INTRODUCTION

Related Article: ISO Commercial Liability Umbrella Coverage Form Archive has information and analyses of previous editions of this coverage form.

COVERAGE FORM ANALYSIS

SECTION I–COVERAGES

1. Insuring Agreement

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

e. The insurance that applies to bodily injury is not limited to only the individual who sustains the bodily injury. It also applies to damages that any person or organization claims for care, loss of services, or death that results at any time from the bodily injury.

2. EXCLUSIONS

Related Article: Expected or Intended Injury Exclusion

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b. Contractual Liability

There is no coverage for bodily injury or property damage in cases where the insured must pay damages based on its having assumed liability in a written contract or agreement. However, coverage does apply to liability for damages under either of the following circumstances:

• Liability the insured would have had without a contract or agreement
• Liability the insured assumed in an insured contract or agreement. The bodily injury or property damage must occur after the contract or agreement was executed. Attorney fees and litigation expenses incurred by or for a party other than the insured are considered damages because of bodily injury or property damage and are covered as such, but only if both of the following apply:

o   The cost of that party's defense is assumed in the same insured contract

o   The fees and expenses are associated with damages that this insurance covers

Note: The liability assumed and technically eligible under an insured contract also must occur during the policy period. A retroactive agreement is not covered because it unfairly manipulates coverage.

Payment for defense expenses related to damages assumed under an insured contract or agreement may be covered under Supplementary Payments–Coverages A and B. This section should be reviewed to determine when defense of an indemnitee and payment of an indemnitee’s defense expenses is included outside the limits.

c. Liquor Liability (04 13 changes)

The insurance company does not pay for bodily injury or property damage that any insured may be liable for because of any of the following:

• Causing or contributing to a person becoming intoxicated
• Furnishing alcoholic beverages to a person who is under the legal drinking age
• Furnishing alcoholic beverages to a person who is already under the influence of alcohol
• Any law that relates to the sale, gift, distribution, or use of alcoholic beverages

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The following significant changes become effective with the 04 13 edition:

Any of the actions described above may result in an occurrence. In that case, there is also no coverage if any of the following claims related to that occurrence are brought against the insured:

• Hiring, employment, monitoring, or training others

• Noting that a person is intoxicated and either providing transportation to that person or failing to provide such transportation

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

When the named insured does not serve alcoholic beverages but does permit others to bring such beverages onto its premises, this exclusion does not apply even if a license is required to operate. It is not such a business even if it charges a fee to consume the beverage on the premises.

This exclusion has an additional exception. If there is valid underlying liquor liability coverage, or there would have been except that the bodily injury and property damage limits were used up, this exclusion does not apply but only for the coverage that underlying coverage provides.

This exclusion does not apply only in cases where the underlying insurance provides coverage. This means the underlying coverage dictates coverage. The underlying coverage’s limitations, provisions, and exclusions apply. However, this coverage form may provide different directions. In that case, this coverage form prevails. (04 13 change)

d. Workers Compensation and Similar Laws

There is no coverage for any requirement or obligation of the insured imposed by any workers compensation, disability benefits, unemployment compensation, or similar law.

Note: Without this exclusion, an insured could neglect its statutory obligations and not incur the consequences.

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e. E.R.I.S.A.

Coverage does not apply to any obligation the insured has with respect to the Employees' Retirement Income Security Act (E.R.I.S.A.). This includes subsequent amendments to it or any other similar federal, state, or local laws.

f. Auto Coverages

This exclusion has two parts. There is no coverage for:

• Bodily injury or property damage that arises out of owning, maintaining, or using any auto that is not considered a covered auto. The underlying policy must cover the auto in order to be covered.
• Loss, cost, or expense payable or that result from:
• Uninsured or underinsured motorists laws
• Auto medical payments coverage
• Personal Injury Protection (PIP)
• No-fault laws
• Any first party physical damage coverage

Related Court Case: Is CGL Insurer Liable For Auto Accident Injury?

Note: Many states require offering uninsured or underinsured motorists coverage up to the limits for the liability coverage. This means that this portion of the exclusion can be covered by endorsement.

g. Employers Liability

Bodily injury to an employee of the insured as a result of employment or performing duties in conjunction with conduct of the insured’s business is excluded. Consequential bodily injury to the spouse, children, parents, brothers, or sisters of that employee is also excluded. This exclusion applies whether the insured is liable as an employer or in any other capacity. It also applies whether it must share damages with or repay someone else who must pay damages because of the injury.

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This exclusion has three exceptions:

• It does not apply to liability the insured assumed under an insured contract.

• Coverage applies if a covered auto injures a domestic employee who is not insured under workers compensation coverage.

Note: This exception is in the umbrella coverage form. It is not in the CGL coverage form.

