(April 2019)
PF&M subscribers in any manual or electronic form are permitted to reprint the following sample insurance proposal language when preparing insurance presentations for their commercial insurance customers. Other uses require permission from The Rough Notes Company, Inc.
The following paragraph or similar language should be included in all
insurance proposals:
Consult the policy for definitions and limitations. The terms of this proposal do not represent contract terms. The policy is subject to company underwriting practices.
This proposal language is not intended to be an entire insurance proposal. A client specific section that includes the name and address of the insured, the insurance company and the agent, including information about them, a list of locations, limits, deductibles, and similar customer specific items are not included and should also be prepared.
The intent of any insurance proposal is not to be a reproduction of the insurance policy but to give a summary of possible coverages.
Paragraphs that explain coverages unique to this coverage form may be the most important addition to your insurance proposal and sales effort. Coverage examples can be tailored to your individual customer. Be careful when altering any proposal language not to expand coverage beyond what the policy intends.
This proposal should be combined with proposals for other lines of business, such as commercial property, general liability, automobile liability and physical damage, and workers compensation, for a complete account proposal.
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Umbrella liability insurance covers losses that exceed the limits of insurance available in the underlying primary insurance. The coverage provided is usually independent of the underlying coverage but may follow form under certain circumstances.
The insurance company pays on the insured's behalf because of bodily injury or property damage that this insurance covers. It pays only the ultimate net loss that exceeds the limits available from underlying insurance or the self-insured retention.
The insurance company also has the right and duty to defend the insured against lawsuits that seek those covered damages. This right and duty applies when the underlying insurance does not provide coverage or when the underlying limits are used up paying claims and settlements. The insurance company has the right to participate in defending any suit that seeks damages.
At its option, the insurance company can investigate any claim and settle any lawsuit that may result but:
The only other obligation or liability to pay amounts, perform acts, or provide services is as Supplementary Payments provides for bodily injury, property damage, and personal and advertising injury liability coverages.
Underlying coverage may be subject to a sublimit. In that case, there is no coverage in the umbrella for the coverage subject to the sublimit unless the sublimit is listed on the declarations as part of the underlying coverage.
Coverage applies only if the bodily injury or property damage:
Bodily injury or property damage that takes place during the policy period and that no insured knew about before the policy period began includes any continuation, change, or resumption of that injury or damage after the policy expires. Bodily injury or property damage is determined to be known at the earliest date that any insured or authorized individual:
Bodily injury damages include damages that any party claims for care, loss of services, or death of the injured person.
Exclusions must be examined carefully because many of them have conditions, exceptions, limitations, or restrictions not shown below.
Coverage does not apply to:
Bodily injury or property damage that the insured intended is not covered. This exclusion does not apply to bodily injury that results from using reasonable force to protect persons or property.
Bodily injury or property damage liability the insured assumes under a contract or agreement is excluded. This exclusion does not apply to liability the insured would have even without the contract or agreement. The exclusion also does not apply to bodily injury or property damage assumed under an insured contract provided the injury or damage takes place after the contract or agreement's effective date.
Bodily injury or property damage liability for which the insured may be liable because of a person's intoxication, the furnishing of alcoholic beverages to persons either under the influence of alcohol or under the legal drinking age, or the violation of laws relating to the sale, gift, distribution or use of alcoholic beverages is excluded. This exclusion applies only if the insured's business is manufacturing, distributing, selling, serving or furnishing alcoholic beverages. Businesses that permit others to consume alcohol on their premises but that do not supply the alcohol are not considered to be a liquor-related business and therefore are not subject to this exclusion.
If there is underlying liquor liability coverage, this exclusion does not apply but only for the coverage provided within the underlying insurance provisions, exclusions and limitations.
Any obligation the insured has under workers
compensation, disability benefits, unemployment compensation, or similar laws
is excluded
Any obligation the insured has under the Employers' Retirement Income Security Act (E.R.I.S.A.), applicable amendments to the Act, or any similar federal, state, or local statute is excluded.
Bodily injury to an employee of the insured
that occurs in the course of his or her employment is excluded. Coverage also
does not apply to consequential injury to the employee's family members.
