Insuring Agreement

This insuring agreement commits the insurer to pay on behalf of the insured the ultimate net loss which the insured becomes legally obligated to pay as damages for bodily injury, personal and advertising injury or property damage to which the umbrella insurance applies, which is in excess of the underlying insurance or which is either excluded or not insured by underlying insurance.

For this insurance to be applicable, the bodily injury, personal and advertising injury or property damage has to be caused by an occurrence that takes place in the coverage territory and occurs during the policy period. So, the policy is an occurrence type policy. This insuring agreement also contains the known loss language which prohibits coverage if the injury occurs prior to the policy period and is known to have occurred by the insured.

Exclusions

The umbrella policy has twenty-one exclusions to consider.

The first exclusion is the asbestos exclusion. The umbrella liability insurance does not apply to liability arising out of, attributable to or any way related to asbestos in any form or transmitted in any manner.

Contractual liability is addressed by the second exclusion. The umbrella insurance does not apply to any liability for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. There is the standard exception here for liability for damages that the insured would have in the absence of a contract or agreement, and for liability assumed in an insured contract (a defined term).

The next exclusion states that the insurance does not apply to damage to impaired property or property not physically injured arising out of a defect, deficiency, inadequacy, or dangerous condition in the product or work of the named insured.

Also excluded by this umbrella policy is property damage to property owned by any insured, including any costs or expenses incurred the insured or any other person, organization or entity, for repair, replacement, by enhancement, restoration or maintenance of that property for any reason, including prevention of injury to a person or damage to another's property. This damage to property exclusion is the same as that found in the standard general liability (CGL) form. Also present in this policy are the standard damage to your product and damage to your work exclusions that the CGL form contains.

The eighth exclusion states that the insurance does not apply to any liability arising directly or indirectly out of any action or omission that violates or is alleged to violate the Telephone Consumer Protection Act (TCPA), the CAN-SPAM Act of 2003, or any statute, ordinance or regulation other than the TCPA or CAN-SPAM Act of 2003, that prohibits or limits the sending, transmitting, communication or distribution of material or information.

The next exclusion notes that the insurance does not apply to personal injury and advertising injury arising out of an electronic chatroom or bulletin board that the insured hosts, owns, or over which the insured exercises control.

Damage arising out of the loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate electronic data is also excluded by the policy.

This insurance does not apply to any liability arising from any injury to an employee of the insured sustained in the workplace, an employee of the insured arising out of the performance of duties related to the conduct of the insured's business or the spouse, child, parent, brother or sister of that employee as a consequence of the aforementioned injury. Employment-related practices liability is also excluded under the terms of the umbrella policy. Both the employer's liability limitation and the employment-related practices exclusion apply whether the insured may be liable as an employer or in any other capacity and to any obligation to share damages with or repay someone else who must pay damages because of the injury.

The umbrella liability coverage does not apply to BI or PD that is expected or intended from the standpoint of the insured. An exception to this exclusion is BI resulting from the use of reasonable force to protect persons or property or BI or PD resulting from the use of reasonable force to prevent or eliminate danger in the operation of autos or watercraft appears here.

Various personal injury and advertising injury actions are excluded from coverage. PI and AI caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict PI and AI are excluded. The publication of material known to be false by the insured is not a covered offense. Criminal acts by the insured are not covered. Liability assumed in a contract or agreement is not covered, although this exclusion does not apply to liability for damages that the insured would have in the absence of the contract or agreement. Liability arising out of the breach of a contract is not covered. PI and AI arising out of the failure of goods or products or services to conform with any statement of quality or performance made in an advertisement, or arising out of the wrong description of the price of the goods, products, or services stated in an ad are not covered. Finally, liability arising out of oral, written, or electronic publication in any manner or material whose first publication took place before the beginning of the policy period is excluded under the terms of the umbrella policy.

This insurance does not apply to PI and AI arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. Excepted is infringement, in the named insured's advertisement, of copyright, trade dress, or slogan.

An exclusion for BI or PD arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release, emission or escape of auto-related pollutants and a second, similar exclusion for non auto-related pollutants are also included in this policy. The second exclusion contains an exception for hostile fire.

Exclusion eighteen is the sistership exclusion. There is no coverage for damages claimed for any loss, cost, or expense incurred by the named insured or others for the loss of use, withdrawal, recall, inspection, repair, replacement, adjustment, removal, or disposal of the named insured's product, work, or impaired property. This is based on the withdrawal or recall being done because of a known or suspected defect, deficiency, inadequacy, or dangerous condition in these items.

