Coverages

Exclusions

Maintenance of underlying insurance

Duties after loss

General provisions

Endorsements

Definitions

I. Definitions

A.     Throughout this policy, "you" and "your" refer to:

1.     The "named insured" shown in the Declarations; and

2.     The spouse if a resident of the same household.

B.     "We," "us" and "our" refer to the Company providing this insurance.

C.     For purposes of this policy, a private passenger type auto, pickup or van shall be deemed to be owned by a person if leased:

1.     Under a written agreement to that person; and

2.     For a continuous period of at least 6 months.

Other words and phrases are defined. They are in quotation marks when used.

D. "Aircraft Liability", "Hovercraft Liability", "Recreational Motor Vehicle Liability" and "Watercraft Liability", subject to the provisions in 2. below, mean the following:

1. Liability for "bodily injury" or "property damage" arising out of:

a. The ownership of such vehicle or craft by an "insured";

b. The maintenance, occupancy, operation, use, loading or unloading of such vehicle or craft by any person;

c. The entrustment of such vehicle or craft by an "insured" to any person;

d. The failure to supervise or negligent supervision of any person involving such vehicle or craft by an "insured"; or

e. Vicarious liability, whether or not imposed by law, for the actions of a child or minor involving such vehicle or craft.

2.For the purpose of this definition:

a.Aircraft means any contrivance used or designed for flight, except model or hobby aircraft not used or designed to carry people or cargo;

b.Hovercraft means a self-propelled motorized ground effect vehicle and includes, but is not limited to, flarecraft and air cushion vehicles;

c.Watercraft means a craft principally designed to be propelled on or in water by wind, engine power or electric motor; and

d.Recreational Motor Vehicle means a "recreational motor vehicle" as defined in Paragraph N.

E.     "Auto" means:

1.     A private passenger motor vehicle, motorcycle, moped or motor home;

2. A vehicle designed to be pulled by a private passenger motor vehicle or motor home; or

3.     A trailer, farm wagon or farm implement while towed by a private passenger motor vehicle.

F.     "Bodily injury" means bodily harm, sickness or disease, including required care, loss of services and death that results.

G.     "Business" means:

1.A trade, profession or occupation engaged in on a full-time, part-time or occasional basis; or

2.Any other activity engaged in for money or other compensation, except the following:

a.One or more activities, not described in b. through d. below, for which no "insured" receives more than $2000 in total compensation for the 12 months before the beginning of the policy period;

b.Volunteer activities for which no money is received other than payment for expenses incurred to perform the activity;

c.Providing home day care services for which no compensation is received, other than the mutual exchange of such services; or

d.The rendering of home day care services to a relative of an "insured".

H.     "Family member" means a resident of your household who is:

1.     Your relative, including a ward or foster child; or

2.     Under the age of 21 and in the care of you or an "insured" who is age 21 or over.

Analysis

These are common and familiar definitions, and mirror those used in the HO 00 03. Because leased vehicles are so common, this policy includes a definition of auto that includes leased vehicles as long as the auto, pickup or van is under a written agreement to an insured and is for a continuous period of at least six months.

I.     "Fuel System" means:

1.     One or more containers, tanks or vessels which have a total combined storage capacity of 100 or more U.S. gallons of liquid fuel; and:

a.     Are, or were, located on any single location covered by "underlying insurance"; and

b.     Are, or were, used to hold liquid fuel that is intended to be used solely for one or more of the following:

(1)     To heat or cool a building;

(2)     To heat water;

(3)     To cook food; or

(4)     To power motor vehicles, other motorized land conveyances or watercraft owned by an "insured";

2.     any pumping apparatus, which includes the motor, gauge, nozzle, hose or pipes that are, or were, connected to one or more containers, tanks or vessels described in paragraph H.1.;

3.     filler pipes and flues connected to one or more containers, tanks or vessels described in paragraph H.1.;

4.     A boiler, furnace or a water heater, the liquid fuel for which is stored in a container, tank or vessel described in Paragraph H.1.;

5.     Fittings and pipes connecting the boiler, furnace or water heater to one or more containers, tanks or vessels described in Paragraph H.1.; or

6.     A structure that is specifically designed and built to hold the liquid fuel that escapes from one or more containers, tanks or vessels described in Paragraph H.1.

Analysis

As discussed later in this article, exclusion 21 precludes coverage for bodily injury, personal injury, or property damage caused by an occurrence involving the escape of fuel from a fuel system. The homeowners covers liability for the escape of liquid fuel up to the policy limits, unless an endorsement such as HO 05 80 05 11 (Property Remediation for Escaped Liquid Fuel and Limited Lead and Escaped Liquid Fuel Liability coverages) is attached. If this is the case, then the limit of liability for this type of occurrence can be changed since the endorsement requires a scheduled limit. The umbrella excludes liability coverage altogether.

J.     "Insured" means:

1.     You.

2.     A "family member."

3.     Any person using an "auto," recreational motor vehicle," or watercraft, which is owned by you and covered under this policy. Any  person using a temporary substitute for such "auto" or recreational motor vehicle" is also an "insured."

4.     Any other person or organization but only with respect to the legal responsibility for acts or omissions of you or any "family member" while you or any "family member" is using an "auto" or "recreational motor vehicle" covered under this policy. However, the owner or lessor of an "auto" or "recreational motor vehicle" loaned to or hired for use by an "insured" or on an "insured's" behalf, is not an "insured."

