February 2014
For most businesses, the liability exposures are the most severe and at the same time often the most complex of all the property/casualty exposures. Whereas property, business earnings, and dishonesty exposures are limited to the value of the property or income exposed, and workers compensation is limited by statute, there is no certain monetary ceiling on liability claims that might be made against an insured. A large liability claim (or claims) against the insured can put the insured out of business, so it is critically important that the survey examine with great care both the many liability exposures and the various insurance coverages that can be written to protect against them.
Named Insured:
D/B/A:
Address:
City, State:
Phone:
FAX:
e-mail:
Named Insured is a(n) ___Individual ___Partnership ___Corporation ___Limited Liability Corporation ___Joint Venture ___Other
General business operations:
States/territories in which insured has operations:
Location addresses:
Loss control contact name/phone:
____1. Does the insured have any worldwide exposures?
____2. Check insured's operations, premises owned or occupied, and payroll and sales records against the Declarations and latest audit statements of the various liability policies, using the rating manuals for reference, to determine whether: a)limits of liability are adequate for probable maximum exposure; note especially the aggregate limits; b)all premises, operations, products, and activities of the insured or on the insured's behalf are recognized and properly included in the coverage; c)rating classifications are proper for all the exposures insured; d)proper premium bases—area, payroll, sales, etc.—have been used.
____3. Obtain premium and loss information for the current experience period, including reserves for open claims. Compare this data with experience modifications, if any, under the policies. Also determine the extent to which any aggregate limits in the policy have been used up or reduced by payment of loss or by pending claims.
____4. Are all liability risks of the insured written by the same insurer? If not, can they be?
____5. Is insured large enough to be eligible for retrospective rating? For a program of self-insured retention with excess liability over the retained limits? Consider possible advantages and disadvantages for insured with each.
____6. Umbrella coverage should be considered.
____7. All liability policies should be checked to see whether they apply on an occurrence or a claims-made basis. For occurrence coverage, has any previous policy for the same coverage been on a claims-made basis? If so—as well as for all present claims-made policies—check for gaps in the continuity of coverage for undiscovered claims not covered by a present occurrence policy or, for a claims-made policy, occurring prior to the policy's retroactive date. Has extended reporting period coverage been provided to fill the gap in coverage? If not, can it be purchased?
____8. Are limits of liability adequate?
____9. Has the insured ever filed for bankruptcy?
____10.Has the insured ever been cancelled or non-renewed?
____11.What is the insured's loss history?
____12. Are all necessary additional insureds named in the policies? Consider such interests as parties with a contractual interest calling for insurance on their behalf, landlords or tenants, as well as affiliated or subsidiary companies, individual partners, joint ventures, etc. Are appropriate certificates of insurance provided to all additional insureds that require them?
____13. When additional interests are included, has proper endorsement been used, showing the actual interest and properly limiting the coverage to the intended interest only?
____14. Check for possible conflict between additional insured's status as an insured and as named insured's indemnitor under a hold-harmless agreement.
____15. Are there "care, custody or control" property damage liability exposures—as to premises? As to personal property?
____16. Does insured utilize independent contractors for any activities? If so, is owners and contractors protective coverage provided? Has insured obtained certificates of liability and workers compensation insurance from these independent contractors, and has proper premium credit been allowed for the evidence of insurance.
____17. If insured employs independent contractors, are there any hold harmless contracts to be considered? Any additional insured considerations?
____18. Does insured need products liability coverage? Completed operations coverage?
____19. Is vendor's products coverage required for distributors of insured's product. If so, is it provided with proper limits? Are certificates of insurance required? Have they been provided?
____20. If insured depends on suppliers' vendor's coverage for products liability protection, are proper certificates of such insurance obtained? Is the vendor's products coverage adequate as to limits of insurance? Does insured handle other products, i.e., outside the scope of the vendor's form? Do the insured's activities include handling of the products (repackaging, relabeling, etc.)? Should insured's own products coverage be provided instead of, or in addition to, the vendor's coverage?