This insurance does not apply to PI and AI arising out of the unauthorized use of another's name or product in the named insured's e-mail address, domain name or metatag, or any other similar tactics to mislead another's potential customers.

There is also an exclusion on this umbrella policy that applies to war. Any liability, however caused, arising directly or indirectly out of war (as defined) is excluded.

The final exclusion eliminates coverage for any liability or obligation of the insured under any workers compensation, unemployment compensation, disability benefits or similar law. This exclusion does not apply to liability of others assumed under an insured contract in existence at the time of the occurrence.

Defense Provisions

The insurer gives itself the right and duty to defend any lawsuit against the insured that seeks damages for BI, PD, PI, or AI covered by the umbrella policy, even if the lawsuit is groundless, false, or fraudulent. However, the total applicable limits of the scheduled underlying insurance and any applicable other insurance have to be exhausted by payment of loss, or, the damages sought must not be covered by the scheduled underlying insurance. And, this duty to defend ends when the applicable limits of insurance have been exhausted by the payment of loss. The umbrella insurer has the right to participate in the investigation, settlement or defense of any claim or suit to which the insurance applies, and will do so at its own expense.

Supplementary payments, such as premiums on bonds, court costs, interest payments, and the insured's costs, will be paid by the insurer, to the extent such payments are not covered by the scheduled underlying insurance or any applicable other insurance.

Finally, if the umbrella insurer does not assume the duty to defend the insured, it still reserves to itself the right to participate in the defense of any lawsuit and in the investigation of any claim to which the umbrella policy may apply. This right is exercised at the insurer's own expense.

Limits of Insurance

The limits of insurance shown in the declarations page of the umbrella policy are the most that the insurer will pay for all damages under the terms of this policy. This is so, regardless of the number of insureds, claims brought, lawsuits filed, persons or organizations making claims or filing lawsuits, or coverages provided under the umbrella policy.

The umbrella policy has a general aggregate limit which applies to all damages included within the products-completed operations hazard (a defined term), because of bodily injury by disease sustained by your employees arising out of and in the course of their employment by the insured, or because of BI, PI and AI or PD not included within the those two categories.

A listed each occurrence limit is the most the insurer will pay for the ultimate net loss in excess of the applicable limits of underlying insurance or if an occurrence is not covered by underlying insurance but is covered by the terms and conditions of the policy, because of all BI, PI and AI and PD arising out of any one occurrence.

The limits of insurance in this umbrella policy apply only in excess of the total applicable limits of scheduled underlying insurance and any applicable other insurance, whether or not such limits are collectible. If the total applicable limits of scheduled underlying insurance and any applicable other insurance are reduced or exhausted by the payment of loss to which the umbrella policy applies, the insurer agrees to the following: in the event of reduction, the umbrella insurer will pay excess of the remaining total applicable limits of the scheduled underlying insurance and any applicable other insurance; and in the event of exhaustion, the umbrella insurer will continue in force as underlying insurance.

Conditions

There are fourteen conditions that appear in this commercial umbrella liability policy. Many are standard ones that are found in most umbrella liability policies.

The appeals condition declares that the umbrella insurer may elect to appeal a judgment against the insured that is in excess of the total applicable limits of the scheduled underlying insurance if the underlying insurers fail to do so. All court costs and expenses for this appeal will be borne by the umbrella insurer.

The insurer claims for itself the right to audit and examine the books and records of the named insured as they relate to the umbrella policy. Also, the insurer claims the right (but not the duty) to inspect the premises and operations of the named insured at any time.

The bankruptcy, insolvency, or inability to pay of the named insured or the underlying insurer does not relieve the umbrella insurer of its duty to pay covered claims. However, under no circumstances does such bankruptcy, insolvency, or inability to pay require the umbrella insurer to drop down, replace, or assume any obligation under the scheduled underlying insurance.

The duties of the named insured and any other involved insured in the event of an occurrence, claim, or lawsuit are spelled out here. And, it is noted that no insured will, except at that insured's own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without the consent of the insurer.

There is also a requirement that the person or organization first named in the Declarations will act on behalf of all other insureds where indicated.

No person or organization has a right under this policy to join the insurer as a party to a lawsuit asking for damages from an insured, or to sue the insurer under this policy unless all of its terms have been fully complied with by the involved entities.