5.     With respect to animals owned by you or any "family member," any person or organization legally responsible for such animals. However, a person or organization using or having custody of such animals in the course of any "business" or without the consent of the owner is not an "insured."

K.     "Occurrence" means:

1.     An accident, including continuous or repeated exposure to substantially the same general harmful conditons, which results, during the policy period, in:

a.     "Bodily injury"; or

b.     "Property damage."

L.     "Personal injury" means injury arising out of one or more of the following offenses, but only if the offense was committed during the policy period:

1.     False arrest, detention or imprisonment;

2.     Malicious prosecution;

3.     The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor.

4.     Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; or

5.     Oral or written publication of material that violates a person's right of privacy.

Analysis

The umbrella provides broad coverage in that any person using an auto, watercraft, or recreational motor vehicle owned by the insured and covered by the umbrella is an insured with respect to that vehicle. Any person using a temporary substitute for such a vehicle is also an insured.

If an insured uses his vehicle to do volunteer work for, say, a church, and negligently causes an accident, the church is also an insured if it is held liable for the driver's accident. However, if an insured rents or borrows an auto or recreational motor vehicle and causes an accident, the owner or lessor of the vehicle is not an insured.

An interesting twist in the umbrella is the definition of an insured with respect to an owned animal. The homeowners form responds to bodily injury caused by an animal owned by or in the care of an insured. However, the umbrella will not provide coverage for any person or organization using or having custody of such an animal in the course of any business. So, for example, if the insured boarded a dog in a kennel, and the dog bit someone, the insured would be covered but not the kennel owner.

The umbrella provides protection for "personal injury"—actions other than bodily injury and property damage. These actions include libel and slander, false arrest, malicious prosecution, wrongful eviction or wrongful entry into a private room, dwelling, or premises committed by or on behalf of its owner, landlord, or lessor. The 2015 makes a change in this section; it states that oral or written publication, in any manner, is part of "personal injury". The previous form did not include the "in any manner" language. The widespread use of the internet and social media means that written publication particularly is not limited to paper documents; this current language makes it possible for social media posts and videos to be included in "personal injury".

M.     "Property damage" means physical injury to, destruction of, or loss of use of tangible property.

N.     "Recreational motor vehicle" means:

1.     All-terrain vehicle;

2.     Dune buggy;

3.     Golf cart;

4.     Snowmobile; or

5.     Any other motorized land vehicle which is designed for recreational use off public roads.

O.     "Retained limit" means:

1.     The total limits of any "underlying insurance" and any other insurance that applies to an "occurrence" or offense which:

a.     Are available to an "insured"; or

b.     Would have been available except for the bankruptcy or insolvency of an insurer providing "underlying insurance"; or

2.     The deductible, if any, as stated in the Declarations, if the "occurrence" or offense:

a.     Is covered by this policy; and

b.     Is not covered by "underlying insurance" or any other insurance.

P.     "Underlying insurance" means any policy providing the "insured" with primary liability insurance covering one or more of the types of liability listed in the Declarations and at limits no less than the retained policy limits shown for those types of liability listed in the Declarations.

Analysis

As used in this form, retained limit can refer either to the total limits of underlying insurance or to the deductible, if any, applying to losses not covered by primary insurance. Many umbrella forms use the term retained limit to refer to a deductible for which the insured is responsible before the umbrella provides coverage, often $250 or $500.

The definition of underlying insurance is a reminder that the insured is required to maintain certain limits of liability insurance, as set forth in the insurer's underwriting guidelines.

Coverages

II. Coverages

A.     Insuring Agreement

     We will pay damages, in excess of the "retained limit," for:

1.     "Bodily injury" or "property damage"  for which an "insured" becomes legally liable due to an "occurrence" to which this insurance applies; and

2.     "Personal injury" for which an "insured" becomes legally liable due to one or more offenses listed under the definition of "personal injury" to which this insurance applies

     Damages include prejudgment interest awarded against an "insured."

Analysis

The insurer will pay damages in excess of the retained limit for covered loss. For example, if an insured is sued because of a covered auto accident and carries $300,000 underlying bodily injury/property damage limits, and a $250 umbrella deductible, the umbrella will respond when the suit claims over $300,250 in damages.

Note that the umbrella also covers any prejudgment interest; that is, any interest accruing on the amount of damages claimed if the judgment is against the insured.

B.     Defense Coverage

1.     If a claim is made or a suit is brought against an "insured" for damages because of "bodily injury" or "property damage" caused by an "occurrence" or "personal injury" caused by an offense to which this policy applies, we:

a.     Will provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. However, we are not obligated to defend any suit or settle any claim if:

(1)     The "occurrence" or offense is covered by other "underlying insurance" available to the "insured"; or

(2)     There is no applicable "underlying insurance" in effect at the time of the "occurrence" or offense and the amount of damages claimed or incurred is less than the applicable deductible amount shown in the Declarations.

b.     May join, at our expense, with the "insured" or any insurer providing "underlying insurance" in the investigation, defense or settlement of any claim or suit which we believe may require payment under this policy.

     However, we will not contribute to the costs and expenses incurred by any insurer providing "underlying insurance"; and

c.     Will pay any expense incurred for the "insured's" defense, with our written consent, in any country where we are prevented from defending an "insured because of laws or other reasons.

