2. CONTACT

Professional Underwriters Agency
2907 Butterfield Rd., #320
Oak Brook IL 60521
(708) 575-8111
FAX: (708) 575-0033

3. UNDERWRITING GUIDELINES

As mentioned, the program targets almost all testing labs other than those involved in the following: diagnostic medical testing; drug testing; product development research; AIDS testing; soil and geotechnical testing in California; and biological human studies.

The agent is to submit the following information with the application: details of any prior or pending claims; current financial statements for the applicant; current brochures that describe the applicant's capabilities; the applicant's quality control program.

4. AVAILABILITY OF COVERAGE

Coverage is available in all states except Vermont.

5. LIMITS AVAILABLE/DEDUCTIBLES

Limits up to $5 million/$5 million are available. Defense expenses are included in the limit and the minimum deductible is $2,500. The minimum premium is $2,500.

6. INSURING AGREEMENT

While the policy includes several items under “Insuring Agreements” that are best described as “conditions,” the section labeled “coverage” is the heart of the agreement. Written on a “pay on behalf of” basis, the policy covers the obligations of the named insured that arise out of negligent acts or the failure to render professional services.

7. DEFINITIONS

The following terms are defined:

Named Insured: see below.

Claim: a demand for money that the named insured receives.

Damages: includes judgments and settlements, but not penalties or punitive damages. It also includes “costs, charges, and expenses.”

Policy period: as shown in the declarations. However, it may be cut short if the policy is terminated.

Costs, charges, and expenses: these are the costs of investigating the claim. The term does include fees of attorneys, arbitrators, and courts. It does not include the salaries of insurer employees.

Bodily injury: includes mental illness and emotional distress.

Personal injury: in addition to the items found in the commercial general liability policy (CGL) from Insurance Services Office (ISO), the American Equity definition includes all types of harassment (such as racial, age-based, and sexual) and humiliation.

8. WHO IS INSURED

In addition to covering the named insured shown on the declarations, the term “named insured” includes partners, joint ventures, officers and directors, and employees. These are the only “insureds” under the policy.

9. WHAT IS INSURED

The American Equity policy covers damages that arise out of the insured's rendering or failure to render professional services. The professional services are those of a testing laboratory.

10. PERILS

The professional liability and personal injury liability insuring agreement is essentially an open perils agreement, with coverage delineated by the definitions and exclusions. Coverage under personal injury, however, can be considered named peril, with the perils set forth in the definitions of personal injury.

11. EXCLUSIONS

The following are the exclusions contained in this policy:

A. Contractual assumption of liability—except for liability the insured would have had anyway.

B. Acts of others who are not listed as an insured. This category includes individuals, corporations, partnerships, or joint ventures.

C. Workers compensation, disability benefits, or unemployment compensation liability.

D. Insolvency or bankruptcy of any insured.

E. Dishonest, criminal, fraudulent, malicious or intentional acts. Such acts by an insured negate coverage if a judgment or some “other final adjudication” finds that the insured's conduct was as claimed. This provision, then, makes it difficult for an insurer to claim that the act was dishonest, criminal, etc. based on the insurer's interpretation of the facts. A decision or adjudication is necessary.

F. Claims by any of the following are not covered:

1. Any business owned or controlled by the insured.

2. Any business that owns or controls the insured.

3. Employees and their families.

4. Partners, officers, directors, shareholders, or employees—whether current, former, or prospective.

5. Any insured.

G. Bodily injury, personal injury, or property damage.

H. Any of the following activities undertaken by the insured:

1. Officer, director, trustee, or employee of a pension, welfare, or profit sharing plan or other financial institution.

2. Public official or employee.

3. Arbitrator.

4. Fiduciary under ERISA.

I. Express warranties or guarantees.

J. Any violation of the Securities Act of 1933.

K. Infringement of copyright, etc.

The policy then goes on to say what specific things the policy does not cover:

A. Any specification of a product containing asbestos.

B. Transportation, storage, or disposal of a product containing asbestos.

C. Any work with a product containing asbestos.

The final exclusion is a long pollution exclusion.

12. CONDITIONS

The following items, which act as conditions, are referred to as “insuring agreements” in this policy.

