MEDIA/COMMUNICATIONS LIABILITY COVERAGE ANALYSIS

(March 2023)

Collapsible Menu

I. Insuring Agreement

A. Media Liability

B. Personal Injury

II Definitions

III Exclusions

IV. Limit Of Liability, Retention, Related Claims And Non-Stacking Of Limits

V. Extended Reporting Period

VI. Conditions

CLAIMS MADE NOTICE

This is a notice to policyholders that the coverage described in the policy applies solely to claims that are made against the named insured and, according to policy provisions, are reported to the given insurer. Such claims must be made during the applicable policy (or extended reporting) period. When applicable, such notices also advise the policyholder that legal defense costs are part of the policy’s applicable limits.

COVERAGE A–BODILY INJURY AND PROPERTY DAMAGE LIABILITY

I. Insuring Agreement

A. Media Liability

Under this portion of the policy, the insurer obligates itself to indemnify the named insured against claims when they involve activities that qualify as wrongful acts. However, such incidents must be reported during the defined policy period or any applicable extended reporting period. Such acts must not have taken place before the policy’s defined retroactive date. Eligible incidents are those for which an insured either bears legal responsibility or for those that were assumed. Eligible incidents include the following:

1. Defamation–Circulating false information that damages a person's reputation or business. Allegations typically include libel (traditionally defamation via print or by broadcast, but can include comments from an email, chatroom or website); slander (defamation via oral communication); and trade libel (any form of defamation of a business product or service). Both outrageous conduct and infliction of emotional distress (overt actions that result in another party's public humiliation) are considered forms of defamation.

Example: A local newspaper's cartoonist is angered when he and his friends weren't able to get a reservation at the town's most popular Italian restaurant. The cartoonist publishes a caricature of the restaurant's owner pushing a grocery cart overflowing with jars of a store brand tomato sauce and bargain-priced pasta. The restaurant owner sues for defamation.

2. Right of Privacy violations – A person has a right not to have details of his or her private life and activities made available to the public when the availability is not justified. In other words, when the public does NOT have the “right to know.”

Example: A newspaper’s website runs a popular online contest that results in gaining names and email addresses of hundreds of new site subscribers. The paper is sued when it’s discovered that they, later, sold this information to a variety of area businesses who contact the subscribers with ads and service offers.

Invasion, infringement of or interference with the right of privacy or publicity includes:

· Disclosure of private facts–Harm arising out of a party's sensationalized disclosure of sensitive information without the consent of the individual who was the subject of the disclosure.

Example: A mega-church’s minister has a very popular blog on his church’s website. His writing includes a series called “They’ve Sinned Too!” The minister shares a story of a former classmate who now heads his own large church in another town. The blog reveals that, one evening during high school, they got drunk, picked up girls and vandalized several homes and cars. The friend’s congregation becomes outraged when they read the story. The other pastor sues.

· False light–Presenting a person to the public in a manner that strongly implies that the party is associated with a set of beliefs or activities when the implication is not true (e.g., investigative reports or docudramas).

Example: During an interview with a mayoral candidate, a reporter notices an old photo of the candidate with a notorious businessman who was imprisoned for embezzlement. The article published in the newspaper refers to the candidate’s close ties with the dishonest businessman.

· Intrusion–Usually associated with newsgathering activities involving the use of recorders, microphones, cameras, or other electronic devices to record a person's private activities.

Example: A reporter rudely and aggressively questions the motives of a local philanthropist, who finally loses his temper. He orders the reporter to leave using a long string of loud, profane language. The reporter, who has secretly taped the conversation, later airs selected excerpts of the conversation on TV.

· Unwarranted or wrongful publicity–A broadcast or publication that casts an individual into the public eye without reason or justification.

Example: John is waiting in line to make his car payment when a group of masked men enter and rob the bank. The robbery is caught on tape by the bank’s security system. Later that night, as the tape is broadcast on television, a reporter’s voice-over ominously asks whether John was acting as a lookout for the bank robbers.