• If there is valid underlying coverage, or there would have been except that the bodily injury and property damage limits were used up, this exclusion does not apply but only for the coverage that underlying coverage provides.

This exclusion does not apply only in cases where the underlying insurance provides coverage. This means the underlying coverage dictates coverage. The underlying coverage’s limitations, provisions, and exclusions apply. (04 13 change)

h. Employment-Related Practices

The CGL coverage form does not have this exclusion. However, CG 21 47–Employment-Related Practices Exclusion is usually attached. This exclusion is identical to the bodily injury and property damage section of CG 21 47.

There is no coverage for bodily injury to a person that results from that person not being employed or whose employment is terminated. There is also no coverage for on-the-job practices, policies, acts, or omissions. Ten acts are listed but they are meant to be examples, not an exclusive list. The listed acts are coercion, discipline, defamation, malicious prosecution, demotion, reassignment, humiliation, evaluation, harassment, and discrimination.

This exclusion applies whether the insured is liable as an employer or in any other capacity. It also applies if it must share damages with or repay someone else who must pay damages because of the injury. In addition, there is no coverage for consequential claims from family members because of bodily injury to any person.

Note: This list includes malicious prosecution because the court in Peterborough Oil Company, Inc. v. Great American Insurance refused to exclude malicious prosecution as an employment-related practice. It reasoned that, if the insurance company did not intend to cover malicious prosecution, it should have listed it. The court determined that this exclusion must be read narrowly, so even with the term “such as” preceding the list, only the items actually listed could be excluded. This case should be used to illustrate being cautious of any exclusion wording.

This exclusion applies even if the injury occurred before the person became an employee or after the person was terminated.

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

This exclusion continues to apply if the insured is liable as an employer or in any other way. It also applies to any obligation the insured has to share damages with or repay another party required to pay damages because of the injury.

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i. Pollution

The Umbrella Policy has an absolute pollution exclusion that is not quite absolute.

If there is valid underlying coverage, or there would have been except that the bodily injury and property damage limits were used up, this exclusion does not apply but only for the coverage that underlying coverage provides.

This exclusion does not apply only where the underlying insurance provides coverage. As a result, coverage is dictated by the underlying coverage. The underlying coverage’s limitations, provisions, and exclusions apply. However, this coverage form may provide different directions. In that case, this coverage form prevails. (04 13 change)

Related Court Case: Pollution Clause Still Applies To Workers' Injuries

j. Aircraft or Watercraft (04 13 change)

There is no coverage for bodily injury or property damage that results from owning, maintaining, using, or entrusting to others any aircraft or watercraft. This applies only to aircraft or watercraft any insured owns, operates, rents, or has loaned to it. This exclusion applies even if the claim alleges that any insured was negligent or engaged in any wrongdoing in supervising, hiring, employing, training, or monitoring others.

This exclusion has five exceptions. It does not apply to:

• Watercraft on shore at locations the named insured owns or rents

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

• Liability assumed under any insured contract with respect to owning, maintaining, or using aircraft or watercraft
• The coverage provided, or that would have been provided except for the limits being used up, by valid underlying coverage for aircraft or watercraft liability. However, the same provisions, conditions, exclusions, and any limitations that apply to the underlying pollution coverage also apply to this coverage. Coverage may be changed through a specific directive in this policy to do so. (04 13 change)

• Aircraft with a paid crew chartered by, loaned to, or hired by the named insured provided it is not owned by any insured

This exclusion is similar to the underlying CGL Coverage Form exclusion but it contains certain broadening features:

• The exclusion in the CGL Coverage Form applies to auto coverage while this exclusion does not. This means that auto liability is provided unless excluded elsewhere. (See exclusion f.)
• The CGL Coverage Form covers non-owned boats less than 26 feet long, while the umbrella limits coverage to non-owned boats less than 50 feet long.

• Umbrella coverage is extended to aircraft and watercraft coverage provided in underlying coverage forms or policies on a following form basis, subject to their conditions, limitations, and exclusions.
• The umbrella provides coverage for chartered, hired, or loaned aircraft if a paid crew is provided when no insured owns the aircraft. The CGL Coverage Form does not have a similar extension.

k. Racing Activities

If autos or mobile equipment are involved in prearranged professional or organized racing activities, there is no coverage during practice or the actual activity. The activity is not limited to racing but includes speed, demolition, or stunt contests.

Note: This is similar to the mobile equipment racing activity limitation in the CGL coverage form and the racing limitation in the Business Auto coverage form.