2.     We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when our limit of liability for the "occurrence" or offense has been exhausted by payment of judgments or settlements.

Analysis

This provision highlights the world-wide coverage provided by the umbrella in that specific reference is made to defense in any country. This is important in that, although homeowners liability coverage applies anywhere in the world, auto liability coverage does not. The umbrella, with its worldwide coverage, is therefore an important addition to the personal insurance portfolio.

Of course, if there is applicable underlying insurance, or if there is no underlying insurance but the amount claimed is less than the deductible shown on the umbrella's declarations page, the insurer has no duty to defend.

C.     Additional Coverages

     We will pay:

1.     Expenses we incur and costs taxed against an "insured" in any suit we defend;

2.     Premiums on bonds required in a suit we defend, but not for bond amounts to the extent they exceed our limit of liability. We need not apply for or furnish any bond; and

3.     Reasonable expenses incurred by an "insured" at our request, including actual loss of earnings (but not loss of other income) up to $250 per day, for assisting us in the investigation or defense of a claim or suit; and

4.     Interest on our share of the judgment which accrues after entry of the judgment and before we pay or tender, or deposit in court, that part of the judgment which does not exceed the limit of liability that applies.

These payments will not reduce the limit of liability.

D.     Limit of Liability

     Our total liability under this policy for all damages resulting from any one "occurrence" or offense will not be more than the limit of liability as shown in the Declarations of this policy. This limit is the most we will pay regardless of the number of "insureds," claims made, persons injured, or vehicles involved in an accident.

Analysis

The umbrella provides four additional coverages, as well as payment for covered damages and defense expense. These are expenses incurred by the insurer (including any taxes imposed against the insured in a suit defended by the insurer); premiums on bonds in a defended suit, unless they exceed the limit of liability; reasonable expenses, including loss of wages, incurred by an insured at the insurer's request; and interest on any settlement accruing after entry of the judgment order but before payment is actually made.

Expense for defense is in addition to the amount available for payment of damages. Therefore, the limit of liability is exhausted only by payment of damages for any one occurrence or offense covered by the policy.

Exclusions

III. Exclusions

A.     The coverages provided by this policy do not apply to:

1.     "Bodily injury" or "property damage" which is expected or intended by an "insured" even if the resulting "bodily injury" or "property damage":

a.     Is of a different kind, quality or degree than initially expected or intended; or

b.     Is sustained by a different person, entity, real or personal property than initially expected or intended.

     However, this exclusion (A.1.) does not apply to:

a.     "bodily injury" resulting from the use of reasonable force by an "insured" to protect persons or property; or

b.     "Bodily injury" or "property damage resulting from the use of reasonable force by an "insured" to prevent or eliminate danger in the operation of "autos," "recreational motor vehicles" or watercraft.

Analysis

Like the homeowners policy, the umbrella provides coverage for intentional bodily injury resulting from reasonable force to protect persons or property. The 2015 form adds property damage resulting from reasonable force to protect persons or property. Therefore, if the insured damages property in an attempt to protect persons or property, damage to that property is covered as well. For example, if an insured intentionally fired a gun, inflicting bodily injury upon a burglar, and damaged a neighbor's property as well, the umbrella would provide coverage for both the injury and the property damage. There is coverage as well if an insured acts to prevent or eliminate danger in the operation of motor vehicles, watercraft, or recreational vehicles. For example, if an insured wrests the wheel from a driver who has lost control of an auto, but runs the auto into a wall with resulting injuries to passengers or bystanders, there is coverage. The act was intentional but was taken to prevent the danger posed by the out-of-control driver.

However, except in these circumstances, acts resulting in intended or expected injury are not covered. There is no coverage for intentionally inflicted injury or property damage even if the injury or property damage is not that which was initially expected or intended, or happens to a different person other than the intended victim. If an insured intends to punch someone but instead hits another person, there is still not coverage. If an insured intends to injure a person, but the person dies, there is no coverage even though the insured did not intend for the death to occur.

2.     "Personal injury":

a.Caused by or at the direction of an "insured" with the knowledge that the act would violate the rights of another and would inflict "personal injury";

b.     Arising out of oral or written publication of material, if done by or at the direction of an "insured" with knowledge of its falsity;

c.     Arising out of oral or written publication of material whose first publication took place before the beginning of the policy period;

d.     Arising out of a criminal act committed by or at the direction of an "insured"; or

e.     Sustained by any person as a result of an offense directly or indirectly related to the employment of this person by an insured.

Analysis

The policy does not cover any personal injury such as libel or slander if the insured knows that the libel or slander is false or would violate the rights of another. Further, if the libel or slander takes place prior to the policy's inception, there is no coverage. Any criminal act committed by or at the direction of the insured is not covered. Finally, there is no coverage for any offense against an employee of the insured. This would preclude coverage for suits arising, say, out of charges of discrimination in hiring, firing, or promotion.

3. "Bodily injury," "personal injury" or "property damage" arising out of or in connection with a "business":

a.Engaged in by an "insured."; or

b.Conducted from:

(1)Any part of a premises owned by or rented to an "insured"; or

(2)Vacant land owned by or rented to an "insured".

This exclusion (A.3.) applies but is not limited to an act or omission, regardless of its nature or circumstance, involving a service or duty rendered, promised, owed, or implied to be provided because of the nature of the "business."

