgment paid by the insurance company. However, the insurance company will not pay prejudgment interest accruing after it has offered full limits.
• Interest that accumulates on the entire judgment amount after it is entered but before the insurance company pays, offers to pay, or deposits its portion of the judgment, within the insurance limits, with the court.
• Cost of appeal bonds or bonds to release attachments. It is limited to the bond amounts and does not exceed the applicable insurance limits. The insurance company is not required to apply for or provide the bonds.

NOTE: The cost for the bond in excess of the limit of the insured is at the insured’s expense.

• Bail bond costs are covered only if resulting from an occurrence this policy covers and is limited to $2,000. The insurance company isn't required to apply for or furnish the bonds.

2. Additional Limits

This part of the provision applies only to Coverage E–Excess Liability. The limits of underlying insurance may be decreased by defense costs, which in turn also reduce the related Supplemental Payments under this policy. Unless specified otherwise, payments made are in addition to the policy’s limits of insurance.

NOTE: This provision is important because these expenses can be significant and might lower the available limits if included within the applicable insurance limits.

3. Expenses

There are situations where the insurance company has the right to defend the insured and may choose to participate in the defense, but it is not obligated to do so. If it exercises this right, it pays its own expenses but does not contribute to the expenses of the insured or the underlying carrier.

4. Indemnitees

The insurance company might be required to defend the insured in a lawsuit if the insured's indemnitee is also a party. In such cases, the insurance company takes the following actions:

• Defends the indemnitee.
• Cover attorney fees incurred to defend the indemnitee.
• Cover necessary litigation expenses incurred.
• Cover the litigation costs incurred by the indemnitee upon its request.

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

• The claim against the indemnitee must pursue damages the insured agreed to cover in an insured contract or agreement.
• This policy covers the liability assumed by the insured.
• The insured is required to have agreed to defend or cover defense costs within the same insurance contract or agreement.
• According to the insurance company's understanding of the incident and the allegations in the lawsuit, there should be no obvious conflict between the interests of the insured and the indemnitee.
• Both the insured and the indemnitee need to request the insurance company manage the indemnitee's defense in the lawsuit and agree to use the same legal representative for both parties.
• The indemnitee is required to agree to perform all of the following:

o Cooperate with the insurance company during its investigation, defense, or settlement of the suit.

o Immediately forward the insurance company copies of any demands, notices, summonses, or legal documents related to the suit.

o Inform any other insurance company that might provide coverage to the indemnitee.

o Cooperate with the insurance company to coordinate any other available insurance.

o Provide the insurance company with written permission to access records related to the lawsuit.

o Provide the insurance company with any additional details related to the lawsuit.

o Provide the insurance company with written authorization to manage and oversee the indemnitee's defense in the lawsuit.

These payments are not considered damages for bodily injury and property damage if the insured and the indemnitee meet certain conditions, meaning the cost and expenses will not reduce the coverage limits available to pay losses. It essentially voids the provisions of Coverage U—Umbrella Liability's exclusion 2. b. 2)., which agrees to pay such expenses but only as damages.

The insurance company's duty to defend the indemnitee ends once it has exhausted the coverage limit for judgments or settlements, or if the outlined conditions and agreements are not fulfilled.

WHAT MUST BE DONE IN CASE OF LOSS

1. Cooperation

This part of the provision applies specifically to Coverage E–Excess Liability. The named insured is required to cooperate with underlying insurance carriers and adhere to all terms and conditions of the underlying policies.

Additionally, all insureds involved in a loss are required to cooperate with the insurance company during the investigation, settlement, or defense of claims and lawsuits.

2. Notice

The insured must promptly inform the insurance company if an incident or offense likely to be covered occurs. This also includes situations where the insured becomes aware of any situation that could lead to a claim under this policy.

The notice should contain the following details:

· name of the insured

· policy number

· time, place, and circumstances of the occurrence or offense

· names and addresses of all known and potential claimants and witnesses

3. Voluntary Payments

Volunteer payments cannot be made, nor can obligations or costs be assumed by any insured unless they are paid at the insured’s expense. The insured will not be reimbursed by the insurance company.

4. Other Duties

The named insured or any other insured has additional duties if an incident or offense occurs that could result in a claim. They are required to promptly send the insurance company copies of all legal documents, demands, and notices. Additionally, upon request, they must cooperate with and support the insurance company in all of the following actions:

• Enforce the insurance company's recovery rights against all parties potentially responsible for injury or damage to the insured.
• Gather and provide evidence.
• Arrange for all witnesses to attend.