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l. War

Coverage does not apply to bodily injury or property damage caused directly or indirectly in any way by war, undeclared war, and civil war, including warlike action by a military force. This exclusion also applies to actions a government takes to prevent or defend against an expected or actual attack by any government or other authority that uses military personnel or agents. It also applies to rebellion, revolution, insurrection, or unlawful seizure of power and actions the government takes to prevent or defend against any of these.

m. Damage to Property

The insurance company does not pay for property damage to:

(1) Property the named insured owns, rents, or occupies. Costs or expenses it or any other party incurs to repair, replace, enhance, restore, or maintain such property for any reason are excluded. Costs to prevent injury to persons or damage to property of others are also excluded. In addition, coverage does not apply to property the insured owns or that it transports when the damage arises out of owning, maintaining, or using a covered auto. However, there is coverage if this last sentence involves liability assumed liability under a sidetrack agreement.

Note: The umbrella coverage form specifically excludes coverage for any expense the insured incurs to repair its own property and it applies regardless of the reason for such repairs. The ruling in Aetna Insurance Company v. Aaron, 112 Md. App. 472.685 A.2d 858 (1996) prompted these exclusions. The Maryland Court of Special Appeals held that an insurance company was obligated to defend and indemnify the insured in a suit brought by the insured’s condominium association. The association sued to recover costs that resulted from repairs it made to the insured’s condominium. The association alleged that the repairs were necessary to prevent additional damage to another condominium a third party owned.

(2) Premises the named insured sold, gave away, or abandoned. This applies only when the property damage arises out of any part of those premises. This exclusion does not apply when the premises is considered the named insured’s work, provided the premises was never rented out or occupied by the named insured.

Note: This is especially important to homebuilders who build model homes.

(3) Property loaned to the named insured. This does not apply to liability assumed under a sidetrack agreement or liability assumed in a written Trailer Interchange agreement. A trailer interchange agreement is commonly used in the trucking industry.

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(4) Personal property in the insured's care, custody, or control. This does not apply to liability assumed under a sidetrack agreement or liability assumed in a written Trailer Interchange agreement. A trailer interchange agreement is commonly used in the trucking industry.

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(5) The specific part of real property on which the named insured or others on its behalf are performing operations. This applies only when the property damage comes out of those operations. This does not apply to liability assumed under a sidetrack agreement.

(6) The specific part of any property that must be restored, repaired, or replaced because the named insured's work was done incorrectly. It does not apply to liability assumed under a sidetrack agreement. It also does not apply to damages covered under the products/completed operations hazard.

Note: This could be called a quality workmanship exclusion.

n. Damage to Your Product

Coverage does not apply to property damage to the named insured's product that arises out of it or any part of it.

Note: The named insured might have a course of action against a supplier if it is determined that the part or component the supplier provided contributed to the malfunction in any way.

o. Damage To Your Work

There is no coverage for property damage to the named insured's work that arises out of it or any part of it included in the products/completed operations hazard.

There is an exception to the exclusion that applies to work performed by a subcontractor that the insured hired. Coverage applies if the damage to property is the result of the subcontractor’s completed work.

p. Damage to Impaired Property or Property Not Physically Injured

The insurance company does not cover property damage to impaired property or property not physically injured caused by a defect, inadequacy, or dangerous condition in either the named insured’s product or its work. Coverage also does not apply if the damage is caused by a delay or failure by the named insured or others who act on its behalf to meet contract terms and conditions.

However, this exclusion does not apply when there is sudden and accidental physical injury to the named insured’s product or work that causes other property to not be useable.

q. Recall of Products, Work, or Impaired Property

There is no coverage for any incurred loss, cost, or expense when the named insured’s product, work, or any impaired property is recalled or withdrawn from the market or from any use. There is also no coverage for costs and expenses the named insured or others incur because they can no longer use the recalled or withdrawn item. This exclusion also applies to withdrawal, recall, inspection, repair, replacement, adjustment, removal, and disposal expenses.

This exclusion applies when the recall or withdrawal is due to a defect, deficiency, inadequacy, or dangerous condition in the item recalled.

Note: This exclusion is necessary because it could be argued that the insurance company’s loss potential is significantly reduced by the named insured acting responsibly. As with other expenses the named insured incurs as a means to prevent a loss, this exclusion is in place to notify the named insured that being responsible is a cost of doing business not insured by this coverage form.

r. Personal and Advertising Injury

There is no coverage for any bodily injury that arises out personal and advertising injury.

Note: Bodily injury that arises from personal and advertising injury is covered under Coverage B–Personal and Advertising Injury Liability.

s. Professional Services (04 13 change)

Bodily injury and property damage due to providing or failing to provide any professional service is excluded. The specific professional services excluded are listed but the exclusion is not limited to only the services listed. Thirteen professional services are listed.

Note: The exclusion lists the specific professional services excluded but the exclusion is not limited to only the ones listed. Some courts interpret exclusions narrowly and state that any company that wants to exclude a specific activity should do so and not rely on the "but not limited to" wording. In those jurisdictions, any professional services not specifically excluded may be treated as covered.