· Plagiarism or misappropriation – Unauthorized use of materials, information or ideas without permission or acknowledgement that the material originated elsewhere.

Example: In a bind to get content up for his company’s website, Acme’s webmaster visits several competitors’ sites, copies information verbatim from their various service tips sections and posts them on the Acme site.

3. Infringement of title, slogan, trademark, trade name, service mark, or service name, or using a trademarked name or likeness for profit–Unauthorized use of property (names, logos, slogans, icons) that are identified with a particular product or service.

Example: The owner of Yards of Fun, a fabric and craft supply shop makes a costume that strongly resembles a famous cartoon character. An employee is paid to wear the costume while attending a series of local craft fairs, handing out flyers promoting the store.

4. Copyright infringement–An allegation that material protected by copyright has been copied, reproduced, distributed, or performed without the permission of the owner.

Example: The website for the Comfy Mattress Company features a video clip of a popular band singing their latest hit. The video clip was downloaded from a music website without permission.

It also includes plagiarism or misappropriation (unauthorized use of materials, information or ideas without permission or acknowledgement that the material originated elsewhere) which is also considered copyright infringement.

5. Unfair competition–The invasion, misuse, misappropriation, or infringement of literary, artistic or musical property rights of another. This could include any allegation that one's business reputation suffered harm because of another party being guilty of some form of plagiarism or other infringement. The term is especially pertinent to broadcasting and advertising.

Example: Happy Home Appliances Shop learns that their chief rival is planning to reduce the cost of kitchen appliances by 20% for the upcoming holiday period. Happy Home publishes advertisements undercutting the rival’s price by 30% more, even though doing so will force them to sell the product at a price lower than what they paid for it.

However, in order to qualify for coverage, the above wrongful acts (as defined by the policy) must occur while the insured is performing either multimedia activities or advertising, on a compensated basis and for a business client.

B. Personal Injury

Under this portion of the policy, the insurer obligates itself to indemnify the named insured against claims when they involve activities that qualify as wrongful acts. However, such incidents must be reported during the defined policy period or any applicable extended reporting period. Such acts must not have taken place before the policy’s defined retroactive date. Eligible incidents are those that an insured either bears legal responsibility or for those that were assumed. Eligible incidents include the following:

2. Right of Privacy violations–A person has a right not to have details of his or her private life and activities made available to the public when the availability is not justified. In other words, when the public does NOT have the “right to know,” invasion, infringement of or interference with the right of privacy or publicity includes:

· Disclosure of private facts–Harm arising out of a party's sensationalized disclosure of sensitive information without the consent of the individual who was the subject of the disclosure.

· Intrusion

· Plagiarism or misappropriation

3. Private occupancy violations (including wrongful entry or eviction, trespass or eavesdropping).

4. Personal injury liability perils–Refers to allegations of harm stemming from detention, false arrest, imprisonment, malicious prosecution.

Regardless whether any wrongful act under Parts A or B above is reported in the correct timeframe (earliest effective date or retroactive date), it is ineligible if any insured had prior knowledge of either a given wrongful act or of circumstances that were likely to lead to a claim submitted under this policy.

II. DEFINITIONS

Media/Communications Liability policies commonly employ specialized terms that are highlighted in bold face type or set apart in quotation marks within the policy and defined. The following, with some language variation, are special terms used by various media professional liability insurers:

A. Advertising–Activities which publicize or promote another party’s products or services.

B. Application–Refers to applications (which are signed) as well as any other documents that are attached to or sent in to supplement an application for this policy. It also refers to such documents to secure a policy from the insurance company’s affiliates when such a policy is for renewal or replacement coverage. Finally, such documents are deemed part of the policy.

C. Affiliate of the insurer–Refers to another insurance company more than 50% owned by and controlled by the insurance company issuing this policy.

D. Claim–Also called "each loss" or “each claim” in some policies. This term refers to demands received by a named insured for various forms of relief because of allegations of injury or damage (may be in form of either monetary or non-monetary). It also refers to civil judicial proceedings (complaints, pleadings, injunctions) including their appeals. Criminal proceedings are NOT considered claims.