____21. Do any products exposures involve unusually high potential loss or a prolonged discovery period, or both? Examples include manufacture of aircraft parts, machine tools, structural materials, drugs, toxic or hazardous chemicals, and use of radioactive materials. If so, are substantial limits of liability maintained, and does the insured have adequate records of old policies that might be called on for coverage belatedly?
____22. Does insured have a foreign products liability exposure? If so, is the definition of policy territory broad enough to cover this exposure? (Note that under basic CGL provisions product must have been sold in the United States, its territories or possessions or Canada, and suit must also be brought there.)
____23. Does the insured with no other obvious product liability exposures have an exposure for the miscellaneous or occasional sale of property—e.g., sale of a motor vehicle, boat, airplane, building, office or plant machinery or equipment? Is product liability coverage provided for this exposure?
____24. What contracts does the insured have under which the insured may have assumed liability (insured contracts) for the actions of others? Are any certificates of insurance required? Have they been furnished?
____25. For any "hold harmless" agreements discovered, does the indemnitor provide liability insurance or only "indemnify" after other party has paid for defense and judgment?
____26. For other parties agreeing to hold harmless, are policies or certificates of insurance required? If so, have they been furnished? Do they show coverage in accordance with the contract's requirements?
____27. Do the insured's operations include performance of any kind of professional services? On a regular or incidental basis? By employees or by others on insured's behalf? For employees or others?
____28. Is the professional liability exposure covered by the general liability insurance or excluded? If covered, does the exposure go beyond the bodily (or personal) injury and property damage coverage provided? If so, or if excluded, is professional liability or errors and omissions insurance provided with substantial limits for those professional liability exposures found to exist?
____29. Does the liability insurance cover personal injury rather than just bodily injury?
____30. Does insured have any advertising, broadcasting, or television personal injury exposure? Is it insured by them or on their behalf? Have they assumed advertisers' liability for others? Is this exposure insured? By whom?
____31. Is there a potential exposure to other personal injuries—discrimination, humiliation, alienation of affections, etc.—not covered by standard personal injury insurance? Has broader coverage been provided to include any of these additional kinds of injury?
____32.Does the insured have any electronic/computer liability exposure?
____33. Does insured have a liquor liability exposure? If so, is adequate dram shop or liquor liability insurance provided to cover this exposure? Consider in this regard the dram shop or liquor liability situation of the individual state(s) of insured's operations, to determine what coverage is appropriate.
____34. Does insured sponsor sports teams or other activities involving employees or other non-employee participants? If so, does the liability insurance recognize and cover such sponsorship? Is athletic teams medical payments coverage called for?
____35. Does the insured have medical payments coverage?
____36. Partners, officers, directors, or employee benefit trustees may be exposed to liability claims by employees, other partners, officers, or directors, stockholders, or others, not covered by the general liability insurance. Is directors and officers liability or fiduciary liability coverage provided against these exposures? Do any insureds serve in a business capacity as officers, directors, or trustees of other organizations? Are they protected by that organization's D & O or fiduciary liability coverage? If not, do they or should they have individual coverage to protect against these exposures?
____37. Aircraft/watercraft: Does insured have any aircraft or watercraft exposures, even as little as occasional nonowned or hired exposures? What is done to cover such exposures?
____38. Nuclear energy: Does the insured operate any nuclear facility to which the nuclear exclusion applies? Has insured provided necessary separate coverage for this exposure? With maximum available limits?
____39. Has liability for punitive damages been considered?
____40. Is insured engaged in any gas, oil, or other underground operations?
____41. Does insured have a pollution liability exposure? Is environmental impairment liability insurance provided? Is it obtainable for this insured? With adequate limits? Can and should it be offered?
____42. Does the insured lease employees? Does the insured use volunteers?
____43. Does the insured have an active and effective loss control program? If not, is the insured receptive to such a program, with help and guidance from the insurer?
____44. Has the insured established and maintained adequate records in areas affecting insurance coverage and loss control? If not, a genuine service can be rendered by including in the survey recommendations for adequate record maintenance. This is especially important for insureds with potentially "long tail" product or professional liability exposures that may require documentation of past coverages or practices long beyond the time that most records are normally kept.
____45.Does the insured understand the duties in event of a claim or loss?
____46.Any leased workers? Any temporary workers?