Two changes made to the list of services in the 04 13 edition reduce coverage.

• The services in s. (2) previously applied only when an architect, engineer, or surveyor that provided services for the construction manager named insured performed the services listed. This restriction is eliminated but the services remain. This means that any professional service that prepares or approves maps, shop drawings, opinions, reports, surveys, field orders, changer orders, drawings, or specifications is now excluded. This is much broader and could have negative implications for many contractors.
• The services in s. (11) were excluded only if the pharmacy practice was by other than a retail druggist or part of a drugstore operation. The exception for retail druggists and drugstore operations is removed. This is a significant change that could produce a gap in coverage because most underlying Businessowners Policies and Commercial General Liability coverage forms provide this coverage.

There is also no coverage for negligence on the part of the insured in hiring, supervising, monitoring, employing, and training as it relates to any professional service occurrence that results in injury or damage. (04 13 addition)

t. Electronic Data (04 13 change)

This exclusion does not apply to bodily injury. (04 13 addition)

Coverage does not apply to damages that arise out of the loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate electronic data. Electronic data is defined as information, facts, or programs used with computer software or any other media used with electronically controlled equipment.

This exclusion has an exception. If there is valid underlying coverage, or there would have been except that the bodily injury and property damage limits were used up, this exclusion does not apply but only for the coverage that underlying coverage provides. However, this coverage form may provide different directions. In that case, this coverage form prevails. (04 13 change)

u. Recording and Distribution of Material in Violation of Statutes (04 13 change)

The change in this exclusion incorporates CU 00 04–Recording and Distribution of Material or Information in Violation of Law Exclusion that was previously a mandatory endorsement.

Insurance coverage does not apply to bodily injury or property damage that arises directly or indirectly out of any act or omission that violates or allegedly violates:

• The Telephone Consumer Protection Act (TCPA), including its amendments or additions
• The CAN-SPAM Act of 2003, including its amendments or additions
• The Fair Credit Reporting Act (FRCA). This includes any and all of its amendments plus related acts such as the Fair and Accurate Credit Transactions Act (FACTA) (04 13 change)
• Any other statute, ordinance or regulation that prohibits or limits sending, transmitting, communicating, printing, disseminating, disposing of, transmitting, or distributing material or information. (04 13 change)

Note: This exclusion does not state that the named insured or even an insured must be the violator. As a result, situations could arise where an insured or the named insured is not aware that its computers have been hacked to violate the act and coverage still does not apply.

COVERAGE B–PERSONAL AND ADVERTISING INJURY LIABILITY

1. Insuring Agreement

a. The insurance company agrees to pay on the insured's behalf the ultimate net loss that exceeds the retained limit because of personal and advertising injury that this insurance covers. It has both the right and the duty to defend any suit that seeks those damages but only when the underlying insurance does not cover the loss or its limits are exhausted. When it does not have a duty to defend, it still has a right to defend or participate in defending the insured against suits for damages that this insurance covers.

It does not have a duty to defend if coverage does not apply to the injury. The insurance company may investigate or settle any claim or suit at any time and at its sole discretion. The most it pays is described in Section III–Limits of Insurance. Its obligation to pay ends when the limits of insurance are used up by paying judgments and settlements. The only other obligations the insurance company owes to the insured are those described above and in Supplementary Payments–Coverages A and B.

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b. When an underlying coverage is subject to a sub-limit, this coverage form does not apply to that particular exposure unless there is a sub-limit on the schedule of underlying insurance. (04 13 addition)

Note: This limitation was not explicitly stated in previous editions of this coverage form. The ISO Commercial General Liability Coverage Form does not have any sub-limits. However, there are many exposures that can be added subject to a much lower sub-limit. The goal of this new wording allows the umbrella carrier to provide only the coverage it knows about for which it charged a premium that contemplates the additional exposure. It also prevents the umbrella carrier from automatically assuming such coverage when a coverage with a sub-limit is added mid-term.

c. Coverage applies only if the personal or advertising injury is caused by an offense that takes place in the coverage territory and during the policy period. The offense must arise from the named insured’s business.

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2. Exclusions

a. Insurance does not apply to personal and advertising injury caused by the following.

(1) Knowing Violation of Rights of Another

The insurance company does not pay for personal and advertising injury that the insured causes or directs. This exclusion applies only if the insured knew that the act would violate the rights of another and result in personal and advertising injury.

