Supplementary Payments–Coverages A And B

1. The following are paid for any claims the insurance company investigates or settles. They are also paid when the insurance company incurs them in order to defend a suit.

None of these costs reduce the limits available to pay for settlements, claims, and judgments.

a. All costs the insurance company incurs

b. The cost of bail bonds. They are paid only when required because of the use of a vehicle that is covered for bodily injury under this coverage form. The bond must be due to that vehicle having violated a traffic law or because of an accident. The cost is limited to not more than $250. The insurance company is not required to furnish these bonds.

c. Cost of bonds to release attachments. However, the cost of only bond limits up to the available limit of insurance are covered. The cost of excess bond amounts is the insured’s responsibility. The insurance company is not required to furnish any bonds.

d. Reasonable expenses the insured incurs because the insurance company requests it to assist in the investigation or defense of a claim or suit. When the insured must be away from work, a maximum of $250 per day is paid for loss of earnings.

Note: The expenses must be reasonable and must be incurred based on the insurance company’s request. No expenses are paid for “freelance” investigating or assistance.

e. A suit's court costs that are the insured's responsibility. These court costs do not include attorney fees or expenses that are taxed by the court against the insured.

Note: This restriction can be very costly to the insured, especially when a court assesses all the proceeding’s costs and expenses against the negligent party.

f. If the insurance company pays a judgment, it also pays the prejudgment interest charged against the insured for the amount of the judgment it pays. It does not pay any prejudgment interest that accrues on the part of the judgment for which the insurance company is not responsible. In addition, once the insurance company offers the full limits to settle, it will not pay any prejudgment interest that accrues after that offer.

g. Interest that accrues on the full amount (not just the amount within the available limits) of any judgment after it is entered. Once the insurance company pays, offers to pay, or deposits with the court the part of the judgment for which it is responsible no additional interest is paid.

2. Under the Contractual Liability exclusion, the cost of the defense of the indemnitee is part of the damages which means that defense costs reduce the amount of limits available to pay for the loss. However, if the insurance and the indemnitee are sued in the same suit and the insurance company defends the insured in that suit, it will also defend the indemnitee and pay under Supplementary Payments if all the following apply:

a. The damages the suit seeks must be for liability assumed in the insured contract between the insured and the indemnitee.

b. The insurance this coverage form provides must be for the liability described in a. above.

c. The insured contract described in a. above must include a provision that requires that the insured assume defense costs or be obligated to defend damages for liability assumed in the insured contract.

d. The interests of the insured and the interests of the indemnitees must not conflict with respect to the suit brought. This lack of conflict is based on both the suit’s allegations and the information the insurance company obtains with respect to the suit.

e. Both the insured and the indemnitee must ask the insurance company to handle the indemnitee's defense in the suit and agree to the same legal counsel handling the interests of both parties.

f. The indemnitee must agree in writing to actions the insured agrees to do in Section IV–Conditions. This is required because the indemnitee is not a party to the contract and is not subject to those conditions or to even know about them.

The indemnitee must cooperate with the insurance company in investigating, defending, or settling the suit. It must promptly send copies of any demands, notices, summonses, or legal documents it receives related to the suit to the insurance company. The indemnitee must also agree to notify any other insurance company with available coverage and assist all the insurance carriers to work together so that all coverage is coordinated.

The indemnitee must give the insurance company written authorization to obtain records and other information related to the suit. It must also provide written authorization for this insurance company to conduct and control the indemnitee's defense in the suit.

Attorney fees and all litigation expenses are paid without reducing the limits of insurance when all the above requirements are met.

There is no obligation for the insurance company to defend after the limit of insurance that applies is used up paying judgments or settlements.

In addition, if the indemnitee fails to meet the conditions in f. above, the insurance company is not obligated to pay the indemnitee’s attorney’s fees and other costs of litigation as part of Supplementary Payments.