E. Defense Costs–Besides the costs (fees, expenses) to a named insured to handle a defense against claims, this term extends to also refer to proceedings-related bond premiums (appeal bonds, attachment bonds, etc.) but not to a named insured’s employee, directors’ or officers’ wages/salaries (including overtime), fees incurred by an insured’s directors or officers or any costs involving the use of independent adjusters.

F. Insured–Refers to the named insured and any subsidiary or affiliate owned and controlled by the named insured at the beginning of the policy period. The term includes directors, officers, trustees, partners, stockholders, and employees acting within the scope of their duties. It also refers to a subsidiary acquired during the policy period (provided notice is given within a specified number of days). An agent or independent contractor who provides services for or information to the named insured also qualifies as an insured. However, this status only applies when, BEFORE an event occurs, the insured has a written agreement to cover such persons.

Example: Jodi Koverwell has just delivered an Acme Insurance Media and Professional Liability Policy to General News and Publications Corp. Jodi explains that the policy's $12 million limit also applies to the corporation's photographers, free-lance writers, and correspondents because the company uses contracts that grant them coverage.

G. Internet–Refers to the global network of computer connections and facilities as well as intranets, extranets or virtual private networks.

H. Loss–Refers to judgments, awards, and settlements an insured has to pay due to a claim (as defined by the policy). Loss also extends to any Defense Costs (again as defined). If a claim occurs in a jurisdiction which permits insurance for punitive or exemplary awards, then such amounts also qualify as a loss.

However, loss does NOT include costs of producing, reproducing or reprinting content (defined under this policy as matter), including costs of recall, correction, returns or losses of profit. Amounts levied by law or licensing organizations (taxes, fines, or penalties) are ineligible to be considered as part of a loss. Returns (of fees, expenses, charges or royalties) as well as restitution are not treated as losses and neither is any situation that qualifies as being uninsurable.

I. Matter–Refers to, essentially, content in the form of writings, photos, paintings, music, statistical, audio or audio-visual.

J. Multimedia Activities–Refer to:

· Efforts relating to handling specified media including research, editing, releasing, publishing, producing (including serially), exhibiting or distribution.

· Public transmission of information defined as specified media

· Website service in the form of website creation, planning, building, hosting or maintaining

K. Named Insured–Party that appears in this policy’s declarations.

L. Policy Period–The beginning and ending coverage dates that appear on the declarations unless an earlier ending date applies due to policy termination.

M. Pollutants–Include irritants and contaminants such as smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste of a solid, liquid, gaseous, or thermal nature. Waste includes property to be disposed of, as well as property to be recycled, reconditioned, or reclaimed. The term also refers to any substances deemed hazardous by the U.S. Environmental Protection Agency or any other related federal, state or local authority. It also includes air emissions, oil, oil product, infection waste, medical waste and asbestos materials.

N. Related Claims–This term treats all defined claims which stem from either one or a series of related, defined wrongful acts as a single claim. This single status is unaffected when such a claim is filed against more than one of the policy’s insureds.

O. Retroactive Date–Date designated as such in the policy’s declarations.

P. Specified Media–The form or forms of media that are designated in the policy’s declarations.

Q. Subsidiary–Any corporation which, at the beginning of the applicable policy’s effective date, is owned or controlled by the Named Insured. Ownership refers to a named insured holding more than 50% of another companies voting stock, even when such stock is held by another subsidiary.

R. Terrorism–Refers to threatening use of force or committing acts of violence against entities or property, committing dangerous acts (including threats) and interfering or disrupting systems (communication, electronic or mechanical), but only when the threat or act is meant to coerce or intimidate a government, civilians or an economy. Such acts against a government which are to promote various objectives (economic, ideological, political, religious or social) as well as acts to promote or oppose a given philosophy or ideology also qualify as terrorism.