(2) Material Published with Knowledge of Falsity (04 13 change)

Coverage does not apply when personal and advertising injury is caused by material published by the insured or at its direction and the insured knew the information was false. The publication can be either oral or written. This exclusion applies regardless of the way the material is published. (04 13 addition)

(3) Material Published Prior to Policy Period (04 13 change)

There is no coverage for personal and advertising injury when the material that caused the alleged injury was first published before the coverage inception date. The publication can be either oral or written. This exclusion applies regardless of the way the material is published. (04 13 addition)

Note: This exclusion does not specify the party that does the initial publication. The insured may publish the material during the policy period but there is no coverage if the insurance company discovers that the material was published elsewhere prior to the policy period.

(4) Criminal Acts

Insurance does not apply to personal and advertising injury that arises out of a criminal act the insured commits or directs.

(5) Contractual Liability

There is no coverage for liability the insured assumed in a contract or agreement. There are two exceptions. This exclusion does not apply to liability the insured has without a contract or agreement. It also does not apply to liability for false arrest, detention, or imprisonment the insured assumes in a contract or agreement.

(6) Breach of Contract

Coverage does not apply to personal and advertising injury that arises out of breach of contract. There is an exception. Coverage applies if the contract was an implied contact and the injury is related to an advertising idea of another used in the named insured's advertisement.

Note: An implied contract is much different than a written one. As a result, it is more difficult to prove that a breach occurred in an implied contract.

(7) Quality or Performance of Goods–Failure to Conform to Statements

Personal and advertising injury that arises when goods, products, or services fail to meet the named insured's advertised statements of quality or performance is excluded.

(8) Wrong Description of Prices

The insurance company does not pay for personal and advertising injury when the named insured’s advertisement shows the incorrect price for goods, products, or services.

(9) Infringement of Copyright, Patent, Trademark, or Trade Secret

Coverage does not apply to personal and advertising injury that arises out of 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 acting on behalf of either does the infringing. All infringement is excluded.

There are two exceptions. This exclusion does not apply:

• When the named insured's advertisement infringes on copyright, trade dress, or slogan
• When use of another’s advertising idea in the named insured’s advertisement is considered infringement of intellectual property rights

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(10) Insureds in Media and Internet Type Businesses

There is no coverage for personal and advertising injury committed by an insured in the businesses of advertising, broadcasting, publishing, or telecasting. There is also no coverage if the insured’s business designs or determines website content for others, or provides Internet search, access, content, or service.

There is an exception. This exclusion does not apply to the sections of the definition of personal and advertising injury that address false arrest, detention or imprisonment, malicious prosecution, or wrongful eviction, entry, or invasion of private occupancy.

Placing frames, borders or links, or advertising on the Internet is not considered being in the business of advertising, broadcasting, publishing, or telecasting, even if the placement is provided to others.

(11) Electronic Chatrooms or Bulletin Boards

Personal and advertising injury that arises out of an electronic chatroom or bulletin board the insured owns, hosts, or controls is excluded.

Note: It is important to note that coverage applies for personal and advertising injury related to posting on chatrooms and bulletins as long as the insured did not control, host, or own it.

(12) Unauthorized Use of Another’s Name or Product

The insurance company does not pay for personal and advertising injury that arises when the named insured tries to mislead another’s customers or potential customers on the Internet. This exclusion applies when the misleading is caused by unauthorized use of the name or product of another party in the named insured's email address, domain, or metatag.

(13) Pollution

Coverage does not apply to personal and advertising injury that arises out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants at any time.

Note: This is an absolute exclusion. It does not have any exceptions.

(14) Employment-related Practices

There is no coverage for personal or advertising injury to a person that results from that person not being employed or whose employment is terminated. There is also no coverage for on-the-job practices, policies, acts, or omissions. Ten acts are listed but they are meant to be examples, not an exclusive list. The listed acts are coercion, discipline, defamation, malicious prosecution, demotion, reassignment, humiliation, evaluation, harassment, and discrimination.

This exclusion applies whether the insured is liable as an employer or in any other capacity. It also applies if it must share damages with or repay someone else who must pay damages because of the injury. In addition, there is no coverage for consequential claims from family members because of bodily injury to any person.

Note: This list adds malicious prosecution because the court in Peterborough Oil Company, Inc. v. Great American Insurance refused to exclude malicious prosecution as an employment-related practice. It reasoned that, if the insurance company did not intend to cover malicious prosecution, it should have listed it. The court determined that this exclusion must be read narrowly, so even with the term “such as” preceding the list, only the items actually listed could be excluded. This case should be used to illustrate being cautious of any exclusion wording.

This exclusion applies even if the injury occurred before the person became an employee or after the person was terminated.

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

This exclusion continues to apply if the insured is liable as an employer or in any other way. It also applies to any obligation the insured has to share damages with or repay another party required to pay damages because of the injury.

(15) Professional Services (04 13 changes)

Personal or advertising injury due to providing or failing to provide any professional service is excluded. Thirteen specific professional services excluded are listed but the exclusion is not limited to only the services listed.