HOW MUCH WE PAY

Coverage E–Excess Liability and Coverage U–Umbrella Liability

NOTE: The Editors added titles to enhance clarity.

1. Limits

The most paid for all damages is limited to the limits specified on the declarations. This limit applies regardless of how many insured individuals, persons, or organizations are injured or damaged, as well as the number of claims or lawsuits filed, vehicles or watercraft involved, or coverages provided by the policy.

2. General Aggregate Limit

The General Aggregate Limit is the maximum amount paid for all damages under Coverages E and U, including any defense costs the company covers under Coverage E, particularly when these costs decrease the available limits of underlying insurance.

However, the General Aggregate does not apply to the following damages for bodily injury or property damage:

• Damage or injury included in the products/completed work hazards.
• Damages or injury included in the underlying insurance not subject to the aggregate limit.

3. Products/Completed Work Hazard Aggregate Limit

This limit is the maximum amount payable for damages arising from injury or damage covered under the products/completed work hazard.

4. Each Occurrence Limit

The Each Occurrence Limit is subject to the General Aggregate Limit and the Products/Completed Work Hazard Aggregate Limit. It represents the maximum amount paid for all damages under Coverages E—Excess Liability and U—Umbrella Liability, including defense costs incurred by the company under Coverage E. When defense costs are paid, they reduce the applicable underlying insurance limits.

The damages must be due to the following:

• Under Coverage E–Excess Liability and Coverage U–Umbrella Liability:

o All bodily injury and property damage arising from a single occurrence.

o All personal and advertising injury sustained by any one person or organization.

• Under Coverage E–Excess Liability, when covering defense costs decreases the limits of the underlying insurance:

o All bodily injury and property damage that arises from a single occurrence.

o All personal and advertising injury that any one person or organization sustains.

o With respect to Coverage E, any other injury or damage that arises from a single negligent error, omission, act, offense, incident, or event.

5. Coverage E–Excess Liability– Underlying Insurance Limits Exhausted

Damages, claims payments, and/or defense costs might deplete the limits of underlying insurance. If that happens, this policy acts as the underlying insurance coverage.

6. Coverage E–Excess Liability– Underlying Insurance Limits Reduced

Damages, claims payments, and/or defense costs might lower the limits of any underlying insurance. If that happens, this policy will act as excess coverage above the reduced limits of the underlying insurance.

7. Coverage E–Excess Liability–Non-concurrent Underlying Insurance

Underlying insurance may not be concurrent with this policy’s term. If this occurs, only claims for occurrences, offenses, and other negligent errors, omissions, acts, incidents, events, and injuries covered by the underlying insurance that happen during this policy’s term are considered when determining whether any aggregate limit in the underlying insurance is reduced or exhausted.

This part of the provision pertains to underlying insurance written on a claims-made basis. Only the following actions will reduce or exhaust the limits of the underlying insurance:

• Claims filed during the duration of this policy or any Extended Reporting Period.
• Related defense costs, but only if paying these costs decreases the limits of the underlying insurance.

8. Application of General Aggregate Limit and Products/Completed Work Hazard Aggregate Limit

The General Aggregate Limit and the Products/Completed Work Hazard Aggregate Limit restart every 12 months from the effective date on the declarations. They also apply separately to any policy period shorter than 12 months. Additionally, if the policy is extended, the extension period is included as part of the previous period when determining limits.

CONDITIONS

1. Appeals

The insurance company can pursue an appeal beyond the coverage limit for Coverage E or above the self-insured retention for Coverage U, even if the underlying carrier or the insured chooses not to appeal. If it does so, the insurance company is responsible for the related expenses. These costs are in addition to the limit.

NOTE: This provision allows the excess or umbrella liability carrier to safeguard its interests. Sometimes, an underlying carrier or self-insured may choose not to appeal a judgment. For instance, if the judgment exceeds the umbrella policy’s retained limit, the umbrella carrier can decide to appeal at its own expense. This is crucial when the underlying carrier suspects the verdict will exceed its limits and opts not to invest further resources in what may be a lost cause.

2. Assignment

Assigning the policy requires approval and written consent from the insurance company.

3. Bankruptcy of an Insured

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

NOTE: This means the excess/umbrella coverage remains in effect as if the insured is still solvent.

4. Bankruptcy of Underlying Insurer

This condition relates to Coverage E–Excess Liability. The Excess/Umbrella policy will not replace the underlying insurance if the underlying insurer becomes bankrupt or insolvent. Instead, it remains effective as if the underlying insurance is still valid and collectible.