However, this exclusion (A.4.) does not apply to:

(1).The rental or holding for rental of:

(a)The residence premises shown in the Declarations:

(i)On an occasional basis if used only as a residence;

(ii)In part, for use only as a residence, unless a single family unit is intended for use by the occupying family to lodge more than two roomers or boarders; or

(iii)In part, as an office, school, studio or private garage;

(b)Any part of a one to four family dwelling other than the residence premises to the extent that personal liability coverage is provided by "underlying insurance";

(c)A condominium, cooperative, or apartment unit other than the residence premises to the extent that personal liability coverage is provided by "underlying insurance";

(2)     Civic or public activities performed by an "insured" without compensation other than reimbursement of expenses;

(3)     An "insured" minor involved in self-employed "business" pursuits, which are occasional or part-time and customarily undertaken on that basis by minors. A minor means a person who has not attained his or her:

(a)     18th birthday; or

(b)     21st birthday if a full-time student;

(4)     The use of an "auto" you own, or a temporary substitute for such "auto, by you, a "family member" or a partner, agent or employee of you or a "family member" while employed or otherwise engaged in the "business" of:

(a)     Selling;

(b)     Repairing;

(c)     Servicing;

(d)     Storing; or

(e)     Parking;

     vehicles designed for use mainly on public highways;

e.     The use of an "auto" for "business" purposes, other than an auto business, by an "insured."

4."Bodily injury" or "property damage" arising out of the ownership or operation of an "auto" while it is being used as a public or livery conveyance. This Exclusion (A.4.) does not apply to

a. A share-the-expense car pool;

b. The ownership or operation of an "auto" while it is being used for volunteer or charitable purposes;

Analysis

Although the ISO homeowners provides liability coverage for an insured engaging in unpaid public or civic duties or activities, such as leading a scout troop, the umbrella, by not excluding the activities, clearly states that such activities are covered as long as the insured performs the activities without monetary compensation other than reimbursement of expenses.

A long-standing dispute involving whether a teenager performing babysitting services or a ten-year-old delivering newspapers could be said to be engaged in business pursuits is resolved by the umbrella language. Although bodily injury, property damage, or personal injury arising out of a business are excluded from coverage, the form makes it clear that the self-employed activities normally associated with youngsters—mowing lawns, paper delivery, babysitting, pet minding—are exempt from the exclusion.

The provision of coverage for use of a covered owned auto, or a covered temporary substitute, for business purposes other than as a public or livery conveyance, follows the language in the ISO Personal Auto Policy (PAP). The umbrella, as does the PAP, does not exclude the ownership, maintenance, or use of a covered auto or covered temporary substitute auto while the insured, a family member, partner, agent, or employee is employed or otherwise engaged in the auto business. An exception to the livery exclusion applies for share the expense carpools and the use of the vehicle for charitable purposes.

A new exclusion has been added for bodily injury or property damage arising out of the ownership, maintenance or use of a vehicle while enrolled in a personal vehicle sharing program or being used with such a personal vehicle-sharing program by anyone other than the named insured or any family member. This is a vehicle sharing program, and not a ride-sharing program. With ride sharing, the insured picks up passengers and takes them to their destination; that is excluded under the livery exclusion. This exclusion addresses situations when an insured has a written agreement with a ride sharing organization to let others drive his vehicle when it is not in use by the insured. The umbrella does not want to provide coverage for an unknown individual that they have no driving history on.

5. "Bodily injury" or "property damage" arising out of the ownership, maintenance or use of an "auto" while:

a. Enrolled in a personal vehicle sharing program under the terms of a written agreement; and

b. Being used in connection with such personal vehicle sharing program by anyone other than you or any "family member";

6. "Bodily injury", "personal injury" or "property damage" arising out of the rendering of or failure to render professional services;

7. "Aircraft Liability";

8. "Hovercraft Liability";

9. "Watercraft Liability".

However, this Exclusion (A.8) does not apply to the extent that watercraft coverage is provided by "underlying insurance" at the time of the "occurrence";

10."Recreational Motor Vehicle Liability".

However, this Exclusion (A.9.) does not apply with respect to any "recreational motor vehicle":

a.Owned by you or a "family member" to the extent that "recreational motor vehicle" coverage is provided by "underlying insurance" at the time of the "occurrence"; or

b.That you or a "family member" do not own;

 

Analysis

A new exclusion has been added for bodily injury or property damage arising out of the ownership, maintenance or use of a vehicle while enrolled in a personal vehicle sharing program or being used with such a personal vehicle sharing program by anyone other than the named insured or any family member. This is a vehicle sharing program, and not a ride-sharing program. With ride sharing, the insured picks up passengers and takes them to their destination; that is excluded under the livery exclusion. This exclusion addresses situations when an insured has a written agreement with a ride sharing organization to let others drive his vehicle when it is not in use by the insured. The umbrella does not want to provide coverage for an unknown individual that they have no driving history on.

There is no coverage for bodily injury, property damage or personal injury arising out of performing or failing to perform professional services. Coverage for these activities are properly found elsewhere, such as under an errors and omissions or medical malpractice policy.

There is no coverage under the umbrella for any bodily injury or property damage for any action, including entrustment or vicarious liability, in connection with any aircraft or hovercraft. This exposure should be insured elsewhere. Excluded as well is coverage for activities involving watercraft unless afforded coverage in the underlying insurance.