Note: The exclusion lists the specific professional services that are excluded but the exclusion is not limited to only the services listed. Some courts interpret exclusions narrowly and state that any company that wants to exclude a specific activity should do so and not rely on the "but not limited to" wording. In those jurisdictions, any professional services not specifically excluded may be treated as covered.

Two changes made to the list of services in the 04 13 edition reduce coverage.

• The services in (15) (b) previously applied only when an architect, engineer, or surveyor that provided services for the construction manager named insured performed the services listed. This restriction is eliminated but the services remain. This means that any professional service that prepares or approves maps, shop drawings, opinions, reports, surveys, field orders, changer orders, drawings, or specifications is now excluded. This is much broader and could have negative implications for many contractors.
• The services in (15) (k) were excluded only if the pharmacy practice was by other than a retail druggist or part of a drugstore operation. The exception for retail druggists and drugstore operations is removed. This is a significant change that could produce a gap in coverage because most underlying Businessowners Policies and Commercial General Liability coverage forms provide this coverage.

There is also no coverage for negligence on the part of the insured in hiring, supervising, monitoring, employing, and training as it relates to any professional service occurrence that results in injury or damage. (04 13 addition)

(16) War

There is no coverage for personal and advertising injury caused directly or indirectly in any way by war, undeclared war, and civil war, including warlike action by a military force. This exclusion also applies to actions taken by a government to prevent or defend against an expected or actual attack by any government or other authority using military personnel or agents. It also applies to rebellion, revolution, insurrection or unlawful seizure of power and the action the government takes to prevent or defend against any of these.

(17) Recording and Distribution of Material in Violation of Statutes (04 13 change)

The change in this exclusion incorporates CU 00 04–Recording and Distribution of Material or Information in Violation of Law Exclusion that was previously a mandatory endorsement.

Insurance coverage does not apply to personal or advertising injury that arises directly or indirectly out of any act or omission that violates or allegedly violates:

• The Telephone Consumer Protection Act (TCPA), including its amendments or additions
• The CAN-SPAM Act of 2003, including its amendments or additions
• The Fair Credit Reporting Act (FRCA). This includes any and all of its amendments plus related acts such as the Fair and Accurate Credit Transactions Act (FACTA) (04 13 change)
• Any other statute, ordinance or regulation that prohibits or limits sending, transmitting, communicating, printing, disseminating, disposing , transmitting, or distributing material or information. (04 13 change)

Related Court Case: Commercial Liability Policy Obligated To Respond To TCPA Violations

b. This exclusion states that there is absolutely no coverage for losses or expenses involved with or related to pollution.

Note: This exclusion may appear odd or out of place but it is placed here for a good reason. Suits and disputes seeking pollution coverage have become so common and creative that it is wise to specifically exclude these costs.

Supplementary Payments–Coverages A and B

SECTION II–WHO IS AN INSURED

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(3) If the named insured is a limited liability company, the named insured is an insured. Members of the company are insureds but only when conducting the named insured's business. The named insured's managers are also insureds but only when performing specific duties as managers.

(4) If the named insured is any other organization, the named insured is an insured. The executive officers and directors are insureds while performing their duties as such. Stockholders are insureds but only in their very limited capacity as stockholders.

(5) If the named insured is a trust, the named insured is an insured. The trustees are insureds but only while performing duties the trust requires.

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b. Each of the following is also an insured:

(1) Volunteer workers who perform duties related to the named insured's business are insureds. Employees who act within the boundaries of their employment or who conduct the named insured’s business are also insureds. Executive officers and managers of LLCs are not considered employees because they are insureds in a. above.

(a) Volunteers and employees are not insureds for bodily injury or personal and advertising injury:

• To the named insured, its partners, or members of a LLC
• To other employees. This restriction applies only when those co-employees act within the boundaries of their employment or conduct the named insured’s business.
• To the named insured's volunteer workers. This restriction applies only when those workers conduct the named insured's business.
• To consequential loss a relative of any co-employee or volunteer sustains if the volunteer or employee is not an insured based on the preceding bullet items
• Where there is an obligation to share damages with or repay others for damages because of injury described in any of the preceding bullet items

(b) Volunteers and employees are not insureds for property damage to property owned, occupied or used by, or rented to the named insured or that is in its custody.

Note: It is important to understand how coverage extends to volunteers and their duties. Their covered duties are not the same as employee duties. Volunteers are usually involved in non-work activities, such as special events and charitable functions. For this reason, their covered duties are the ones the business establishes for them.

(2) Any party, other than an employee or volunteer, that acts as the named insured's real estate manager

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(3) Any party that has proper temporary legal custody of a deceased named insured's property but only with respect to liability that arises out of or is caused by maintenance or use of that property. However, this is only until a legal representative is appointed.

