Exclusions

Supplementary payments

Limits of insurance

Conditions

Definitions

1. "Auto" means:

a. A land motor vehicle, trailer or semitrailer designed for travel on public roads, including any attached machinery or equipment; or

b. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged.

However, "auto" does not include "mobile equipment".

2. "Injury or damage" means any injury or damage, as may be defined in any policy of "underlying insurance", arising from an occurrence or offense.

3. "Insured" means:

a. The Named Insured shown in the Declarations; and

b. Any "insured" under any policy of "underlying insurance", but only to the extent, and only for the coverage, for which such person or organization is an "insured" under the "underlying insurance".

4. "Mobile equipment" means any of the following types of land vehicles, including any attached machinery or equipment:

a. Bulldozers, farm machinery, forklifts and other vehicles designed for use principally off public roads;

b. Vehicles maintained for use solely on or next to premises you own or rent;

c. Vehicles that travel on crawler treads, except that snowmobiles are "mobile equipment" only while on an "insured location" or any premises you own or rent;

d. Vehicles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted:

(1) Power cranes, shovels, loaders, diggers or drills; or

(2) Road construction or resurfacing equipment such as graders, scrapers or rollers;

e. Vehicles not described in Paragraph a., b., c. or d. above that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types:

(1) Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment; or

(2) Cherry pickers and similar devices used to raise or lower workers;

f. Vehicles not described in Paragraph a., b., c. or d. above maintained primarily for purposes other than the transportation of persons or cargo.

However, self-propelled vehicles with the following types of permanently attached equipment are not "mobile equipment" but will be considered "autos":

(1) Equipment designed primarily for:

(a) Snow removal;

(b) Road maintenance, but not construction or resurfacing; or

(c) Street cleaning;

(2) Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and

(3) Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment.

However, "mobile equipment" does not include land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered "autos".

Analysis

The discussion begins with the definitions, and defined terms are critical to the coverage provided. "Auto" is the first defined term and includes attached machinery or equipment or any land vehicle subject to vehicle registration laws. A differentiation is made between "auto" and "mobile equipment." "Mobile equipment" is defined as vehicles used primarily off public roads, used solely on premises owned or rented to the insured, vehicles traveling on crawler treads, or vehicles maintained for moving permanently mounted equipment. Examples of mobile equipment are bulldozers, farm machinery, and forklifts; permanently mounted equipment including power cranes, shovels, graders, air compressors, or building cleaning equipment. Vehicles not described that are used for other than the transportation of persons or cargo are also mobile equipment. An exception exists for self-propelled vehicles with certain permanently attached equipment – equipment for snow removal, road maintenance, street cleaning, cherry pickers mounted on an auto or truck chassis, air compressors, pumps, and generators—all these are considered autos. Note that these vehicles are either self propelled or used for road maintenance, or both. Any land vehicle subject to a compulsory financial responsibility law is considered an auto.

"Injury or damage" is defined as injury or damage as it is defined in the underlying policy. This is because the intent of this policy is to provide additional limits and not broader coverage. The definition of "insured" is handled the same way—how the underlying policy defines insured determines how an insured is defined in the farm excess policy. No changes to the definitions have been made in the 2016 update.

5. "Retained limit" means the limits of "underlying insurance" scheduled in the Declarations.

6. "Suit" means a civil proceeding in which damages because of "injury or damage" to which this insurance applies are claimed or sought. "Suit" includes:

a. An arbitration proceeding in which such damages are claimed and to which the "insured" must submit or does submit with our consent; or

b. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the "insured" submits with our consent or the "underlying insurer's" consent.

7. "Ultimate net loss" means the total sum, after reduction for recoveries or salvages collectible, that the "insured" becomes legally obligated to pay as damages by reason of settlement(s) or judgment(s) or any arbitration or other alternative dispute resolution proceeding entered into with our consent or the "underlying insurer's" consent.

8. "Underlying insurance" means any policies of insurance listed in the Declarations under the schedule of "underlying insurance".

9. "Underlying insurer" means any insurer who provides any policy of insurance listed in the schedule of "underlying insurance" in the Declarations.