Note: Acts to defend against or to minimize terrorist acts also qualify as terrorism.

S. War–Broadly extends to any military or similar activity regardless whether formally declared. Efforts to defend against such activities also meet the definition of war.

T. Wrongful Act–Mistakes, misstatements, misleading statements, acts, omissions or misrepresentations that are negligent and which involve the name insured (including such activities done on insured’s behalf or with permission).

III. EXCLUSIONS

Media/Communications Liability is not written on a standard form. Instead, the specialty carriers who offer this coverage develop proprietary forms, which can vary tremendously from one carrier to another. When a Media Liability Policy is delivered to an insured, potential problems and disputes can be avoided or minimized by stressing the importance of reviewing and understanding the exclusions, which may not be familiar to some insureds.

As most Media/Communications Liability Policies are written on a named perils basis, there are, generally, few exclusions. These exclusions primarily involve:

A. Disqualifying any incident that was documented, reported or had a claim filed against any named insured prior to the current policy’s effective dates or prior to any coverage initially issued by this insurance carrier, whichever is earliest. No coverage applies to any litigation that was pending prior to the current policy’s effective dates or prior to any coverage initially issued by this insurance carrier, whichever is earliest. Further, coverage is barred for similar circumstances that are related to and which has created any prior or pending litigation.

B. Judicially determined dishonest, fraudulent or criminal acts or criminal fines or penalties. In such instances, the named insured is obligated to reimburse the insurance company for all costs it expended in legal defense.

C. No coverage exists for any form of bodily injury (including disease or death), property damage (including loss of use) or emotional or mental harm. An exception for such losses exists. Coverage may be provided when such losses are directly related to a covered, wrongful act when no other source of coverage exists.

D. No protection applies to wrongful acts (as defined) that stem from either employment-related liability or to discrimination as defined by either federal, state or local laws or rules.

E. Employee benefit and pension plan losses are ineligible for coverage under this policy. This exclusion extends to losses which violate local, state or federal laws, particularly Acts such as:

· Employee Retirement Income Security Act (original act and amendments)

· Laws and rules related to ERISA

· Securities Act or Securities Exchange Act (original acts and amendments)

· Laws and rules related to the federal securities acts

· Racketeer Influenced and Corrupt Organizations Act (original act and amendments) including allegations of violations

· Laws and rules related to the RICO Act

F. No coverage is provided for any claim brought by an entity that meets the definition of an insured. Nor will a claim be eligible when it is filed by any entity that owns or controls an insured, which is owned or controlled by an insured, nor an entity consisting of common ownership in which an insured is among the owners. Finally, no claim is eligible when filed by any form of government agent or official. The policy specifically mentions the FTC and FCC, but the exclusion applies to any and all agencies and officials.

G. Loss involving a breach of contract does not qualify for protection. An exception is made for instances that meet the definition of a wrongful act, but only when liability for such an act is due to an insured being held responsible under a contract.

Example: Johnny-On-The-Spot Printing contracts to design, print, and mail a promotional brochure for Brad's Bowling Bonanza. The project is date sensitive. Johnny drops the ball and misses the mailing date by several days. Brad sues for breach of contract. There is no coverage.

H. Theft or intentional disclosure of proprietary information, such as trade secrets.

I. Losses related to the named insured’s income collection activities are ineligible.

J. No coverage applies to losses caused by promotional activities (including, but not limited to awards, coupons, discounts, prizes) which result in redeeming or paying out amounts that exceed totals that were either contractually designated or expected.

Example: A television station runs a contest in which winners must solve a puzzle posted on a website in order to qualify for cash prizes. A person publishes the answer on a blog and hundreds of persons submit “winning” answers. The contest rules did not prohibit this outcome, so the station has to pay out tens of thousands more than they had planned. This loss is not covered.

K. Loss related to a named insured’s self-advertising (whether its own product or service) does not qualify for coverage.

L. Coverage does not apply to any infringement of patent. It also does not apply to software technology-related copyright, trademark or service mark infringement.