A. Territory, Policy Period, Claims Made. The territory is the United States and territories and Canada.

B. Limits of Liability.

C. Deductible.

D. Awareness Provision. If the insured becomes aware of any situation that might result in a claim—and reports it to the insurer—the insurer will consider that any future claim was made during the current policy period.

E. Defense, Settlement, Cooperation. The insured must cooperate with the insurer. The insurer may not settle any claim without the consent of the insured.

F. Discovery Clause. If the insurer terminates the policy or refuses to renew, the insured may purchase an extra 365 days coverage for 100% of the annual premium.

The following are the “conditions” as set forth in the policy:

A. Insured's duties in the event of a claim:

1. Give written notice to the agent or the insurer.

2. Forward to the insurer any notice, summons, etc. received in connection with the claim.

3. Cooperate with the insurer and submit to an exam under oath if required.

B. Cancellation. The insured may cancel the policy at any time. The insurer may cancel by mailing a 30-day notice to the insured.

C. Subrogation.

D. Audit. The insurer may audit the insured's books within the policy period and up to three years after.

E. Action Against the Insurer.

F. Other insurance. This policy is excess.

G. Assignment.

H. Application. The insured warrants that the statements made in the application are truthful.

I. The insured must give immediate notice of claim to the agency.

J. False or fraudulent claims void the policy.

K. Changes.

L. Service of Suit.

Executive Risk Indemnity Inc.

1. INTRODUCTION

Executive Risk Indemnity Inc. offers a claims made miscellaneous professional liability policy that provides coverage for such operations as business brokers, claims adjusters, credit bureaus, executive recruiters, landscape architects, printers, sports agents, travel agents, and tax preparers (not a complete listing— please contact company). Covered defense costs are included in the applicable limit of liability.

2. CONTACT:

Executive Risk Management Associates
82 Hopmeadow Street
Simsbury, CT 06070-7683
1-800-677-5442

3. UNDERWRITING GUIDELINES

A completed application is required, along with an informational brochure or other promotional literature, current financials, and a copy of the applicant's standard contract for services provided.

4. AVAILABILITY OF COVERAGE

All states.

5. LIABILITY

LIMITS AND DEDUCTIBLES AVAILABLE.

Maximum limits of $5 million are available. Limits may be on a per claim basis, with an annual aggregate applying. Deductibles begin at $2,500.

WHO IS INSURED.

The policy covers the person or entity stated in the declarations, and any natural person who was, is, or shall become a director, officer, employee or partner of the person or entity.

WHAT IS INSURED.

The policy covers the person or entity stated in the declarations for the commission of a “wrongful act.” Defense expenses as a result of any claim first made against the insured during the policy period for a wrongful act first committed on or after the retroactive date stated in the declarations are included within the limit of liability.

PERILS.

The only peril covered is the commission of a “wrongful act.”

INSURING AGREEMENT. The policy contains two insuring agreements. The first agreement is to pay on behalf of the insured damages which the insured becomes legally obligated to pay as a result of a claim. The second is that the company has the right and duty to defend any such claim, even if the claim is groundless.

DEFINITIONS

A. “Claim” means any civil action, suit, proceeding or demand by any person or entity seeking to hold the Insured responsible for monetary damages as a result of a Wrongful Act actually or allegedly committed by the Insured or by any other person for whose Wrongful Acts the Insured is legally responsible.

B. “Damages” means judgments or settlements negotiated with the approval of the Company; however, Damages shall not include:

1. fines, taxes, or penalties;

2. fees or other charges of the Insured; or

3. punitive or exemplary damages or the multiplied portion of any multiplied damage award, except where permitted by law Damages shall include, in an amount not exceeding the sum of $25,000, the multiplied portion of a multiplied damages award of punitive or exemplary damages, which sum shall be part of and not in addition to the applicable limits of liability.

C. “Defense Expenses” means reasonable expenses and legal fees incurred with the approval of the company in the investigation, adjustment, defense or appeal of a claim against the insured; however, defense expenses shall not include salaries, overhead or benefit expenses or other fees and charges of the Insured.

D. “Insured” means the person or entity stated in item 1 of the Declarations, and any natural person who was, is or shall become a director, officer, employee or partner thereof, but only while such person was, is or shall be acting within the scope of his or her duties as such.

E. “Policy Period” means the period from the inception date to the expiration date stated in item 2 of the Declarations, or to any earlier cancelation date.

F. “Professional Services” means only services performed for others for a fee and which are listed in item 6 of the Declarations.