Analysis

Since this is an excess policy, payment will not be made until the underlying policy limits have been paid out. This is the "retained limit"—the limit of the underlying policy that is listed on the declarations. A retained limit is basically a deductible, only larger. "Suit" is defined to include not only civil proceedings where damages are claimed, but includes arbitration proceedings in which damages are claimed or any other alternative dispute resolution proceeding. The insured must submit to these alternative proceedings with the carrier's consent.

The amount agreed to in any settlement, judgment, arbitration, or alternative dispute resolution is the "ultimate net loss." This is the amount the insured is legally obligated to pay and is the total amount of the loss less recoveries or salvage amounts. For example, the loss is $800,000 and the salvage is valued at $100,000. Therefore, the ultimate net loss is $700,000.

"Underlying insurance" is any policy of insurance that is listed on the declarations. Underlying insurance provides coverage for the loss first; if those limits are exhausted and more coverage is required, that is when the farm excess policy becomes active.

The "underlying insurer" is the company that provides the underlying insurance policies.

Insuring Agreement

1. Insuring Agreement

a. We will pay on behalf of the "insured" the "ultimate net loss" in excess of the "retained limit" because of "injury or damage" to which this insurance applies, but only to the extent that valid "underlying insurance" covering the same "injury or damage" exists or would have existed but for the exhaustion of limits of "underlying insurance" through actual payments of claims, settlements or judgments. The "injury or damage" must occur or be committed during the policy period.

We will have the right and duty to defend the "insured" against any "suit" seeking damages to which this insurance applies, when the limits of "underlying insurance" have been exhausted through actual payments of claims, settlements or judgments. However, we will have no duty to defend the "insured" against any "suit" seeking damages to which this insurance does not apply. When we have no duty to defend, we will have the right to defend or to participate in the defense of the "insured" against any "suit" seeking damages to which this insurance may apply.

We may, at our discretion, investigate any occurrence or offense that may involve this insurance and settle any claim or "suit", which we have the duty to defend, that may result.

But:

(1) The amount we will pay for damages is limited as described in Section II – Limits Of Insurance; and

(2) Our right and duty to defend end when we have used up the applicable Limit of Insurance in the payment of judgments or settlements under this policy.

No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments.

Analysis

The policy begins by explaining the insuring agreement. This agreement details the coverage provided by the carrier in exchange for the insured's premium payments. The policy pays for amounts above the underlying policy as long as the underlying policy would have provided coverage but for the exhaustion of limits through payments, judgments, or settlements. The damage must occur during the policy period in order for coverage to apply. For example, a loss of $900,000 occurs and the underlying policy limit is $400,000. Once that underlying limit is exhausted, the excess policy will pay the remaining $500,000. The underlying policy provided coverage but the limit was exhausted. However, if the loss is excluded on the underlying policy, there would be no coverage from the excess policy. For example, an excluded loss occurs costing $500,000. The underlying policy limit is $200,000. When the insured discovers that the underlying policy does not cover the loss, the insured files a claim with the excess carrier. However, since the loss was excluded on the underlying policy, there is no coverage under the excess policy. The excess liability policy only covers what is above and beyond the underlying policy, as long as the loss is covered by the underlying policy.

As with most insurance policies the carrier has the right and duty to defend the insured against any suit to which the policy applies. If the suit involves a loss that the policy does not provide coverage for, then the carrier does not have to defend the insured against any suit. However, the carrier has the option to defend or participate in defense of an insured in any suit to which this coverage may apply. While at first glance this seems contradictory, note the phrasing. The carrier is obligated to defend when the loss is covered by the policy; the carrier does not have to defend when the loss is not covered, but the carrier has the option to participate in any defense if the insurance may apply. This contains an element of doubt—the policy may or may not apply to certain losses, and in such instances the carrier is not obligated to provide a defense. In such instances, if a suit occurs before a final determination is made the carrier has the right to participate in any suit in order to protect its interests. If an incident may involve the policy and the carrier has the duty to defend the insured, the carrier has the right to investigate or settle any claim or suit. In such situations there are limitations—the amount paid for damages is limited by the Section II Limits of Insurance and the carrier's right and duty to defend ends when the limit of insurance has been exhausted by the making of payments. There are no changes to the first part of the first insuring agreement in the 2016 form.

b. This insurance is subject to and will follow the same provisions, exclusions and limitations that are contained in the applicable "underlying insurance", unless otherwise directed by this insurance. To the extent such provisions differ or conflict, the provisions of this Policy will apply. However, the coverage provided under this Policy will not be broader than that provided by applicable "underlying insurance".