Note: There is no requirement that the named insured, an insured, or even someone acting on behalf of either does the infringing. All infringement described above is excluded.

M. This policy does not respond to loss when it is triggered by the insured’s noncompliance with either antitrust or restraint of trade laws.

N. Coverage is barred for many losses that are related to Internet activity. Specifically, no coverage is available for loss due to the following:

· Any form of breakdown (including mechanical) or failure that results in preventing Internet use. Examples include power failure (blackouts or brownouts), power surges, power interruption (such as insufficient or inconsistent power supply), failed telephone or data transmission lines (such as cables or wireless interference), etc.

· Existence of any computer virus

· Any circumstances that prevent a legitimate party’s access to an Internet web site

· Use of a computer system by a person who does not have permission or rights to do so, as well as use by authorized persons in a manner NOT permitted by their employment or responsibilities

· Any form of unauthorized entry to a computer system

O. War

There is no coverage for 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 the action the government takes to prevent or defend against any of these.

P. Pollution Related

Coverage does not apply to any loss, cost, or expense that arises out of:

Any request, demand, order, or statutory or regulatory requirement that any insured or others test for, clean up, treat, respond to, or assess the effects of pollutants in any way
Any claim or suit by or on behalf of a governmental authority because of testing for, cleaning up, treating, responding to, or assessing the effects of pollutants in any way

Note: There have been numerous attempts to cover various types of pollution losses because of the personal injury liability coverage wording in previous editions. These attempts were disguised as trespass, wrongful entry, or invasion of the right of private occupancy. Personal and advertising injury coverage was never intended to pay for any pollution damages or cleanup costs. This exclusion clarifies that there is no coverage for any pollution exposure that may arise out of this coverage form’s personal and advertising injury wording.

IV. LIMIT OF LIABILITY, RETENTION, RELATED CLAIMS AND NON-STACKING OF LIMITS

A. Limit of Liability

1. This policy’s declarations provides a per claim limit of liability. That amount acts as the maximum available coverage for a single given claim and any claim related to it.

2. This policy’s declarations provides a policy period aggregate limit of liability. That amount acts as the maximum available coverage for all claims that are legitimately first reported during the policy period. If the policy includes an extended reporting period, the aggregate extends through that additional period.

B. The Retention

This amount, which appears in the policy’s declarations, represents the portion of any given claim that is the sole responsibility of the named insured to pay. Any claim or related claims (as defined) payment made under this policy will always be in excess of this, retained, amount.

C. Related Claims

This term refers to the policy treating all claims that, essentially, arise from the same set of circumstances, as a single claim. The date of related claims is the date on which the initial loss is reported (first claim made against an insured) during an applicable policy period.

Example: The television station with the flawed contest argues that each contestant with a winning submission is an individual loss. The station’s insurer sues over the issue and a court rules that it is a single claim. The television station loses again when the courts also rule that the single claim is not a covered loss.

D. Non-stacking of limits

Depending upon circumstances, a given claim may be eligible for coverage under more than one policy. It could be due to multiple policies being issued to a named insured or due to issuance to an entity that’s an affiliate of the named insured. In such cases, coverage will be apportioned among the policies that provide coverage and protection will be capped at an amount equal to the policy with the highest limit of liability.

V. EXTENDED REPORTING PERIOD

A. Since this is a claims made policy, an insurer that terminates coverage (via cancellation or non-renewal) incurs a specific obligation. In such cases the company must offer the named insured an opportunity to buy protection for an extended reporting period.

The named insured can purchase this coverage for an additional premium, but only if the insurance company is told of the intent to buy it no later than 10 days after coverage has terminated. The ability to report claims only applies to incidents that meet the policy’s definition of wrongful acts. Unlike other premium payments, premiums for an extended reporting period are deemed immediately earned (so no amount qualifies for refund).

Note: Under this policy, the length of the reporting period extension and the accompanying premium are both determined at the time the decision to purchase the coverage is made.