G. “Related Claims” means collectively all claims involving the same wrongful act or wrongful acts which are logically or causally connected by reason of any common fact, circumstance, situation, transaction, event or decision.

H. “Wrongful Act” means any actual or alleged act, error or omission committed solely in the performance of, or failure to perform professional services.

6. EXCLUSIONS

Since the policy applies to allegations of negligence in performance of a professional service, actions other than the commission of a “wrongful act” as defined are excluded from coverage.

The policy does not apply to any claim:

A. based on or directly or indirectly arising out of or resulting from any criminal, fraudulent, dishonest or discriminatory act or omission or any act, error or omission committed with knowledge of its wrongful nature or with intent to cause damage, or the gaining by the “Insured” of any personal profit, gain or advantage to which the “Insured” was not legally entitled; however, the Company shall reimburse the “Insured” for any Defense Expenses that would have been payable under this policy if, upon final disposition of such “Claim,” such allegations have not been proven;

B. for non-pecuniary relief;

C. based on or directly or indirectly arising out of or resulting from any actual or alleged bodily injury to or sickness, disease or death of any person, or damage to or destruction of any tangible property, including the loss of use thereof;

D. based on or directly or indirectly arising out of or resulting from:

1. any actual, alleged or threatened exposure to, or generation, storage, transportation, discharge, emission, release, dispersal, escape, treatment, removal or disposal of any smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials (including materials which are intended to be or have been recycled, reconditioned or reclaimed) or other irritants, pollutants or contaminants, or

2. any regulation, order, direction or request to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize any of the foregoing, or any action taken in contemplation or anticipation of any such regulation, order, direction or request;

E. by or on behalf of any person or entity included within the definition of “Insured” against any other person or entity included within the definition of “Insured”;

F. based on or directly or indirectly arising out of or resulting from the performance of or failure to perform “Professional Services” for:

1. the “Insured,” or

2. any entity owned or controlled by any person or entity included within the definition of “Insured,” or

3. any person or entity which owns or controls any entity included within the definition of “Insured,” or

4. any entity which is under common ownership or control with any entity included within the definition of “Insured,” or

5. any entity of which any person included within the definition of “Insured” is a director, officer, partner or principal shareholder;

G. based on or directly or indirectly arising out of or resulting from any act, error, omission, fact, circumstance, situation, transaction, event or decision which is the subject of any notice or claim under any prior policy; or any other act, error, or omission, whenever occurring, which is logically or causally connected by reason of any common fact, circumstance, situation, transaction, event or decision, with any act, error or omission which is the subject of such notice or such claim.

7. CONDITIONS

It is important to be aware that notice to the insurer must be in writing. Further, if the insured becomes aware of any circumstances that may give rise to a claim, then the insured should notify the company. Then, if a claim is subsequently made, even if after the policy period, it will be deemed to have been made within the policy period or the extended reporting period, if applicable. See Condition B, below.

The policy provides limits on a per claim basis, up to the aggregate limit selected. Defense expenses resulting from each claim or related claim are a part of, and not in addition to, these limits. The cost of defending a claim can reduce, or even exhaust, the selected limit. It is also important to note that the deductible applies to defense expenses as well as to payment of damages. See Condition F, below.

The following conditions apply:

A. Territory: This policy applies only to “Wrongful Acts” committed, and to “Claims” made against the “Insured,” in the United States of America, its territories or possessions, or Canada.

B. Notice:

(1) As a condition precedent to any right to coverage afforded by this policy, the “Insured” must give written notice to the company of any “Claim” as soon as practicable after such “Claim” is first made and, subject to Section IV (C) below, during the “Policy Period” or extended reporting period, if applicable.

(2) If the “Insured” becomes aware of any circumstances which may subsequently give rise to a “Claim” against the “Insured” and, during the “Policy Period” or, if applicable, the extended reporting period, gives the company written notice of

(1) the nature and date of the specific “Wrongful Act,” and

(2) the names of potential claimants, and

(3) the injury or consequences which have or might result there from, and

(4) the manner in which the “Insured” first became aware of the potential for a “Claim” there from, then any “Claim” subsequently made against the “Insured” arising out of such “Wrongful Act” shall be deemed to have been made during the “Policy Period” of, if applicable, the extended reporting period.