5. Cancellation and Nonrenewal

This condition refers to the state-specific endorsement identified on the declarations page of the insurance policy.

6. Change, Modification, or Waiver of Policy Terms

Waivers or modifications to the policy terms are only valid if the insurance company approves them in writing.

7. Conformity with Statute

Any policy terms conflicting with state laws where the policy is issued are changed to comply with those laws.

8. Examination of Books and Records

The insurance company has the right to review and audit any parts of the named insured's books and records related to the policy during the policy period and up to three years after it expires.

9. Inspections

The insurance company or its representatives may inspect the named insured's property and operations at any time, but are not required to do so. These inspections and any recommendations from the reports are only for the company's benefit. They do not guarantee the insured's property or operations are safe, healthy, or lawfully compliant.

10. Knowledge of Bodily Injury or Property Damage

This provision applies to Coverage U–Umbrella Liability. Knowledge of bodily injury or property damage is considered to have occurred at the earliest of the following when any designated insured:

• receives a suit, claim, or demand for damages alleging injury or damage.
• reports the injury or damage to the insurance company or any other carrier.
• becomes aware of anything suggesting injury or damage has occurred or is occurring.

11. Legal Action against Us

The insurance company cannot be sued until all of the following conditions have been fulfilled:

· All policy terms are met.

· The insured's liability amount has been established as follows:

o a final judgment in a trial, or;

o A written agreement has been made between the insured, the claimant seeking damages, and the insurance company.

This policy does not cover any injury or damage excluded or that exceeds the applicable limit.

No party is permitted to join or implead the insurance company in any proceeding to establish an insured's liability.

NOTE: The insurance company can be sued to recover an agreed settlement or final judgment against an insured. However, it is not liable for damages which 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 their legal representative.

12. Maintenance of Underlying Insurance

This condition applies to Coverage E. The following conditions apply to the underlying insurance:

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

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

· Cancellation, non-renewal, 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 coverages.

Payments for occurrences or offenses during the policy period that reduce or exhaust 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 restrict 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

The insurance policy is void concerning the named insured or any insured if, at any time, any of the following occurs:

• Intentionally hid or falsely represented a material fact or situation related to the insurance policy, or the named insured or any other insured's interests.
• Involved in committing fraud or making false sworn statements about any part of the insurance policy or its subject matter.

NOTE: This condition clarifies the named insured confirms all information on the declarations is accurate and complete upon accepting coverage. It also confirms this information is based on the applicant’s representations to the insurer on the application, which the company relied on when issuing the policy.

14. Subrogation

If the insurance company makes a payment under this policy, it might require the insured to assign their recovery rights against third parties that may have caused the loss. The company is not obligated to pay if the insured impairs or affects those rights. However, an insured can waive their recovery rights in writing prior to a loss occurring.

NOTE: When the insurance company makes a payment under this policy, any rights the insured has to recover those payments from responsible parties transfer to the insurer. The insured must not jeopardize those rights. Additionally, if the insurer requests, the named insured may need to assist with litigation, transfer of rights, or enforcement of those rights.

Example: Jerry works for Restless Foods. While driving a company van, the engine suddenly failed, leading to a severe accident. Seven vehicles were involved, and 14 individuals were hurt. Restless Foods’ primary and umbrella insurance policies covered the victims up to their policy limits.

Jerry insisted he did nothing wrong, claiming the van’s engine just stopped unexpectedly.

Restless Foods’ carriers assumed their recovery rights and filed a lawsuit against the van manufacturer after discovering a faulty switch that caused the engine to shut down suddenly.

15. Transfer of Defense

This condition applies to Coverage E–Excess Liability and operates as follows when the underlying limits have been exhausted due to a covered occurrence:

• The duty to defend of the underlying insurer transfers to the umbrella carrier.
• The umbrella insurer agrees to cooperate in the transfer and control of any unresolved claims or suits.

16. Separate Insureds

Coverage applies to each insured person who is sued or faces a claim. However, this does not alter the limits outlined in How Much We Pay.

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 applies as excess coverage over any other insurance, regardless of type. It does not share or contribute to other policies unless explicitly written as excess over this policy.

Example: GasGrillzRUs manufactures outdoor gas grills, with the following policies:

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

· Company B: Umbrella Coverage Form with a $1,000,000 Aggregate Limit

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

A GasGrillzRUs sales representative was demonstrating its new line of gas grills at the Indiana State Fair when the propane tank exploded. The total claims for damages and injuries amount to $3,250,000.