There may be more than one policy of "underlying insurance" specified in the Schedule of Underlying Insurance in the Declarations. If provisions in the policies of "underlying insurance" conflict and are not superseded by the provisions of this Policy, the provisions, exclusions and limitations of the "underlying insurance" applicable to the particular occurrence or offense for which a claim is made or "suit" is brought will apply.

c. This insurance applies to "injury or damage" only if such "injury or damage" is subject to an applicable "retained limit" specified in the Schedule of Underlying Insurance in the Declarations. This "retained limit" can be either:

(1) The Each Occurrence or Each Offense limit of the "underlying insurance"; or

(2) Any other limit specified for a particular named exposure. If such limit exists for a particular exposure in a policy of "underlying insurance", this insurance does not apply to the "injury or damage" arising out of that particular exposure unless that limit is also specified in the Schedule of Underlying Insurance in the Declarations.

d. If this insurance applies and if the applicable limits of "underlying insurance" are:

(1) Exhausted through actual payments of claims, settlements or judgments, this insurance will provide coverage as "underlying insurance".

(2) Reduced by actual payments of claims, settlements or judgments, this insurance will apply in excess of the available limits of "underlying insurance".

Any exhaustion or reduction of the limits of "underlying insurance" must result from "injury or damage" that occurs or is committed during the policy period of this policy.

Analysis

As stated earlier, this policy provides coverage over what an underlying policy covers and does not provide broadened coverage. If the underlying policy does not cover a particular loss, neither will this policy. The 2016 form adds language to ensure that this policy follows the provisions, exclusions, and limitations of the underlying policy. The addition of "exclusions and limitations" leaves no room for misinterpretation. Injury and damage are covered only if they are covered in the underlying policy and are subject to a retained limit. Exposures that are specifically listed in the underlying policy must be shown on the declarations of the underlying policy in order for the excess policy to grant coverage. The excess policy steps in when the underlying limits have been exhausted or reduced through payments, settlements, or judgments. Language is also added that explains what happens when there is more than one underlying policy and what if there is conflicting language between the underlying forms. If the provisions of those forms do not supersede this policy, then the provisions, exclusions, and limitations that apply in the underlying forms will apply to those offenses when a claim is brought under this form. If the underlying policy excludes injuries caused by farm animals, then those injuries will be excluded if a claim for injury from farm animals is brought under this policy.

Exclusions

2. Exclusions

This insurance does not apply to:

a. Autos

Any loss, cost or expense payable under or resulting from any first party physical damage coverage; no-fault law; personal injury protection or auto medical payments coverage; or un-insured or underinsured motorist law;

b. Workers Compensation Or Similar Law

Any obligation of the "insured" under a workers compensation, disability benefits or unemployment compensation law or any similar law;

c. M.S.A.W.P.A.

Damages awarded under:

(1) The Migrant and Seasonal Agricultural Worker Protection Act (29 USC Sections 1801 et seq.) (hereinafter "M.S.A.W.P.A.");

(2) Any law, due to violation of the M.S.A.W.P.A.; or

(3) Any regulation promulgated pursuant to the M.S.A.W.P.A.;

d. E.R.I.S.A.

Any obligation of the "insured" under the Employees' Retirement Income Security Act (E.R.I.S.A.), and any amendments to it or any similar federal, state or local statute; or

e. Medical Payments

Medical payments or expenses.

Analysis

The policy excludes first-party coverage. Physical damage, no-fault, personal injury, medical payments, and un/underinsured coverage are all excluded. Coverage for others is provided. If an insured hits a van full of people and several are injured, the excess policy will pay for those injuries that exceed the coverage on the underlying policy.

The next three exclusions are related to employees. As is typical, any loss that would be covered under workers compensation is excluded, as are damages that would be awarded under the Migrant and Seasonal Agricultural Worker Protection Act or the Employees' Retirement Income Security Act. The excess liability form is not designed to cover any obligations the insured has towards employees or workers. Medical payments or expenses are also excluded. The 2016 form makes no changes in this section.