Recreational motor vehicle liability is excluded except for such vehicles owned by the insured or a family member with underlying coverage provided or not owned by the insured or a family member.

11.     "Bodily injury" or property damage" caused directly or indirectly by war, including the following and any consequence of any of the following:

a.     Undeclared war, civil war, insurrection, rebellion or revolution;

b.     Warlike act by a military force or military personnel; or

c.     Destruction, seizure or use for a military purpose.

     Discharge of a nuclear weapon will be deemed a warlike act even if accidental;

12.     A person using an "auto," "recreational motor vehicle" or watercraft without a reasonable belief that that person is entitled to do so. This Exclusion (A.12.) does not apply to a "family member" using an "auto," "recreational motor vehicle" or watercraft you own;

13. The ownership, maintenance or use of:

a. Any "auto" for the purpose of:

(1) Participating or competing in; or

(2) Practicing or preparing for; any prearranged or organized:

(a) Racing or speed contest; or

(b) Driver skill training or driver skill event; and

b. Any watercraft which, at the time of the "occurrence", is:

(1) Being operated in; or

(2) Practicing or preparing for;

any prearranged or organized:

(a) Race;

(b) Stunt activity;

(c) Speed contest; or

(d) Other competition.

However, this exclusion (A.13.) does not apply to:

(1) Motorcycle rider skill training in connection with a course designed by the Motorcycle Safety Foundation, or any similar course administered by any state agency, to improve motorcycle rider skills;

(2) A sailing vessel; or

(3) Watercraft involved in predicted log cruises;

14. "Bodily injury" or "personal injury" to you or any "family member"; This exclusion also applies to any claim made or suit brought:

a.To repay; or

b.Share damages with;

another person who may be obligated to pay damages because of "bodily injury" or "personal injury" to you or a "family member";

15. "Bodily injury" or "personal injury" arising out of:

a. The transmission of a communicable disease by an "insured";

b. Sexual molestation, corporal punishment or physical or mental abuse; or

c. The use, sale, manufacture, delivery, transfer or possession by any person of a Controlled Substance(s) as defined by the Federal Food and Drug law at 21 U.S.C.A. Sections 811 and 812. Controlled Substances include but are not limited to cocaine, LSD, marijuana and all narcotic drugs. However, this exclusion (A.14) does not apply to the legitimate use of prescription drugs by a person following the orders of a licensed health Care professional;

16. "Bodily injury," "personal injury" or "property damage" arising out of an act or omission of an "insured" as an officer or member of a board of directors of a corporation or organization. However, this exclusion (A.16.) does not apply if the corporation or organization is not-for-profit and the "insured" receives no compensation other than reimbursement of expenses;

17. "Property damage" to property owned by an "insured". This includes costs or expenses incurred by an "insured" or others to repair, replace, enhance, restore or maintain such property to prevent injury to a person or damage to property of others, whether on or away from the residence premises shown in the Declarations;

Analysis

The exclusion of coverage for actions caused either directly or indirectly by war is common. Even an accidental detonation of a nuclear weapon is still considered a warlike act, and therefore excluded.

Although there is no coverage for a person using an auto, watercraft, or recreational motor vehicle without a reasonable belief they are entitled to do so, there is coverage for a family member using such a vehicle if they are owned by the insured. Therefore, if the insured's teenage son "borrows" the family car keys from his mother's handbag without first asking, he is covered.

The next exclusion for racing has been updated significantly in the 2015 form. Instead of just the use of autos, recreational motor vehicles or watercraft being excluded while being operated in, or practicing for any prearranged or organized race, speed contest or similar competition, the exclusion is split out for autos and watercraft. The exclusion for watercraft states that the ownership, maintenance or use of the auto for participating or competing in, practicing in, preparing for, any prearranged or organized racing, speed contest, driver skill training or driver skill event are all excluded. Of interest is the last addition, the exclusion for driver skill training or events; there are more driving schools that let individuals use their vehicles to learn evasive driving and other driving techniques that increase the hazard of the vehicle being damaged or causing injury to others.

Watercraft is excluded for prearranged or organized race, stunt activity, speed or other competitions. Stunting has been added to the 2015 form. Exceptions to these exclusions are for motorcycle rider skill training in connection with a course designed by the Motorcycle Safety Foundation or similar course that is administrated by a state agency with the goal being to improve motorcycle rider skills. Sailing vessels and watercraft in predicted log cruises are also exempt from the exclusion.

Exclusion A.14. precludes coverage for bodily injury or personal injury to the insured or a family member, while exclusion A.16 precludes coverage for property damage to property owned by the insured.

Exclusion A.15 is the standard exclusion for bodily or personal injury arising out of the transmission of communicable diseases, sexual molestation, corporal punishment or physical or mental abuse and the use, sale, manufacture, transfer or possession of controlled substances. Controlled substances are defined by the Federal Food and Drug law. An issue is that marijuana is listed in those controlled substances, and that many states have declared marijuana legal for either medical or recreational purposes. When marijuana is legal for medical purposes, a prescription is needed so the exemption for those under the order of a licensed health care professional is protected. But what about those using marijuana legally and recreationally according to state laws? Under the umbrella policy, coverage for marijuana is excluded, even if it is legal according to state laws. This may change in the future.

