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42 Cards in this Set
- Front
- Back
Purpose of CGL and how it differs from PLI |
CGL provides protection from liability exposures involved with operating a business (premises, operations, products, contractual liability, and completed operations). Coverage is provided for liability due to bodily injury, property damage, and medical payments. PLI provides protection for liability that arises from rendering of professional services or activities. CGL involved with operations of business. PLI arises from rendering professional services. |
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Significance of 1966 Comprehensive General Liability Form |
written in simplified language and provided a policy document specific to the insured. It used a policy jacket with common provisions to which specific policy provisions (applicable to the insured) were then added. Introduced the occurrence as the basis for the CGL Policy. Reduce ambiguity and confusion
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Influences that led to the CGL form of 1986 |
During the 70's and 80's, liability claims increased in areas (regulatory influences included environmental and pollution issues, medical malpractice was increase). Asbestos cases where insurers were being found liable for claims on polices that had been written decades earlier. Concern arose about the profitability of occurrence based policies. These concerns led to the first claims-made policy and the CGL policy in 1986 |
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Fundamental Difference between an occurrence and claims-made policy trigger |
Occurrence trigger activates the policy that is in effect at the time of an incident that causes injury or damage. Coverage is triggered by the date of the incident, regardless of when it is reported to the insurer. A claims-made trigger actives the policy that is in effect at the time the claim is made. Coverage is triggered by the making of a claim, regardless of when the incident happened
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What is the function of a retroactive date in a claims-made policy |
A retroactive date excludes coverage for claims arising from incidents that happened before the retroactive date. |
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How can a laser endorsement help an insured obtain insurance |
By using the laser endorsement, an underwriter can exclude specific exposures that may be present due to high claims experience or that the insured may simply not need. This allows the insured to cover the necessary exposures and potentially minimized the premium for its insurance. Excluding Specific Loss Exposures - exclusion of specific accidents, products, work or location endorsement. very helpful for underwriters and insurers to help remove obstacles that make it difficult to underwrite or obtain insurance by allowing an insurance policy to be customized to the insured's needs. |
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Purpose of an extended reporting period in a claims-made policy |
an ERP period allows additional time for a claim to be filed after a claims-made policy ends. It only covers claims based on any incident that happened after any applicable retro date and before the end of the policy period. It does not cover claims arising from incidents that happen during the ERP. |
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Is an extended reporting period needed for an occurrence policy? Why or why not? |
it is not needed for an occurrence policy because the incident is covered by the policy in effected at the time of injury, regardless of when it is reported to the insurer. |
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Four Major Trigger Theories |
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Determine trigger theory: A painter uses toxic paint in painting a home for a homeowner. The homeowner's child ingests bits of paint over several years before diagnosed with a disease caused by the toxic paint. |
Triple Trigger - The child is exposed to a harmful condition immediately upon exposure (exposure), during continuous exposure (manifestation), and at the time of diagnoses (injury/damage-in-fact). Each policy is in effect during the times of exposure could potentially respond to the claim. |
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Determine trigger theory: A construction company installs a defective plumbing pump at a business. A year later the pump suddenly breaks causing water damage to a commercial building. |
Injury-in-fact - The pump does not cause a harmful condition until it suddenly breaks, then causes damage to the building. The policy is effect on the date the damage occurred will most likely respond to the claim. |
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Determine trigger theory: After enjoying a meal at a local restaurant, a customer becomes ill. The customer receives medical treatment and is diagnosed with food poisoning caused by the meal. The customer recovers satisfactorily, suffering no further injury, and then files a claim with the restaurant |
Exposure - The customer was exposed to a meal that caused an immediate injury, which was treated and resolved. |
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Determine trigger theory: A new electrical component is installed in a hospital's generator. Over the next 6 months, the generator performs inconsistently causing extensive operational problems and patient care concerns. Finally an electrician discovers that the new electrical component is defective. |
Manifestation or Triple Trigger - Manifestation: the defect in the electrical component caused damage over several months, but the defect was not discovered until the 6th month. Triple Trigger: The electrical component was defective when it was installed and caused continuous damage to the hospital's operation, up until it was identified as defective. all or some of the policies in effect at the time of installation, during the 6 months of damage, and at the time of discover could apply. |
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CGL Policy: Supplementary Payments |
Additional payments made by an insurer for various costs and expenses associated with Coverages A and B |
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CGL Policy: Coverage Form |
Heart of the CGL Policy, which includes coverage insuring agreements, definitions, limits, and exclusions that define policy coverage. |
