COMPARE: AAIS CU 0002–COMMERCIAL UMBRELLA LIABILITY COVERAGE 09 10 EDITION TO AAIS CU 0001–COMMERCIAL EXCESS/UMBRELLA LIABILITY COVERAGE 09 10 EDITION

(October 2020)

INTRODUCTION

The American Association of Insurance Services (AAIS) previously provided umbrella/excess liability coverage under UM 0200–Commercial Umbrella/Excess Liability Coverage 04 00 Edition. CU 0001–Commercial Excess/Umbrella Liability Coverage 09 10 Edition replaced it. CU 0002–Commercial Umbrella Liability Coverage 09 10 Edition is the new AAIS umbrella liability coverage policy. It is similar to the Insurance Services Office (ISO) Commercial Liability Umbrella Coverage Form.

Note: CU 0001 and CU 0002 are similar to one another. This article points out only the differences between them.

IDENTICAL SECTIONS

These sections are identical in both CU 0001 and CU 0002. This analysis does not address them.

· Table of Contents

· Agreement

· Nuclear Energy Liability Exclusion

DEFINITIONS

The following definitions in CU 0002 are not in CU 0001:

· Covered Auto

· Retained Limit

The following definitions are in both forms but are modified:

Coverage Territory

The territory in CU 0002 is the same as the territory for Coverage U in CU 0001.
The territory for Coverage E in CU 0001 is based on the underlying insurance's coverage territory.

Covered Contract

Covered contract in CU 0002 does not include contracts related to the following:

Autos loaned or rented with drivers
Autos that transport property over a route that a public authority approved
Property damage to rented or leased autos

Insured

Insured in CU 0002 is the same as insured in Coverage U in CU 0001 as it relates to coverage other than auto. CU 0002 defines insured differently with respect to coverage that relates to autos.
Insured in Coverage E in CU 0001 is the named insured plus other insureds, as described in the underlying insurance. However, this is only to the extent that the underlying insurance covers them.

Self-insured Retention

CU 0002 adds a paragraph that explains that the self-insured retention applies only to occurrences and offenses that the underlying insurance does not cover.

COVERAGES

CU 0002 provides two separate coverages:

Coverage L–Bodily Injury and Property Damage Liability
Coverage P–Personal and Advertising Injury Liability

CU 0001 provides two separate coverages:

Coverage E–Excess Liability
Coverage U–Umbrella Liability

CU 0002 and CU 0001 both cover bodily injury, property damage, and personal and advertising injury liability.

This comparison uses CU 0002 as the standard and compares Coverage E and Coverage U in CU 0001 separately.

AGREEMENT

The agreements are similar, except as follows:

Coverage E

This coverage applies only when the underlying insurance provides coverage.
This coverage does not address the Knowledge of Bodily Injury or Property Damage Condition in CU 0002.
This coverage applies to injury or damage other than bodily injury, property damage, and personal and advertising injury when the underlying provides such coverage. That other coverage may:

Be subject to claims-made provisions as outlined in the insuring agreement
Have an extended reporting period as described in item e

Coverage U

This coverage does not apply to any claims that Coverage E insures.
This coverage applies in excess of only the self-insured retention or other non-excess insurance. It does not refer to the terms underlying insurance or retained limit.
This coverage addresses bodily injury, property damage, and personal and advertising injury.

EXCLUSIONS

Coverage E

This coverage excludes all injury and damage that the underlying insurance excludes. It has 16 additional exclusions that match the ones in CU 0002. There are two exceptions:

The pollution exclusion is absolute unless the underlying insurance provides coverage. In that case, coverage follows the underlying insurance.
The electronic data corruption exclusion is absolute unless the underlying insurance provides coverage. In that case, coverage follows the underlying insurance.

Note: The underlying coverages must be evaluated to determine if the coverage provided is broader or narrower than the coverage that CU 0002 provides.

Coverage U

All exclusions in CU 0001 are the same as the exclusions in CU 0002 except for the following:

Bodily injury or property damage due to use of an auto that is not a covered auto does not apply because
CU 0001 excludes all auto coverage.
The pollution exclusion is absolute.
The exception to the pollution loss cost expense exclusion does not apply.
There is no coverage for auto, aircraft, watercraft, mobile equipment, or recreational vehicles. CU 0002 provides coverage for each of these with varying amounts.
There is no underlying coverage exception for the employers liability exclusion.
The fellow employee exclusion does not apply because it is related to auto that CU 0001 already excludes.
The racing activities exclusion does not apply because it is related to auto, mobile equipment, and recreational vehicles that CU 0001 already excludes.
The exclusion for property that a covered auto transports does not apply because CU 0001 excludes auto coverage.
The electronic data exclusion is absolute. It does not have CU 0002’s exception for underlying coverage.
Lead, silica, and asbestos are excluded. There are no exceptions for any underlying coverage.

SUPPLEMENTAL PAYMENTS

All Supplemental Payments are identical except that CU 0001 has an exception in Coverage E. If the underlying insurance reduces limits with defense costs, Coverage E does too.

WHAT MUST BE DONE IN CASE OF LOSS

All items are identical except under only Coverage E in CU 0001. The named insured must cooperate with underlying carriers because there should not be any underlying insurers under Coverage U.

HOW MUCH WE PAY

This section has a number of changes.

1. Limits in CU 0001 has two additional items as follows:

1. d. applies only to the extent that this policy provides coverage.

· 1. e. is added. It states that the limits are the most paid regardless of the number of coverages the policy provides.

2. Aggregate/General Aggregate

CU 0001 uses the term General Aggregate. CU 0002 uses the term Aggregate.
The General Aggregate in CU 0001 is the total of both damages (as in CU 0002) and defense costs if paid within the limits with respect to Coverage E.
The General Aggregate in CU 0001 does not apply to the following:

Bodily injury or property damage that the products/completed work hazard covers
Bodily injury or property damage in the underlying insurance that is not subject to an aggregate

Note: The Aggregate in CU 0002 does not apply to bodily injury or property damage related to covered autos. This means that it is similar to CU 0001 because auto is usually one of the few liability coverages not subject to an aggregate.

Products/Completed Work Hazard Aggregate

CU 0001 has a Products/Completed Work Hazard Aggregate. CU 0002 does not. This means that products and completed work under CU 0002 are part of the Aggregate.

Each Occurrence Limit

Under CU 0001, this is the total of all covered damages plus defense costs if paid within the limits under Coverage E. It is all bodily injury and property damage in a single occurrence, all personal injury and advertising injury that one person or organization sustains, and any other injury insured under Coverage E in an event, error, negligent act, omission, incident, or offense.
Under CU 0002, this is the total of damages from all bodily injury and property damage in a single occurrence.

Personal and Advertising Injury Limit

CU 0002 has a limit for personal and advertising injury. It applies to all personal injury and advertising injury that one person or organization sustains. This is part of the occurrence limit in CU 0001.

Concurrency

This is similar except that it applies to only Coverage E under CU 0001.

Continuance

Coverage E in CU 0001 provides the same coverage as the underlying insurance if the underlying insurance limits are used up. If the underlying insurance limits are reduced, Coverage E applies in excess of those reduced limits. This provision is not in CU 0002.

CONDITIONS

These are identical, with one exception. When there is a reference to underlying insurance within a condition in
CU 0001, that item applies to only Coverage E except in Appeals when Coverage U applies because of self-insurance.