C. Additional Time to Report Certain Claims: If a “Claim” is first made against the “Insured” during the last fourteen (14) calendar days of the “Policy Period,” such “Claim” will be deemed to have been reported to the company during the “Policy Period” if:

(1) the “Insured” makes reasonable efforts to report such “Claim” immediately, and

(2) the “Insured” gives the company written notice of such “Claim” no later than fourteen (14) calendar days after the “Policy Period.”

D. Date of Related Claims: “Related Claims” shall be deemed to have been first made at the earlier of the following times:

(1) at the time the earliest of the “Related Claims” was first made, or

(2) at the earliest time at which notice was given under any policy of insurance of any act, error, omission, fact, circumstance, situation, transaction, event of decision underlying any of the “Related Claims.”

E. Defense and Settlement of Claims: The “Insured” shall not admit any liability for or settle any “Claim” or incur any costs, charges or expenses without the written consent of the company. The company shall have the right to make investigations and conduct negotiations and, with the written consent of the “Insured,” enter into such settlement of any “Claim” that the company deems appropriate. If the “Insured” shall refuse to consent to a settlement acceptable to the claimant in accordance with the company's recommendation, the “Insured” shall thereafter negotiate or defend such “Claim” at the “Insured's” own expense independently of the company, and, subject to the applicable limits of liability of this policy, the company's liability for such “Claim” shall not exceed the amount for which such “Claim” could have been settled plus “Defense Expenses” incurred with the company's consent up to the date the “Insured” refused to settle such “Claim.”

F. Limits of Liability and Deductibles:

(1) Regardless of the number of “Claims,” the number of persons or entities included with the definition of “Insured,” or the number of claimants who make “Claim” against the “Insured”:

(a) the amount stated in item 3(a) of the Declarations shall be the maximum limit of liability of the company for all “Damages” and “Defense Expenses” resulting from each “Claim” or “Related Claims” made against the “Insured,” which amount shall be part of and not in addition to the amount stated in item 3(b) of the Declarations, and

(b) the amount stated in item 3(b) of the Declarations shall be the maximum aggregate limit of liability of the company for all “Damages” and “Defense Expenses” resulting from all “Claims” under this policy, and

(c) the deductible stated in item 4 of the Declarations shall apply separately to each “Claim” or “Related Claims” and shall also apply to either “Damages” or “Defense Expenses” or both.

(2) “Defense Expenses” shall be part of and not in addition to the applicable limits of liability, and payment of “Defense Expenses” by the company shall reduce, and may exhaust, the applicable limits of liability.

(3) The obligations of the company to pay “Damages” and to defend any “Claim” seeking “Damages” from the “Insured” or pay “Defense Expenses” shall only be in excess of the deductible, which amount shall be borne by the “Insured” at the “Insured's” own expense. The company shall have no obligation whatsoever, either to the “Insured” or to any other person or entity, to pay all or any portion of the deductible amount on behalf of the “Insured.” The company shall, however, at its sole discretion, have the right and option to do so, in which event the “Insured” will repay the company any amounts so paid.

(4) The company shall not be obligated to pay any “Damages” or to defend or continue to defend any “Claim” after the applicable limit of liability has been exhausted by the payment of “Damages” or “Defense Expenses” or both.

G. Extended Reporting Period:

(1) If this policy is not renewed for any reason or is canceled for any reason other than for non-payment of premium, the “Insured” shall have the right to purchase an extension of the coverage granted by this policy for a period of one (1) year after the effective date of such cancelation or non-renewal (an extended reporting period), but only with respect to any “Wrongful Act” committed before the effective date of such cancelation or non-renewal and otherwise covered by this policy. The premium for this extended reporting period shall be seventy-five percent (75%) of the premium set forth in item 5 of the Declarations, as the same may be amended from time to time, and must be paid within thirty (30) days after the effective date of cancelation or non-renewal. Such additional premium shall be deemed fully earned immediately upon the inception of the extended reporting period.

(2) The company's limits of liability during the extended reporting period shall be part of, and not in addition to, the company's limits of liability stated in item 3 of the Declarations.

H. Other Insurance: This policy shall be specifically excess over, and shall not contribute with, and other valid and collectible insurance, whether such other insurance is stated to be primary, contributing, excess (except insurance specifically in excess of this policy), contingent or otherwise.