Exclusion A.16 provides coverage much the same as exclusion A.3., in that an insured serving as an officer or director of a not-for-profit organization is covered so long as the only reimbursement to the insured is for expenses only.

The exclusion for property damage to the insured's own property is straightforward; the umbrella policy is for liability coverage, and not damage to the insured's own property. Those damages are covered under the underlying home or auto policies.

18.     "Property damage" to property rented to, occupied or used by, or in the care, custody or control of, an "insured" to the extent that the "insured is obligated by contract to provide insurance for such property. However, this exclusion (A.18.) does not apply to "property damage" caused by fire, smoke or explosion;

Analysis

The umbrella provides broad care, custody, or control coverage. While the ISO homeowners policy precludes coverage for property damage rented to, occupied or used by or in the care of an insured, the umbrella precludes coverage for such property only if the insured is required by contract (which can be either verbal or written) to cover the property.

However, while an insured would be covered for any bodily injury or property damage negligently caused while driving a rental vehicle, the coverage for property damage would not apply to the rental vehicle itself since most rental companies contractually require physical damage coverage on the vehicle.

It is possible that an insured may wish to purchase an umbrella but not own an auto. Many insurers will require that a named nonowner policy be in place to provide underlying limits for situations such as driving a rental car; this is a matter for individual insurers to determine. See Endorsements for an additional way to modify coverage for this situation.

19.     "Bodily injury" to any person eligible to receive any benefits:

a.     Voluntarily provided; or

b.     Required to be provided;

     by an "insured" under any:

(1)     Workers compensation law;

(2)     Non-occupational disability law; or

(3)     Occupational Disease law;

20.     "Bodily injury" or "property damage" for which an "insured" under this policy:

a.     Is also an insured under a nuclear energy liability policy issued by the:

(1)     Nuclear Energy Liability Insurance Association;

(2)     Mutual Atomic Energy Liability Underwriters; or

(3)     Nuclear Insurance Association of Canada;

     or any of their successors; or

b.     Would be an insured under that policy but for the exhaustion of its limit of liability;

21.     "Bodily injury," "personal injury" or "property damage" caused by an "occurrence" or offense involving the escape of fuel from a "fuel system";

22.     "bodily injury" or "personal injury" caused by an "occurrence" or offense involving the absorption, ingestion or inhalation of lead;

23.     "Personal injury" or "property damage" caused by an "occurrence" or offense of lead contamination.

Analysis

The exclusion of coverage for bodily injury for any person eligible to receive benefits, whether mandated or voluntarily provided, is standard, as is the exclusion of coverage for bodily injury or property damage when such coverage should be provided by a nuclear energy policy.

The exclusion of coverage for bodily injury, property damage, or personal injury caused by the escape of fuel must be considered carefully. There is no exclusion of coverage under the ISO homeowners. As noted in the definitions, if an endorsement such as the HO 05 80 is attached, there is limited coverage for property remediation caused by a fuel leak, and limited coverage for liability caused by a fuel leak. The umbrella excludes liability altogether. The use of personal injury in connection with an exclusion of coverage for lead absorption or ingestion may seem strange in that the term is normally associated with offenses such as slander and libel. Consider, however, that pollution claims have been brought under the Commercial General Liability form (CGL) citing "wrongful invasion of the right of private occupancy of a room, dwelling, or premises"—part of the definition of "personal injury"—and the intent becomes clear.

B.     Liability coverage does not apply to any loss assessment charged against you as a member of an association, corporation or community of property owners.

C.     We do not provide:

1.     Automobile no-fault or any similar coverage under this policy; or

2.     Uninsured Motorists Coverage, Underinsured Motorists Coverage, or any similar coverage unless this policy is endorsed to provide such coverage.

Analysis

There is no loss assessment coverage under the umbrella. Additionally, there is no uninsured or underinsured motorist coverage unless the policy is endorsed to provide it. Some states have mandated that the coverage be provided under the umbrella since UM/UIM is a type of reverse liability in that the insured's own carrier becomes responsible for bodily injury to the insured caused by an uninsured or underinsured party.

Maintenance of Underlying Insurance

IV. Maintenance of Underlying Insurance

You must maintain the "underlying insurance" at the full limits stated in the Declarations and with no change to more restrictive conditions during the term of this policy. If any "underlying insurance" is canceled or not renewed and not replaced, you must notify us at once.

If you fail to maintain "underlying insurance," we will not be liable under this policy for more than we would have been liable if that "underlying insurance" was in effect.

Analysis

Full insurance as outlined in the declarations must be maintained. There can be no restrictions—for example, a youthful driver excluded by endorsement on the underlying auto policy. Further, if for some reason the insured fails to maintain the required underlying insurance, the umbrella will not fill in the gap and provide insurance. To see how this works, consider this situation. A family has three autos and decides to store one. They cancel liability coverage on the vehicle. In a month they decide to drive the vehicle but neglect to advise their agent to put liability back on the auto. If the insured driver negligently causes an accident, the umbrella will not be triggered until a claim for damages exceeds what the insured should have carried as underlying insurance on the auto. It will not act as an underlying auto liability policy. If the insured is required to maintain $300,000 underlying liability and carries a $250 umbrella deductible, he must come up with $300,250, at which point the umbrella coverage will be triggered.