Supplementary Payments

1. We will pay, with respect to any claim we investigate or settle, or any "suit" against an "insured" we defend, when the duty to defend exists:

a. All expenses we incur.

b. Up to $2,000 for cost of bail bonds (including bonds for related traffic law violations) required because of an occurrence or offense to which this insurance applies. We do not have to furnish these bonds.

c. The cost of appeal bonds and bonds to release attachments, but only for bond amounts within the applicable Limit of Insurance. We do not have to furnish these bonds.

d. All reasonable expenses incurred by the "insured" at our request to assist us in the investigation or defense of the claim or "suit", including actual loss of earnings up to $250 a day because of time off from work.

e. All costs taxed against the "insured" in the "suit". However, these payments do not include attorneys' fees or attorneys' expenses taxed against the "insured".

f. Prejudgment interest awarded against the "insured" on that part of the judgment we pay. If we make an offer to pay the applicable Limit of Insurance, we will not pay any prejudgment interest based on that period of time after the offer.

g. All interest on that part of the judgment we pay that accrues after entry of the judgment and before we have paid, offered to pay, or deposited in court the part of the judgment that is within the applicable Limit of Insurance.

These payments will not reduce the Limits of Insurance.

2. When we have the right but not the duty to defend the "insured" and elect to participate in the defense, we will pay our own expenses but will not contribute to the expenses of the "insured" or the "underlying insurer".

COVERAGE EXTENSION – FARM EXCESS LIABILITY COVERAGE

      The words "you" and "your", throughout this Farm Excess Liability Policy, include your spouse if a resident of the same household. This coverage extension also applies to any endorsement attached to the Policy.

Analysis

Supplementary payments are additional payments that are paid that result from the investigation or settlement of any claim or the defense of any suit when the carrier has a duty to defend the insured. These payments are separate from the limits of insurance. All expenses of the carrier are paid as are reasonable expenses incurred by the insured at the carrier's request to assist in the investigation/defense, including up to $250 per day because of time the insured takes away from his employment. Any costs taxed against the insured in the suit are paid for as well. The 2016 form adds a caveat to that so that these payments do not include attorneys' fees or expenses taxed against an insured.

Prejudgment interest that is awarded against the insured is paid on the part of the judgment that the carrier pays. If the carrier offers to pay the limit of insurance, no prejudgment interest that accumulates after the time of the offer of settlement is covered.

Up to $2000 is allocated for the cost of bail bonds; the cost of appeal and attachment release bonds is available as long as the cost is within the limits of insurance. The carrier does not have to furnish any of these bonds. When the carrier has the right, but not the duty to defend the insured, if the carrier participates in the defense the carrier pays its expenses only and does not pay any of the insured's expenses.

A brief coverage extension is added after this section in the 2016 form. This states that the terms "you" and "your" also include the spouse if the spouse is a resident of the same household. Without an endorsement, carriers do not generally consider non-related, non-married individuals as insureds.

Limits of Insurance

1. The Limits Of Insurance shown in the Declarations and the provisions below fix the most we will pay regardless of the number of:

a. "Insureds";

b. Claims made, "suits" brought, or number of vehicles involved; or

c. Persons or organizations making claims or bringing "suits".

2. The Aggregate Limit is the most we will pay for the sum of all "ultimate net losses", except "ultimate net loss" because of "injury or damage" arising out of the ownership, maintenance or use of a covered "auto".

Covered "auto" means only that "auto" to which "underlying insurance" applies.

3. Subject to Paragraph 2. above, the Each Occurrence Or Offense Limit is the most we will pay for the sum of all "ultimate net losses" under this policy because of all "injury or damage" arising out of any one occurrence or offense.

4.   If any "underlying insurance" has a policy period that is different from the policy period of this Policy then, for the purposes of this insurance, the "retained limit" will only be reduced or exhausted by payments for "injury or damage" covered under  this insurance.

The Aggregate Limit for this policy applies separately to each consecutive annual period and to any remaining period of less than 12 months, starting with the beginning of the policy period shown in the Declarations, unless the policy period is extended after issuance for an additional period of less than 12 months. In that case, the additional period will be deemed part of the last preceding period for purposes of determining the Limits of Insurance.