B. The option to buy extended reporting period protection is forfeited if policy coverage has terminated due to nonpayment of premium. The option is also lost if the named insured fails to comply with other required policy provisions and conditions.

C. When a policy terminates because the insurance company and policyholder fail to agree upon a change in premiums, retentions, liability limits or conditions, the situation is not treated as a termination that triggers the right to purchase extended reporting period coverage.

D. Use of the extended reporting period option has no effect on the available policy limits nor on the policy period. Whatever limits exists as of the date that an extension is purchase carries over.

E. Claims which are first reported during the extended period are treated as if they were made as of the last day of the defined policy period.

Example: Giant Web Publishing Inc. is nonrenewed by Carrier A, but easily replaces coverage with Carrier B. It buys a two-year extended reporting period from Carrier A. at the same time that begins at the end of its policy period. Eight months later, Giant is sued by a former client for defamation. The incident that triggered the claim took place before the retroactive date of its new policy, so the claim is legitimately made under Carrier A’s extended reporting period.

VI. CONDITIONS

A. Notice and Cooperation

Every insured involved in or with the claim must:

Immediately send copies of demands, notices, summonses, and legal documents it receives in conjunction with the claim or suit to the insurance company
Authorize and grant approval for the insurance company to obtain records and other needed information
Cooperate with the insurance company as it investigates or settles the claim or defends against the suit
The denial of an insured to reveal the name of a confidential source is not considered to be a lack of cooperation.
When the insurance company requests, assist it to enforce any right against any person or organization that may be liable to the insured for injury or damage that this insurance covers

In addition to the above, all documents must be sent to the insurance carrier to the mailing location specifically referenced in the policy.

B. Notice of Circumstances Giving Rise to Claim

The named insured has a number of duties to perform if there is a wrongful act-related claim. The named insured must inform the insurance company of any occurrence or offense (wrongful act) that may result in a claim. The notification has to occur before the applicable policy period’s expiration. At a minimum, the notice should include information concerning how, when, and where the event took place and the names and addresses of all possible claimants, all persons involved in committing the wrongful act, a complete description of the wrongful act and how the named insured gained knowledge of the possible loss.

Note: After a given situation is reported, any other related claims are treated as having been reported at the same time.

C. Retractions and Corrections

Most policies permit an insured to decide whether to make a retraction or correction of media content. This is especially significant for publishers and broadcasters. The insurer provides the named insured with the discretion to decide when retractions and corrections related to content it issued are prudent.

D. Defense and Settlement

With the approval of the insurer, an insured is responsible for handling a lawsuit. It may generally use its own legal counsel and make necessary filings in defense of a lawsuit. The insurer may choose to join the insured in the defense, in which case the two parties must fully cooperate with each other.

The insured, in general, has the right to settle a claim or suit if the amount of a settlement or judgment and defense costs does not exceed the remaining retention under the policy. The insurer cannot settle any claim without the consent of the insured when the total amount exceeds the retention.

While it is important that the insured notify the insurer promptly of a claim, it is essential for a claim in excess of the insured's retention to be reported to the insurer without delay, along with copies of pertinent documents.

The named insured has a couple of options when there’s a dispute between it and the insurance company.

1. When the named insured is willing to accept either a claimant’s settlement or decides not to appeal a trial court decision, the insurance company has the option to continue to litigate the matter. However, the insurer must, first, get permission to continue with a suit or to file an appeal from any excess insurers. Further, any related costs (including additional judgment interest as well as additional trial costs) are then assumed by the insurance company. Any portion of resultant settlement amount or judgment paid in excess of the amount in which the named insured had agreed to accept will be the financial responsibility of the insurer alone. Such amounts will NOT be applied to the applicable policy limit.

2. When it is the insurance company that wishes to accept either a claimant’s settlement or decides not to appeal a trial court decision, the insurance company has the option to pay the applicable amount of difference between the retention and the settlement or judgment to the insured. At that point, it is the financial responsibility of the named insured to continue litigation and to handle all work and costs since, after such payment, the insurance company’s settlement and defense obligations are terminated.