Duties After Loss

V. Duties After Loss

In case of an "occurrence" or offense likely to involve the insurance under this policy, you or another "insured" will perform the following duties that apply. We have no duty to provide coverage under this policy if your failure to comply with the following duties is prejudicial to us. You will help us by seeing that these duties are performed:

A.Give written notice to us or our agent as soon as is practical. Such notice shall set forth:

1.The identity of the policy and named insured shown in the Declarations;

2.Reasonably available information about the time, place and circumstances of the "occurrence" or offense; and

3.The names and addresses of any claimants and witnesses.

B.If a claim is made or a suit is brought against an "insured", the "insured" must:

1.Notify us immediately in writing;

2.Cooperate with us in the investigation, settlement or defense of any claim or suit;

3.Promptly forward to us every notice, demand, summons or other process relating to the "occurrence" or offense;

4.At our request, help us:

a.To make settlement;

b.To enforce any right of contribution or indemnity against any person or organization who may be liable to an "insured";

c.With the conduct of suits and attend hearings and trials; and

d.To secure and give evidence and obtain the attendance of witnesses.

C.The "insured" will not, except at the "insured's" own cost, voluntarily make payment, assume obligation or incur expense to others.

Analysis

The insured's duties are two-fold. If the insured thinks an occurrence or offense may trigger coverage under the umbrella, the insurer must be notified in writing with details including information about the incident, and names and addresses of any claimants and witnesses. This notice must be as soon as practical. However, if the insured is sued, or a claim is brought, then the insured must promptly give written notice to the insurer. The insured must assist the insurer in the settlement of the claim.

General Provisions

VI. General Provisions

A.     Appeals

     If an "insured" or any insurer providing "underlying insurance" elects not to appeal a judgment which exceeds the "retained limit," we may do so at our own expense. We will pay all costs, taxes, expenses and interest related to our appeal. the amounts we pay will be in addition to our limit of liability.

B.     Bankruptcy Of An Insured

     Bankruptcy or insolvency of an "insured" will neither:

1.     Relieve us of our obligations under this policy; nor

2.     Operate to cause this policy to become primary in the event the "insured" is unable to satisfy the "retained limit" either because of insufficient "underlying insurance" or insufficient personal assets.

C.     Bankruptcy Of An Underlying Insurer

     In the event of bankruptcy or insolvency of any "underlying insurer," the insurance afforded by this policy shall not replace such "underlying insurance," but shall apply as if the "underlying insurance" was valid and collectible.

Analysis

The general provisions are standard language. Bankruptcy of an insured does not relieve the insurer of its obligations under the umbrella; however, the umbrella will not act as primary insurance if the insured's bankruptcy means that underlying coverage is no longer in effect because of the insured's failure to pay premium. Further, if the insurer providing the underlying insurance becomes bankrupt, the umbrella's coverage will still not become primary.

D.     Fraud

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

E.     Liberalization Clause

     If we make a change which broadens coverage under this edition of our policy without additional premium charge, that change will automatically apply to your insurance as of the date we implement the change in your state, provided that this implementation date falls within 60 days prior to or during the policy period stated in the Declarations.

This Liberalization Clause does not apply to changes implemented with a general program revision that includes both broadenings and restrictions in coverage, whether that general program revision is implemented through introduction of:

1.A subsequent edition of this policy; or

2.An amendatory endorsement.

F.     Other Insurance

     The coverage afforded by this policy is excess over any other insurance available to an "insured," except insurance written specifically to be excess over this policy.

G.     Our Right To Recover Payment

    If we make a payment under this Policy and the person to or for whom payment was made has a right to recover damages from another, we shall be subrogated to that right. That person shall do:

1. Whatever is necessary to enable us to exercise our rights; and

2. Nothing after loss to prejudice them.

H.     Policy Period And Territory

     The policy period is stated in the Declarations. This policy applies to an "occurrence" or offense which takes place anywhere in the world.

I.     Severability Of Insurance

     This insurance applies separately to each "insured." However, this provision will not increase our limit of liability for any one "occurrence" or offense.

J.     Suit Against Us

1.     No legal action can be brought against us:

a.     Unless there has been full compliance with all the terms of this policy; and

b.     Until the obligation of the "insured" has been determined by final judgment or agreement signed by us.

2.     No person or organization has any right under this policy to join us as a party to any legal action against an "insured."

K.     Termination

1.     Cancellation By You

     You may cancel this policy by:

a.     Returning it to us; or

b.     Giving us advance written notice of the date cancellation is to take effect

2.     Cancellation By Us

     We may cancel this policy as stated below by letting you know in writing of the date cancellation takes effect. This cancellation notice may be delivered to you, or mailed to you at your mailing address shown in the declarations.

     Proof of mailing will be sufficient proof of notice.

a.     When you have not paid the premium, we may cancel at any time by letting you know at least 10 days before the date cancellation takes effect.

b.     When this policy has been in effect for less than 60 days and is not a renewal with us, we may cancel for any reason by letting you know at least 10 days before the date cancellation takes effect.

c.     When this policy has been in effect for 60 days or more, or at any time if it is a renewal with us, we may cancel by letting you know at least 30 days before the date cancellation takes effect.

3.     Nonrenewal

     We may elect not to renew this policy. We may do so by delivering to you, or mailing to you at your mailing address shown in the Declarations, written notice at least 30 days before the expiration date of this policy. Proof of mailing will be sufficient proof of notice.