In this case,

· Company A initially pays its $1,000,000 aggregate limit, leaving a remaining balance of $2,250,000.

· Company B is an umbrella policy purchased in excess of Company A, and it pays its $1,000,000 aggregate limit, leaving a remaining balance of $1,250,000.

· Company C provides a layer purchased as excess coverage over Company C. It does not pay until both Company A and Company B exhausts their limits. This results in Company C paying the remaining amount of $1,250,000.

The umbrella carrier is not required to defend if another carrier is obligated to do so. However, it will defend if no other carrier assumes that responsibility, and in doing so, it acquires the rights of the insured against those carriers.

This insurance only covers its share of the final net loss, which is the amount exceeding what other primary coverage sources are responsible for, including deductibles and/or self-insured retentions.

19. Loss Payable

The insurance company will only pay after the insured, their underlying carrier, or any other applicable insurance provider has paid the underlying insurance limit, self-insured retention, or any other applicable insurance coverage limits. The insured's obligation to contribute to the final loss must be established through a final settlement, judgment, or written agreement between the insurance company, the claimant, and the insured.

20. Extended Coverage Territory

• A lawsuit may be filed in a country where the insurance company is unable to legally defend the insured. In these situations, the insurer reimburses the insured for defense costs and other necessary expenses it would have covered if it had the right to defend. These payments are considered Supplementary Payments, provided this policy covers them, and they do not count against the policy 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 made in United States currency. The exchange rate for damages paid is based on the rate at the time the insured was required to pay the damages. The exchange rate for all expenses under Supplementary Payments is based on the date the insured incurs those expenses.
• Disputes between the named insured and the insurance company concerning coverage must be filed in courts located within the United States, its territories and possessions, Canada, or Puerto Rico.
• The named insured must maintain coverage required by any government authority during the policy period. Failure to do so does not invalidate this insurance. Instead, it is treated as if the necessary coverage were in effect.

However, this requirement does not apply to any limit reductions or exhaustions from payments for covered occurrences or offenses, as this is not considered a failure to maintain the necessary coverage.

NUCLEAR ENERGY LIABILITY EXCLUSION

1. Exclusion

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

• If an insured under this policy also qualifies as an insured (or would qualify if the policy had not expired due to limit exhaustion) under a Nuclear Energy Liability policy issued by any of the following:

o Nuclear Energy Liability Insurance Association

o Mutual Insurance Association

o Mutual Atomic Energy Liability Underwriters

o Nuclear Insurance Association of Canada

o Any of their successors

• Due to the hazardous nature of nuclear materials and situations where individuals or organizations must maintain financial protections under the Atomic Energy Act of 1954 or any amendments, this also includes cases where the insured can claim indemnity from the United States or its agencies through agreements with any party. This exclusion applies even if such entitlement is nullified by this policy.

This insurance also does not cover liability for bodily injury or property damage resulting from the hazardous properties of nuclear material, based on the following:

• The nuclear material is located at, has been discharged from, or dispersed from any nuclear facility owned or operated by or on behalf of an insured.
• The nuclear material has been possessed, handled, used, stored, processed, disposed of, or transported by an insured party or others acting on their behalf, and is contained in spent fuel or waste.
• Bodily injury or property damage arises out of an insured providing services, materials, parts, or equipment related to planning, constructing, maintaining, operating, or using any nuclear facility. However, for such facilities in the United States, its territories or possessions, or Canada, this exclusion only applies to property damage to that nuclear facility and any property at that location.

2. Definitions

These definitions specifically apply only to the Nuclear Energy Liability Exclusion:

Hazardous Properties

These properties exhibit radioactive, toxic, or explosive traits.

Nuclear Material

This refers to source material, special nuclear material, or by-product material.

Source Material, Special Nuclear Material, and Byproduct Material

Each of these terms is defined in the Atomic Energy Act of 1954 or in subsequent or amending laws.

Spent Fuel

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

Waste

This refers to any waste material containing byproduct material. It excludes tailings or waste generated during the extraction or concentration of uranium or thorium from ore processed mainly for its source material content. Additionally, it includes waste resulting from the operation of nuclear reactors or equipment used to separate uranium or plutonium isotopes, process or utilize spent fuel, or manage, 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 refers to any device engineered or actively used to maintain nuclear fission in a self-sustaining chain reaction, or that contains enough fissionable material to reach a critical mass.

Property Damage

This includes all forms of radioactive property contamination.

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.