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CGL Policy: Personal/Advertising Injury |
Coverage B of CGL Policy |
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CGL Policy: Occurrence or Claims-Made |
Type of coverage forms available for CGL Insurance |
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CGL Policy: Insuring Agreement |
Part of the CGL coverage form that describes Coverages A, B and C. |
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CGL Policy: Policy Conditions |
Section IV of CGL Policy, which describes the insurer's and insured's rights, duties, and responsibilities, including what must be done in the event of a covered loss or if and insured wants to cancel a policy |
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CGL Policy: Who is an Insured |
Section II of a CGL coverage form that identifies who is covered under the policy |
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CGL Policy: CGL Policy Components |
Declarations page, coverage form, endorsements, amendments, additional exclusions, and broad form nuclear exclusion |
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CGL Policy: Medical Payments |
Coverage C of the CGL coverage form
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CGL Policy: Endorsements, Amendments, Additional Exclusions |
Methods of adding, excluding, or modifying policy coverage or terms. |
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CGL Coverage Form Components |
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What is the purpose of the insuring agreement? |
The insuring agreement explains the insurer's promises and obligations, including what is covered |
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What are two requirements for coverage of bodily injury and property damage? |
The bodily injury or property damage must meet the definitions found in the CGL Policy. In addition, the bodily injury or property damage must be the result of an occurrence, which much have happened during the policy period (assuming that it is a occurrence policy) |
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What is covered under property damage? |
Includes physical damage or injury to tangible property and/or the loss of use of that property |
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Bodily Injury |
considered to include injury, sickness, or disease. It includes death, if it results from the injury, sickness or disease. harm suffered by the human body resulting in pain and suffering, sickness, disease or death. The definition of bodily injury is open to court interpretation and may include emotional distress or mental injuries. CGL coverage generally pays for the cost of medical care. |
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Property Damage |
includes physical damage to tangible property as well as the loss of use of that property. Losses can include the value of property, the cost to replace or repair it, and the loss of income related to an incident or occurrence. |
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How does an insurer pay damages when an insured is found to be legally obligated for bodily injury or property damage? |
An insurer pays for damages when an insured is legally obligated for bodily injury or property damage in the form of a judgment, which is a monetary amount awarded by a court in the form of a settlement, which is a monetary agreed to by both parties |
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What is the extrinsic fact test? |
The extrinsic facts test is used to determine if an insurer has a duty to defend an insurer. It examines the complaint and all additional information known to the insurer |
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Tests to Determine a Duty to Defend |
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What must first be determined before an insurer decides to provide a defense? |
Before the insurer provides a defense, the insurer typically determines if the bodily injury or property damage is covered under the policy and whether the insured is legally obligated for damages. If the injury or damage may be covered, then the insurer is required to defend the insured |
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Reservation of Rights |
an insurer may choose to defend an insured under a reservation of rights, in which it agrees to defend the claim but reserves the right to affirm or deny coverage until a later date. |
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Does a CGL Policy pay for damages alleged by an injured party? |
A CGL Policy does not pay for damages alleged by an injured party. It pays for damages for which the insured is legally obligated or legally responsible to pay. |
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CGL Policy: Coverage Territory |
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Describe the Purpose of Coverage A |
To insure any claim against bodily injury or property damage |
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Describe two duties of the first named insured |
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Describe how changes are made to coverage |
Insured's request to change coverage after it has become effective must be made with insurer's approval by attaching an endorsement to the policy |
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Describe the insured's duties in the event of an occurrence, claim or lawsuit |
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Describe how the CGL Policy could respond when other insurance covers the same loss |
CGL insurance may be primary and pay first or be excess over other insurance, paying after other insurance pays up to the applicable limits. If a CGL Policy and other policies are primary, and all agree to pay for the loss by contribution by equal shares, then each policy pays an equal dollar amount of the loss If any insurers do not agree to contribution by equal shares, then the loss is paid by contribution by limits. Under this method, each policy pays pro-rata share of the loss based on the ratio of applicable limit to the total applicable limit of all policies |
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Describe conditions for canceling a policy |
Either party can cancel a policy. States regulate insurer rights and require prior written notice that may vary by state.
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