4.     Other Termination Provisions

a.     When this policy is cancelled, the premium for the period from the date of cancellation to the expiration date will be refunded pro rata.

b.     If the return premium is not refunded with the notice of cancellation or when this policy is returned to us, we will refund it within a reasonable time after the date cancellation takes effect.

L.     Transfer Of Your Interest In This Policy

1.     Your rights and duties under this policy may not be assigned without our written consent. However, if you die, coverage will be provided for:

a.     The surviving spouse if resident in the same household at the time of death. Coverage applies to the spouse as if a named insured shown in the Declarations;

b.     any member of your household who is an "insured" at the time of your death, but only while a resident of the "residence premises"; or

c.     The legal representative of the deceased person as if a named insured shown in the Declarations. This applies only with respect to the representative's legal responsibility to maintain or use your "autos" or the residence premises shown in the Declarations.

2.     Coverage will only be provided until the end of the policy period.

M.     Waiver Or Change Of Policy Provisions

     This policy contains all the agreements between you and us. Its terms may not be changed or waived except by endorsement issued by us. If a change requires a premium adjustment, we will adjust the premium as of the effective date of the change.

Analysis

Although many of the general provisions are common to insurance forms, there are some in the umbrella that differ significantly. The provision for other insurance states that the insurance provided by this policy is excess over any other insurance available to the insured. This provision should not be construed to mean that the umbrella is, in fact, an excess liability policy only. The provision simply means that, if there is other insurance available for a covered occurrence or offense, that insurance is primary. If no other insurance applies to a covered occurrence or offense, the umbrella becomes primary.

The umbrella territory is anywhere in the world. An insured driving in Europe therefore has coverage for bodily injury and/or property damage. (However, an insured should recognize that the policy does not provide medical payments or no-fault coverage under any circumstances.)

It is important to be aware of the cancellation provisions. Most state insurance laws and regulations do not reach umbrella coverage. Therefore, unless specifically modified by a mandatory state provision, the umbrella may be cancelled at any time with thirty days' notice.

The insured cannot assign the policy. If the insured dies, the surviving spouse, if a resident in the same household at the time of death, is afforded the same coverage as the named insured. A legal representative of the deceased named insured is provided coverage but only with the representative's legal responsibility to maintain or use the covered autos or premises.

Endorsements

There are currently several endorsements that may be used in connection with the ISO umbrella. The first of these, DL 98 10 06 98, Personal Umbrella Liability Policy Change endorsement, is used by the insurer to issue policy changes.

Some insurers do not wish to insure a person with no underlying auto insurance. Endorsement DL 98 11 10 06, Personal Umbrella Liability Policy Auto Liability Exclusion endorsement, gives the insurer a way to provide coverage for a person with no drivers license. The endorsement precludes coverage for bodily injury or property damage arising from the ownership, maintenance, use, loading or unloading of an auto owned or operated by or rented or loaned to an insured. Coverage for entrustment of an auto, failure to supervise, negligent supervision, or for vicarious liability for the actions of a child or minor using an auto, is excluded. If this endorsement is attached the insured must fully understand that all auto exposures are excluded.

Another situation may arise whereby an insured has a drivers license but does not own or lease an auto. However, he may occasionally rent or borrow an auto. Endorsement DL 98 12 10 06, Personal Umbrella Liability Policy Auto Liability Following Form endorsement, may be attached to the umbrella. This endorsement allows the coverage provided by the umbrella to apply "to the extent that 'auto' coverage is provided by 'underlying insurance' at the time of the 'occurrence' or offense." Often the umbrella insurer will require that a named nonowner auto policy be purchased to provide the required underlying insurance.

Endorsement DL 98 13 10 06, Personal Umbrella Liability Policy Exclusion—Designated Auto endorsement, may be attached to the umbrella if either the insured or the insurer does not wish to cover a specific auto. The endorsement provides a space to schedule the auto, and excludes coverage for the described auto.

Along these same lines, either the insured or the insurer may decline to insure a motorized recreational vehicle or a watercraft. Endorsement DL 98 14 10 06, Personal Umbrella Liability Policy Exclusion—Designated Recreational Motor Vehicle endorsement, and endorsement DL 98 15 10 06, Personal Umbrella Liability Policy Exclusion—Designated Watercraft endorsement may be attached to the policy. The recreational motor vehicle or watercraft to be excluded are described on the endorsement; any liability coverage arising from their ownership, operation, loading or unloading, failure to supervise, negligent supervision, maintenance, or use, or vicarious liability or entrustment thereof are excluded from coverage.

Endorsement DL 98 16 10 06, Personal Umbrella Liability Policy Exclusion—All Hazards in Connection with Designated Premises, may be attached to the policy if the insured or the insurer do not wish to provide coverage for bodily injury, personal injury, or property damage arising out of a specific premises.

Endorsement DL 98 17 04 02, Personal Umbrella Exclusion—Fungi, Wet or Dry Rot, or Bacteria endorsement, is used with the Personal Umbrella Liability Policy to combat claims due to mold. The endorsement excludes bodily injury, property damage, or personal injury arising out of the actual, alleged, or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or the presence of any fungi, wet or dry rot, or bacteria. DL 98 17 defines fungi as any type or form of fungus, including mold or mildew, and any mycotoxins, spores, scents or by-products produced or released by fungi.