(4) A properly appointed legal representative for a deceased named insured but only while carrying out its duties as the legal representative

Note: The legal representative assumes all of the deceased named insured's rights and duties. This goes beyond the standard insured status and extends to rights to cancellation, conditions, and other elements assigned only to named insureds.

c. Any newly formed or acquired organization qualifies as a named insured if no other similar coverage is available to it. This applies only if the named insured either owns or has a majority stake in the organization. The newly formed or acquired organization cannot be a partnership, joint venture, or limited liability company. This provision is limited to not more than 90 days after the organization is formed or acquired, or until the end of the policy period, whichever comes first. Coverage A does not apply to bodily injury or property damage that occurred before the organization was acquired or formed. Coverage B does not apply to personal and advertising injury arising out of an offense committed before the organization was acquired or formed.

2. This part of Who Is an Insured relates to liability directly related to owning, maintaining, or using covered autos.

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a. The named insured is an insured.

b. Any person who uses a covered auto the named insured owns, hires, or borrows with the named insured's permission is an insured. This broad statement is subject to the following limitations:

(1) If the named insured hires a vehicle, the owner and person from whom it was hired is not an insured. However, there is an exception for rented trailers or semitrailers connected to a covered vehicle.

(2) The named insured’s employee is not an insured when driving his or her owned vehicle even though it is considered a covered auto under the named insured’s policy.

3) Anyone who uses a covered vehicle while working for an auto-related business. The only exception is if the auto-related business belongs to the named insured.

(4) A person who moves property to or from a covered auto is not an insured. There are a number of exceptions. Lessees, borrowers, partners, and members of a LLC remain insureds as well as the named insured’s employees and employees of lessees and borrowers.

(5) The named insured's partners or members of a LLC are not insureds for any vehicle they own, even when this coverage form considers the auto to be a covered auto.

(6) If an employee injures a fellow employee, the employee who caused the injury is not an insured if the injury occurs while the fellow employee is conducting the named insured's business. The employee is also not an insured for any consequential claim a family member of the injured fellow employee makes. (04 13 addition)

c. Any supervisor of any insured listed above is also an insured. However, the supervisor's liability is limited to its liability as a supervisor or overseer.

3. This item applies to all liability, including auto.

The underlying coverage form or policy determines the final Who Is an Insured. An additional insured on an underlying policy becomes an additional insured on the umbrella.

Additional insured coverage that a contract or agreement requires is subject to Section III–Limits of Insurance. It is also limited to the lesser of the required contract amount, reduced by any payments from any underlying coverage or the limits of insurance on the declarations that apply. (04 13 changes)

The coverage provided to the additional insured is not broader than the coverage provided to the additional insured in the underlying coverage.

No person or organization is an insured with respect to conduct of any current or past partnership, joint venture or limited liability company that is not a named insured on the declarations.

SECTION III–LIMITS OF INSURANCE

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3. Subject to the Aggregate Limit described in 2. above, the Each Occurrence Limit is the most paid under Coverage A for the total of all ultimate net loss that arises from a single occurrence.

4. Similarly, and subject to the Aggregate Limit described in .2 above, the Personal and Advertising Injury Limit is the most paid under Coverage B for the total of all ultimate net loss for an offense to one person or organization.

5. This paragraph addresses underlying insurance with a different policy period and underlying insurance written on a claims-made basis.

If any underlying insurance has a different policy period, this coverage's limits are only reduced or exhausted by payments for:

• Bodily injury or property damage that occurs during this coverage form's policy period
• Personal and advertising injury for offenses committed during this coverage form's policy period

Underlying insurance written on a claims-made basis is treated differently. The retained limits are only reduced or exhausted by claims for that insurance made during this coverage's policy period or any extended reporting period.

This section also clarifies how the Aggregate Limit applies. It applies separately to each consecutive annual period and to any remaining period of less than 12 months. This begins with the coverage inception date, unless it is extended after issuance for any additional period of less than 12 months. If that occurs, the additional period is treated as part of the last preceding period for the purpose of determining the Limits of Insurance.

SECTION IV–CONDITIONS

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4. Legal Action Against Us

Nobody has the right to join the insurance company in any way, bring it into a suit that claims damages from an insured, or sue it unless all its terms and conditions are completely met and complied with.

The insurance company can be sued to recover on an agreed settlement or on a final judgment against the insured. However, its liability does not go beyond what is available in this coverage form's terms. That liability is also limited to this coverage form’s limit of insurance.

An agreed settlement is a settlement and release of liability that the insured, the insurance company, and the claimant or its legal representative signs.

5. Other Insurance

a. This insurance is excess over any insurance and does not contribute with it. This condition does not apply when other insurance is written specifically to be excess over this insurance.