Analysis

This policy contains an aggregate limit. This limit is the most that is paid for the sum of all ultimate net losses unless the losses arise out of the use of a covered auto. For example, the policy limit is $2,000,000. If the insured has a loss in February for $500,000, a loss in March for $1,500,000, and a loss in May for $250,000, the most that will be paid is $2,000,000. Two of the losses are within the aggregate limits, while the third one is not. An each occurrence limit exists as well. This limit applies to all losses because of injury or damage arising out of one occurrence or offense. For example, the insured's herd of longhorns breaks through the fence and destroys the crops of three adjoining neighbors. The loss of each neighbor will be added to the other losses since the damage for all three neighbors is from one occurrence, the rogue herd of cattle. As long as the each occurrence limit is above the sum of the losses, each neighbor's loss will be paid.

A new section is added in the 2016 form. This section declares that if the underlying policy has a different policy period, that the retained limit will be reduced or exhausted only by payments for covered injury or damage. The retained limit is the available limits of the underlying policy applicable to a claim. "Injury or damage" is defined as injury or damage defined in the underlying policy. For example, an insured has an underlying policy that runs from February 1, 2016, to February 1, 2017. The Farm Excess Liability Policy runs from April 1, 2016, to April 1, 2017. The underlying policy limits are 2 million dollars. The excess limits are 5 million. A loss of 3 million occurs May 1, 2017, that is covered under the excess policy. The underlying policy limits will be exhausted. The Farm Excess policy will then pick up the remaining 3 million in coverage.

The aggregate limit is applied separately to each consecutive policy period and to any remaining period of less than twelve months. If a policy was less than twelve months for any reason, the aggregate limit would apply to that period of time as if it were a twelve-month term. However, if that policy was extended beyond the original term, only one aggregate limit would apply. For example, a policy runs for twelve months, is renewed and then goes for six months before cancellation. The aggregate would apply to the first twelve months and then separately to the second six months. Conversely, if a policy runs for twelve months, and then the policy term is extended to eighteen months, only one aggregate limit will apply to the whole eighteen months

Conditions

1. Bankruptcy

a. Bankruptcy Of Insured

Bankruptcy or insolvency of the "insured" or of the "insured's" estate will not relieve us of our obligations under this policy.

b. Bankruptcy Of Underlying Insurer

Bankruptcy or insolvency of the "underlying insurer" will not relieve us of our obligations under this policy.

However, this insurance will not replace the "underlying insurance" in the event of bankruptcy or insolvency of the "underlying insurer". This insurance will apply as if the "underlying insurance" were in full effect.

2. Duties In The Event Of Occurrence, Offense, Claim Or Suit

We have no duty to provide coverage under this policy if failure to comply with the following duties is prejudicial to us.

a. You must see to it that we are notified as soon as practicable of any occurrence or offense that may result in a claim. To the extent possible, notice should include:

(1) How, when and where the occurrence or offense took place;

(2) The names and addresses of any injured persons and witnesses; and

(3) The nature and location of any "injury or damage" arising out of the occurrence or offense.

b. If a claim is made or "suit" is brought against any "insured", you must:

(1) Immediately record the specifics of the claim or "suit" and the date received; and

(2) Notify us as soon as practicable.

You must see to it that we receive written notice of the claim or "suit" as soon as practicable.

c. You and any other "insured" involved must:

(1) Notify the police if a law may have been broken;

(2) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or "suit";

(3) Authorize us to obtain records and other information;

(4) Cooperate with us in the investigation or settlement of the claim or defense against the "suit"; and

(5) At our request, assist us in the enforcement of any right against any person or organization that may be liable to the "insured" because of "injury or damage" to which this insurance may also apply.

d. No "insured" will, except at that "insured's" own cost, voluntarily make a payment, assume any obligation, or incur any expense without our consent.

Analysis

The first condition deals with bankruptcy. The bankruptcy of an insured has no bearing on the obligations of the carrier. As long as the premium has been paid, the carrier must handle any claims. If the underlying carrier becomes bankrupt, the excess carrier's obligation remains the same. However, the excess policy will not drop down and cover the portion of the claim that should have been covered by the underlying carrier. The carrier is an excess carrier and will pay only above the retained amount. Therefore, the insured will have to pay out the amount of the underlying limits before the excess coverage will take over.