There is a liberalization condition in the policy that obligates the insurer to provide any broader coverage added to the insured's forms or endorsements for 60 days at no separate premium charge.

The conditions section of the umbrella policy has the requirement that the named insured keeps the scheduled underlying insurance in full force and effect. This duty applies to the terms, definitions, conditions, exclusions, and applicable limits of the underlying insurance and to any renewals or replacements of such underlying insurance. If the named insured fails to comply with this condition, the insurer notes that it will be liable only to the same extent that the insurer would have been, had the named insured fully complied.

If other valid and collectible insurance applies to damages that are also covered by this policy, this policy will apply excess of the other insurance. However, this condition will not apply if the other insurance is specifically written to be excess of this policy.

As for premium, it should be stated in the Declarations and the advance and anniversary premiums are not subject to adjustment, except as stated in the Declarations or in an endorsement. The insured is to maintain records of premium information and must send copies to the insurer if the insurer requests.

The next condition for this policy deals with the unintentional failure to disclose. The failure of the named insured to disclose all hazards existing as of the inception date of the umbrella policy will not prejudice the named insured with respect to the coverage afforded by the policy. This is so provided that any such failure or omission is not intentional.

Except with respect to the limits of insurance and rights and duties specifically assigned to the first named insured, this insurance applies as if each named insured were the only named insured, and separately to each insured against whom a claim is made or a lawsuit is brought.

If any insured has rights to recover all or part of any payment that the umbrella insurer has made under this policy, those rights are transferred to the insurer and the insured must do nothing after a loss to impair these rights. In fact, the rights and duties of the named insured under the policy may not be transferred without the written consent of the insurer.

Finally, if the umbrella insurer decides not to renew, it will mail or deliver to the first Named Insured shown in the Declarations written notice of the nonrenewal not less than 30 days before the expiration date. Proof of mailing is sufficient proof of notice.

Definitions

Most of the definitions that appear in this umbrella policy are standard and found in many liability policies. A few are specific to this policy.

The definitions section starts off with the words advertisement, auto and bodily injury. As is typical, advertisement is a notice to the general public about the goods, products, or services of the named insured for the purpose of attracting customers and an auto is a land motor vehicle designed for travel on public roads. Bodily injury means bodily injury, sickness, or disease sustained by any person and including death or mental anguish resulting from any of these at any time.

This umbrella policy next defines hostile fire, impaired property and insured contract. None of these definitions are out of the ordinary and can be found on any standard liability coverage form.

Coverage territory in this policy means anywhere, and electronic data is defined as information, facts or programs stored as or on, created or used on, or transmitted to or from computer software, including systems and applications software, hard or floppy disks, CD-ROMS, tapes, drives, cells, data processing devices or any other media which are used with electronically controlled equipment.

The policy defines an authorized representative as: for an individual, you and your spouse, for a partnership or joint venture, your members, partners and their spouses, for an LLC, your members and managers, for an organization other than the aforementioned, your officers and directors and for privately held organizations your stockholders, and for a trust, your trustees.

Employee, executive officer, leased worker, temporary worker and workplace are also in the definitions list for this umbrella policy. None is out of the ordinary in their meanings.

This policy also defines loading and unloading, mobile equipment, occurrence, personal and advertising injury, pollutants, products-completed operations hazard, property damage and suit. These definitions follow the wording found on a standard CGL coverage form from the Insurance Services Office (ISO).

Subsidiary is defined as any organization in which more than 50% of the outstanding securities or voting rights representing the present right to vote for election of directors is owned or controlled, directly or indirectly, in any combination, by one or more of the Named Insureds.

Ultimate net loss is defined in the policy as the sum actually paid or payable in the settlement or satisfaction of the insured's legal obligation for damages, covered by the umbrella insurance, either by adjudication or compromise. This does not include defense and supplementary payments as described in the policy.

Underlying insurance means the insurance listed in the Schedule of Underlying Insurance and the insurance available to the insured under all other insurance policies applicable to the occurrence. This definition of underlying insurance also includes any type of self-insurance or alternative method by which the insured arranges for funding of legal liabilities that affords coverage that the Coverage Part covers. Underlying limit means the total of the applicable limits of all underlying insurance less the amount by which the applicable limit of the applicable policy listed in the Schedule of Underlying insurance has been reduced, solely by payment of loss resulting from claims which are in accordance with the policy.

The last two definitions are your product and your work, both standard definitions found in liability policies.