The excess carrier does not have a duty to defend the insured against a suit if another carrier has such duty. However, it will defend the insured if no other carrier does. It then becomes entitled to the insured's rights against those carriers.

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

6. Premium Audit

a. All premiums are calculated according to the insurance company's rules and rates.

b. The advance premium is only a deposit premium. At the end of each audit period, the insurance company determines the actual earned premium for the period and notifies the first named insured. The due date for the company to receive the premium billed is the due date on the billing notice. However, if the advance and audit premiums are more than the earned premium, the insurance company refunds the excess to the first named insured.

c. The first named insured is required to keep records and information the insurance company needs to calculate the premium and must send copies of such records and information to it when requested to do so.

7. Representations or Fraud

By accepting this coverage form as issued, the named insured agrees that the statements on the declarations are complete and accurate, are based on representations it made to the insurance company, and that coverage is issued based on those representations. Any fraud that the named insured commits relating to a claim or the coverage form voids coverage.

8. Separation of Insureds

Other than the Limits of Insurance and any rights and duties that apply specifically to the first named insured, the insurance provided applies to each named insured as if it was the only named insured. The insurance provided also applies to each insured against whom claim is made or suit is brought as though that insured was the only defendant.

9. Transfer of Rights of Recovery Against Others to Us

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

Note: The insured can waive any and all rights of recovery prior to a loss. This condition applies only to rights that remain available at the time of loss.

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10. When We Do Not Renew

If the insurance company decides to not renew, it mails or delivers written notice of the non-renewal to the first named insured on the declarations at least 30 days before the expiration date. If the notice is mailed, proof of mailing is sufficient proof of notice.

Note: State amendatory endorsements may supersede this paragraph.

11. Loss Payable (04 13 change)

This coverage form does not provide liability coverage for a specific claim until both of the following occur:

• Either the insured or the insured’s underlying carrier is obligated to pay the retained limit
• A final judgment or settlement is determined or a written agreement reached between the insured, the claimant, and the insurance company that obligates the insured to pay in excess of its retained limits

Note: The reference to a specific claim is added and the paragraph form is changed to an a. and b. format.

12. Transfer of Defense

The underlying carrier's duty to defend transfers to the umbrella carrier after the underlying carrier pays its limits in judgments or settlements. The umbrella carrier agrees to cooperate in transferring control of any unresolved claims or suits.

13. Maintenance of/Changes to Underlying Insurance (04 13 changes)

Underlying insurance coverage must be maintained and cannot be reduced. The only reduction permitted is when the aggregate limit is reduced by payments for claims, judgments, or settlements to which this insurance applies.

Note: The wording” to which this insurance applies” at the end of the paragraph could be very important. If the payments that reduce the aggregate are for coverages in the underlying that the umbrella does not cover, a gap occurs between the aggregate in the underlying and the umbrella. This means that coverage must be carefully tracked between the two policies in order to prevent such gaps in coverage.

However, failure to do the above does not invalidate this insurance. It applies as if the underlying insurance is still in effect. This means the named insured must fill in the gap when the underlying coverage does not satisfy the umbrella requirements.

The insurance company's liability does not change or increase if the underlying insurance's scope of coverage increases during this policy's term.

The named insured must notify the insurance company as soon as practicable when any underlying insurance is cancelled, not renewed, replaced, or terminated in any way or if the limits or scope of coverage of such underlying insurance changes.

Note: The previous edition stated only that the underlying coverage no longer be in effect instead of listing all possible ways that it might not be in effect.

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14. Expanded Coverage Territory

a. If a suit is brought in a country where the insurance company is not allowed to defend the insured, the company reimburses the insured for any defense costs and other necessary expenses incurred that would have been the company's responsibility if it could have defended. Because these payments are made as Supplementary Payments, they are outside the limit of insurance. In addition, if a claimant is awarded damages and laws prohibit the company from paying them, the company reimburses the insured for amounts it paid.

b. Payments or reimbursements are in United States currency. The rate of exchange for damages paid is based on the exchange rate at the time the insured became obligated to pay the damages. The exchange rate for all supplementary payment expenses is based on the date the expenses are incurred.

c. Disputes between the named insured and the insurance company must be filed in courts in the United States, its territories and possessions, Canada, or Puerto Rico.

d. The insured must carry and maintain any coverage any governmental authority requires throughout the policy period. This requirement does not apply to any reduction in limits that may take place due to payments of claims, judgments, or settlements. If this is not done, the umbrella coverage provided is still valid but any obligations are based on the laws being in effect. As a result, if the insured sustains penalties as a result of not carrying the appropriate coverage, it bears the damages for those penalties.

SECTION V–DEFINITIONS