Duties in the event of loss enumerate certain duties the insured is obligated to fulfill. The duties listed here are standard for most insurance policies. The insured is required to notify the carrier of a loss as soon as possible, notify the carrier immediately if a suit is filed, notify the police if any laws have been broken, allow the carrier to review records, and to assist the carrier in any investigations of the claim or suit. This section has no changes in the 2016 version.

3. Legal Action Against Us

No person or organization has a right under this Policy:

a. To join us as a party or otherwise bring us into a "suit" asking for damages from an "insured"; or

b. To sue us on this Policy unless all of its terms have been fully complied with.

A person or organization may sue us to recover on an agreed settlement or on a final judgment against an "insured"; but we will not be liable for damages that are not payable under the terms of this policy or that exceed the applicable Limit of Insurance. An agreed settlement means a settlement and release of liability signed by us, the "insured" and the claimant or the claimant's legal representative.

4. Other Insurance

a. This insurance is excess over any other insurance, whether or not valid or collectible, whether primary, excess, contingent or on any other basis. This condition will not apply to insurance specifically written as excess over this Policy.

b. When this insurance is excess over primary insurance, we will have no duty under this policy to defend the "insured" against any "suit" if any other insurer has a duty to defend the "insured" against that "suit". If no other insurer defends, we will undertake to do so, but we will be entitled to the "insured's" rights against all those other insurers.

c. When this insurance is excess over insurance other than primary insurance, we will pay only the "ultimate net loss" that exceeds the sum of:

(1) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and

(2) The total of all deductible and self-insured amounts under all that other insurance.

5. Transfer Of Rights Of Recovery Against Others To Us

If the "insured" has rights to recover all or part of any payment we have made under this policy, those rights are transferred to us. The "insured" must do nothing after loss to impair them. At our request, the "insured" will bring "suit" or transfer those rights to us and help us enforce them.

Analysis

The legal action against the carrier clause is typical of most insurance policies. Because this is an excess policy, the provisions for other insurance are slightly different. The condition states that this policy is excess over any other insurance, whether or not collectible. However, if there is insurance specifically written as excess over this policy, that language does not apply. When this policy is excess over other insurance and that other insurance has an obligation to defend the insured in event of a suit, this carrier has no obligation to provide any legal defense for the insured. This carrier can defend if no other carriers defend the insured, but the carrier is then entitled to the insured's rights against the other carriers. If the insured has multiple policies that this policy is excess over, only the amount that exceeds the sum of the total limits of all other payments from other insurance and the amount of deductibles under that insurance is covered.

The transfer of rights of recovery condition is again standard language. If the insured has rights to recover payment and the carrier has already made payment to the insured, the rights of the insured against the other party are transferred to the carrier. No changes have been made in this section in the 2016 revision.

6. Liberalization

If we adopt any revision that would broaden the coverage under this policy without additional premium within 45 days prior to or during the policy period, the broadened coverage will immediately apply to this policy.

7. Appeals

If the "underlying insurer" or "insured" elects not to appeal a judgment in excess of the "retained limit", we may do so at our own expense. We will also pay for taxable court costs, pre- and postjudgment interest and disbursements associated with such appeal. In no event will this provision increase our liability beyond the applicable Limits of Insurance described in Section II – Limits Of Insurance.

8. Representations

By accepting this Policy, you agree:

a. The statements in the Declarations are accurate and complete;

b. Those statements are based upon representations you made to us; and

c. We have issued this Policy in reliance upon your representations.

9. Fraud

We do not provide coverage for any "insured" that has made fraudulent statements or engaged in fraudulent conduct in connection with any occurrence or offense for which coverage is sought under this Policy.

10. Separation Of Insureds

Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Policy to the first Named Insured, this insurance applies:

a. As if each Named Insured were the only Named Insured; and

b. Separately to each "insured" against whom claim is made or "suit" is brought.

Analysis

The next several conditions are standard policy language. Provisions for broadening of coverage, appeals of judgments, the truthfulness of the statements made by the insured, denial of coverage in event of fraud, and separation of insureds are included.