I. Cooperation and Subrogation:

(1) In the event of a “Claim,” or after giving the company notice of circumstances which may subsequently give rise to a “Claim,” the “Insured” will provide the company with all information, assistance and cooperation as the company may reasonable request. The “Insured” shall, upon the company's request, assist in making settlements and the conduct of actions, suits or proceedings. The “Insured” shall attend hearings, trials and depositions and shall assist in securing and giving evidence and obtaining the attendance of witnesses.

(2) The “Insured” will do nothing that may prejudice the company's position or the company's potential or actual rights of recovery in the event of a “Claim.”

(3) In the event of payment under this policy, the company shall be subrogated to, and titled to an assignment of all of the rights of recovery therefore of the “Insured.” The “Insured” shall execute all papers and shall do everything that may be necessary to secure such rights, including the execution of such documents as may be necessary to enable the company effectively to pursue and enforce such rights and to bring suit in the name of the “Insured.”

J. Cancelation:

(1) The company may cancel this policy by delivering or mailing to the “Insured” by registered, certified or other first class mail written notice stating when, not less than thirty (30) days thereafter, such cancelation shall be effective.

(2) The “Insured” may cancel this policy by surrendering this policy or by mailing or delivering to the company notice stating when thereafter such cancelation shall be effective.

(3) The mailing of notice as aforesaid shall be sufficient proof of notice. If this policy is canceled by the company, the earned premium shall be computed pro rata. If this policy is canceled by the “Insured,” the earned premium shall be computed in accordance with the customary short rate table and procedure. Premium adjustment may be made either at the time cancelation is effective or as soon as practicable after cancelation becomes effective, but payment or tender of unearned premium is not a condition of cancellation.

K. Entire Agreement: The “Insured” agrees that this policy, including any endorsements and the application attached to and forming part of this policy, and including any materials submitted in connection with such application, which are on file with the company and are a part of this policy, as if physically attached, constitutes the entire agreement existing between the “Insured” and the company or any of its agents relating to this insurance.

L. Representation: The “Insured” represents that the particulars and statements contained in the application and all materials submitted in connection therewith are true, accurate and complete, and agrees that this policy is issued in reliance on the truth of that representation, and that such particulars and statements, which are incorporated into and constitute a part of this policy, are the basis of this policy and are material to the company's acceptance of this risk.

M. No Action Against Company; Bankruptcy of Insured:

(1) No action shall be taken against the company unless, as conditions precedent thereto, there shall have been full compliance with all of the terms of this policy and the amount of the obligation of the “Insured” to pay shall have been finally determined either by judgment against the “Insured” after adjudicatory proceedings, or by written agreement of the “Insured,” the claimant and the company.

(2) No person or entity shall have any right under this policy to join the company as a party to any “Claim” against the “Insured” to determine the liability of the “Insured,” nor shall the company be impleaded by the “Insured” or the “Insured's” legal representative in any such “Claim.”

(3) Bankruptcy or insolvency of the “Insured” or of the “Insured's” estate shall not relieve the company of any of its obligations hereunder.

N. Authorization and Notices: The person or entity stated in item 1 of the Declarations shall be the sole agent, and shall act on behalf of all “Insureds” with respect to all matters under this policy, including but not limited to giving and receiving notices and other communications, effecting or accepting any endorsements to or cancelations of this policy, the payment of premium and the receipt of any return premiums, and the purchase of any extended reporting period.

O. Changes: Notice to any agent or knowledge possessed by any agent or other person acting on behalf of the company shall not effect a waiver or change in any part of this policy or estop the company from asserting any right under its terms, conditions and limitations; nor shall the terms, conditions and limitations of this policy be waived or changed except by written endorsement issued to form a part of this policy.

P. No Transfer or Assignment of Insured's Interest: No transfer or assignment of interest under this policy or any cause of action against the company arising out of its performance of, or alleged failure to perform in accordance with the terms and conditions of this policy shall be effective without the company's written consent; however, in the event of the death, incapacity or bankruptcy of any person or entity within the definition of “Insured,” a “Claim” against the estate, heirs, legal representatives or assigns or the “Insured” for a “Wrongful Act” by such “Insured” shall be considered a “Claim” against the “Insured.”

Q. Headings: The descriptions in the headings and subheadings of this policy are solely for convenience, and form no part of the terms and conditions of the policy.