E. Misrepresentations in the Application

By accepting this coverage form as issued, the named insured agrees that the statements on the declarations are complete and accurate and are based on its representations. It further agrees that the coverage that the insurance company issues is based on those representations.

Note: This is very important because these statements allow the insurance company to use inaccurate statements in any application to void coverage.

F. Territory

The policy responds to eligible allegations of wrongful acts that occur anywhere in the world, but only when suit is filed in the United States of America (including territories or possessions) or in Canada.

G. Other Insurance

The insurance company's obligations to pay is limited to apply on an excess basis whenever there are other sources of valid and collectible insurance available that applies to the loss. This policy’s excess status is not affected by any method of sharing that exists in other insurance. However, this insurance applies on a primary basis when this coverage is expressly written as primary protection and the other source is expressly written as an excess level over the coverage provided by this policy.

H. Subrogation

Any rights the insured has against others to recover all or part of any payment the insurance company makes are transferred 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.

In the event of recovering sums from other parties, any amounts that exceed the total costs experienced by the insurance company (payments plus recovery expenses) shall be paid to the named insured.

I. Changes

This provision informs that the policy is changed ONLY by a proper endorsement. No other circumstances affect the policy as written.

J. Action Against the Insurer

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 of the coverage form’s 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.

K. Assignment of Interest

Without the insurance company’s written permission, the policy’s rights cannot be assigned to another party. The assignment has to be transacted via a proper policy endorsement.

L. Cancellation

a. The named insured on the declarations can cancel at any time by giving the insurance company advance notice of its intent to do so.

b. The insurance company can cancel at any time by giving written notice of cancellation to the named insured, the contractor, and any governmental authority or contracting party on the declarations at their last known mailing address. It must be mailed or delivered at least 60 days before cancellation takes effect.

In case of cancellation, the insurance company refunds any unearned premium. Refunds on cancellations it initiates are pro rata. Refunds on cancellations the named insured initiates may be less than pro rata. In any case, cancellation is effective even if a refund has not been offered or made.

M. Transactions Changing Coverage

Change of Control of the Named Insured–If during a given policy period, another entity or group gains any form of controlling interest in the ownership or board of the named insured, the policy’s coverage will continue, but only as of the date of the change in control. The named insured is obligated to tell the insurance company of such events no later than 30 days from the change in control’s effective date.

Acquisition or Creation of a subsidiary–If during a given policy period, the named insured either acquires or creates a subsidiary, that subsidiary is also covered for the occurrence of wrongful acts. However, the coverage only applies to such acts that occur as of the date of the subsidiary’s existence as such and only when its operation is similar to the named insured.

When a subsidiary’s value equals or exceeds 10% of the original named insured’s (plus any covered subsidiary’s) total assets, the acquisition of the subsidiary must be reported as quickly as possible. In order for coverage to continue, the named insured is obligated to pay any requested additional premium as well as comply with any policy changes that are made to accommodate the subsidiary’s presence.

Cessation of Subsidiaries–If during a given policy period, a covered entity ceases to be subsidiary, then coverage under the policy applies only up to the date that subsidiary status ends.

N. Authorization Clause

Once this policy takes effect, the first named insured that appears on the policy’s declarations assumes certain, distinct obligations. It is responsible to act as a representative for all other insureds, including making premium payments, receiving refunds, handling all policy endorsements and acting as the party to accept any termination notices.

O. Service of Suit

This provision, essentially, binds the insurance company to participate in any lawsuit filed against it when it is triggered by a claim that it has not paid what was due under the policy’s provisions. The insurer states that:

It will cooperate with the lawsuit process as required by any valid, competent jurisdiction located within the United States
It will accept any documents related to a suit brought against it that alleges it has not made proper loss payment
It will comply with a court decision that is final (not subject to appeals)

· Its participation in such a suit does not affect its rights regarding seeking to have the action heard in a valid, United States jurisdiction of its choice