Item 7 was reworded in the 2016 revision. Now it lists taxable court costs, pre- and postjudgement interest, and disbursements associated with appeal. It also states that the provision will in no way increase the limit beyond the limit of liability.

11. Loss Payable

Insurance under this policy does not apply unless and until:

a. The "insured" or "insured's" "underlying insurer(s)" has become obligated to pay the "retained limit"; and

b. The obligation on the "insured" to pay the "ultimate net loss" in excess of the "retained limit" has been determined by a final settlement or judgment or written agreement between the "insured", claimant, "underlying insurer" (or a representative of one or more of these) and us.

12.  Transfer Of Defense

a.   Defense Transferred To Us

      When the limits of "underlying insurance" have been exhausted, in accordance with the provisions of the "underlying insurance", we may elect to have the defense transferred to us. We will cooperate in the transfer of control to us of any outstanding claims or "suits" seeking damages to which this insurance applies and which would have been covered by the "underlying insurance" had the applicable limit not been exhausted.

b.   Defense Transferred By Us

      When our Limits of Insurance have been exhausted, our duty to provide a defense will cease. We will cooperate in the transfer of control of defense to any insurer specifically written as excess over this Policy of any outstanding claims or "suits" seeking damages to which this insurance applies and which would have been covered by the "underlying insurance" had the applicable limit not been exhausted. In the event that there is no insurance written as excess over this Policy, we will cooperate in the transfer of control to the "insured" and its designated representative.

13.Maintenance Of/Changes To Underlying Insurance

The "underlying insurance" must be maintained in full effect during the policy period without reduction of coverage or limits except for reduction of aggregate limits due to payment of claims, settlements or judgments that result from "injury or damage" that occurs or is committed during the policy period. Such exhaustion or reduction is not a failure to maintain "underlying insurance". Failure to maintain "underlying insurance" will not invalidate this insurance, but this insurance will apply as if the "underlying insurance" were in full effect.

If there is an increase in the scope of coverage of any "underlying insurance" during the term of this policy, our liability will be no more than it would have been if there had been no such increase.

You must notify us in writing as soon as practicable if any "underlying insurance" is cancelled or not renewed or if the limits or scope of coverage of any "underlying insurance" is changed.

14. CoverageTerritory

a. Where this policy applies, it applies to occurrences or offenses that take place anywhere in the world.

b. If a "suit" is brought in a part of the coverage territory outside the United States of America (including its territories and possessions), Puerto Rico or Canada, and we are prevented by law, or otherwise, from defending the "insured", the "insured" will initiate a defense of the "suit". We will reimburse the "insured", under Supplementary Payments, for any reasonable and necessary expenses that the "insured" incurs for the defense of a "suit" seeking damages to which this insurance applies and that we would have paid had we been able to exercise our right and duty to defend.

If the "insured" becomes legally obligated to pay sums because of damages to which this insurance applies in a part of the coverage territory outside the United States of America (including its territories and possessions), Puerto Rico or Canada, and we are prevented by law, or otherwise, from paying such sums on the "insured's" behalf, we will reimburse the "insured" for such sums.

c. All payments or reimbursements we make for damages because of judgments or settlements will be made in U.S. currency at the prevailing exchange rate at the time the "insured" became legally obligated to pay such sums. All payments or reimbursements we make for expenses under Supplementary Payments will be made in U.S. currency at the prevailing exchange rate at the time the expenses were incurred.

Analysis

The loss payable clause stipulates that this coverage does not apply unless the underlying carrier has become obligated to pay the retained limit and that the amount of payment above that retained limit has been determined.

The excess carrier has an obligation to defend the insured only when payments of judgments and settlements made by the underlying carrier have exhausted the limits of insurance.

A new section was added with the 2016 revision that deals with the defense of the insured when the underlying limits have been exhausted. When that occurs, the underlying carrier can transfer the defense of the case to this policy. For example, the insured is sued under the underlying policy, and the policy limits of $1 million have been exhausted. The case continues and the excess farm policy can assume defense of that claim.

The next section deals with what happens when this policy has exhausted its limits. The control of the defense can be transferred to another carrier specifically written as excess over this policy. If there is no excess policy, the carrier for this policy will cooperate with the insured to transfer the defense to the insured and his representative.

The amount of underlying insurance in force must remain consistent. If for some reason the amount of underlying insurance is reduced, this policy will pay as if the underlying policy was at the proper limit. Also, if there is an increase in the scope of coverage in any underlying policy, this coverage will pay only as if there had been no increases in the underlying policy.

The coverage territory is anywhere in the world. If a suit is brought outside the United States, its territories and possessions, Puerto Rico, or Canada, and the carrier is prevented from paying the defense or the claim, the insured is to make payments, which will be reimbursed by the carrier. All payments or reimbursements are made in U.S. currency. Any disputes between the carrier and the insured must be filed in the United States, its territories and possessions, Puerto Rico, or Canada.

15. Cancellation

a. The first Named Insured shown in the Declarations may cancel this policy by mailing or delivering to us advance written notice of cancellation.

b. We may cancel this policy by mailing or delivering to the first Named Insured written notice of cancellation at least:

(1) 10 days before the effective date of cancellation if we cancel for nonpayment of premium; or

(2) 30 days before the effective date of cancellation if we cancel for any other reason.

c. We will mail or deliver our notice to the first Named Insured's last mailing address known to us.

d. Notice of cancellation will state the effective date of cancellation. The policy period will end on that date.

e. If this policy is cancelled, we will send the first Named Insured any premium refund due. If we cancel, the refund will be pro rata. If the first Named Insured cancels, the refund may be less than pro rata. The cancellation will be effective even if we have not made or offered a refund.

f. If notice is mailed, proof of mailing will be sufficient proof of notice.

16. Changes

This policy contains all the agreements between you and us concerning the insurance afforded. The first Named Insured shown in the Declarations is authorized to make changes in the terms of this policy with our consent. This policy's terms can be amended or waived only by endorsement issued by us and made a part of this policy.

17. Examination Of Your Books And Records

We may examine and audit your books and records as they relate to this policy at any time during the policy period and up to three years afterward.

18. Inspections And Surveys

a. We have the right to:

(1) Make inspections and surveys at any time;

(2) Give you reports on the conditions we find; and

(3) Recommend changes.

b. We are not obligated to make any inspections, surveys, reports or recommendations and any such actions we do undertake relate only to insurability and the premiums to be charged. We do not make safety inspections. We do not undertake to perform the duty of any person or organization to provide for the health or safety of workers or the public. And we do not warrant that conditions:

(1) Are safe or healthful; or

(2) Comply with laws, regulations, codes or standards.

c. Paragraphs a. and b. of this condition apply not only to us, but also to any rating, advisory, rate service or similar organization which makes insurance inspections, surveys, reports or recommendations.

d. Paragraph b. of this condition does not apply to any inspections, surveys, reports or recommendations we may make relative to certification, under state or municipal statutes, ordinances or regulations, of boilers, pressure vessels or elevators.

19. First Named Insured Duties

The first Named Insured is the person or organization first named in the Declarations and is

responsible for the payment of all premiums. The first Named Insured will act on behalf of all other Named Insureds for giving and receiving of notice of cancellation or the receipt of any return premium that may become payable. At our request, the first Named Insured will furnish us, as soon as practicable, with a complete copy of any "underlying insurance" and any subsequently issued endorsements or policies which may in any way affect the insurance provided under this Policy.20. Transfer Of Your Rights And Duties Under This Policy

Your rights and duties under this policy may not be transferred without our written consent except in the case of death of an individual named insured.

If you die, your rights and duties will be transferred to your legal representative but only while acting within the scope of duties as your legal representative. Until your legal representative is appointed, anyone having proper temporary custody of your property will have your rights and duties but only with respect to that property.

Analysis

These last conditions are standard policy language. The carrier will notify the first named insured of any cancellation, giving ten days notice in event of nonpayment and thirty days notice for any other reason. Changes to the policy can be made by the first named insured with the consent of the company. The carrier has the right to examine the insured's books and records, and can inspect, survey, and recommend changes to the property. However, any inspection does not warrant that conditions are safe, healthful, or comply with any regulations. The section on premiums has been removed and replaced with First Named Duties. This explains that the first named insured is responsible for all premiums and will act on behalf of all other named insureds for notices of cancellation or receipt of any return premium. When requested, the first named insured will provide a copy of any underlying policies that affect coverage under this policy.