This exclusion applies whether the insured is liable as an employer or in any other capacity, or whether it must share damages with or repay someone else who must pay damages because of the injury.
This exclusion does not apply to injuries to
a domestic worker a covered auto causes. It also does not apply to liability
assumed under an insured contract.
When there is underlying employers
liability coverage, this exclusion does not apply but only for the coverage
that underlying insurance provides.
Bodily injury to a person if it results from refusing to employ that person, ending that person's employment, or other employment-related practices, policies, acts, or omissions directed at that person is not covered. There is also no coverage for contingent bodily injury to that person's spouse, children, or specified relatives that any described employment-related practice causes. Coverage does not apply, regardless of the status of the person at the time of the injury, even if the event that causes the injury takes place before, during, or after the person's employment.
This exclusion applies whether the insured is liable as an employer or in any other capacity, or whether it must share damages with or repay someone else who must pay damages because of the injury.
Bodily injury or property damage that would not have occurred in any way except for the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants at any time, or pollution cost or expense is not covered.
If there is underlying pollution liability coverage, pollution coverage is no longer excluded but the pollution coverage provided is limited to that which is provided by the underlying insurance.
Coverage does not apply for liability that arises out of owning, operating, occupying, renting, loaning, supervising, maintaining, using, entrusting, loading, or unloading any aircraft or watercraft any insured owns or operates, or that is rented or loaned to any insured. This exclusion does not apply to:
If there is underlying coverage, aircraft and watercraft coverage is no longer excluded but the coverage provided is limited to that which is provided by the underlying insurance.
Bodily injury or property damage that results from using mobile equipment or autos in or to practice for any prearranged racing, speed, demolition, or stunting contest or activity is not covered.
Bodily injury or property damage that arises out of any act of war, including undeclared war, civil war, insurrection, rebellion or revolution, or any act or condition of war is excluded.
Coverage does not apply to property damage to:
This exclusion has four separate exceptions that must be reviewed carefully and in their entirety in the context of the exclusion.
Property damage to the insured's product that arises out of the product or any part of it is not covered.
Coverage is excluded for property damage to the insured's work when that damage results from that work or any part of it that the products-completed operations hazard includes. There is an exception that applies to work performed by a subcontractor the insured hired. Coverage applies if the damage to property is the result of the subcontractor’s completed work.
There is no coverage for property damage to impaired property or property not physically damaged that arises out of either of the following:
This exclusion does not apply when there is sudden and accidental physical injury to the named insured’s product or work that causes other property to no longer be useable.
Costs and expenses are not covered when claimed as a result of loss of use, withdrawal, recall, inspection, repair, replacement, adjustment, removal, or disposal of the insured's product, work, or impaired property because of a defect, deficiency, inadequacy, or dangerous condition in it
Bodily injury that results from personal and advertising injury is not covered. Such coverage is provided elsewhere in the coverage form that includes resulting bodily injury.
Bodily injury or property damage that results from administering or failing to administer any professional service is not covered. The exclusion lists 13 types of professional services, but the exclusion is not limited to just those.
Bodily injury or property damage that arises in any way out of any action or omission that violates or allegedly violates any statute, ordinance, or regulation that prohibits or limits sending, printing, transmitting, disposing of, transmitting, communicating, or distributing material or information is excluded. This includes, but is not limited to, the CAN-SPAM Act of 2003, the Fair Credit Reporting Act (FRCA), Fair and Accurate Credit Transactions Act (FACTA), and the Telephone Consumer Protection Act (TCPA).
The insurance company pays on the insured's behalf because of personal and advertising injury that this insurance covers. It pays only the ultimate net loss that exceeds the limits available from underlying insurance or the self-insured retention.
The insurance company also has the right and duty to defend the insured against lawsuits that seek those covered damages. This right and duty applies when the underlying insurance does not provide coverage or when the underlying limits are used up paying claims and settlements. The insurance company has the right to participate in defending any suit that seeks damages.
At its option, the insurance company can investigate any claim and settle any lawsuit that may result but:
The only other obligation or liability to pay amounts, perform acts, or provide services is as Supplementary Payments provides for bodily injury, property damage, and personal and advertising injury liability coverages.
Underlying coverage may be subject to a sublimit. In that case, there is no coverage in the umbrella for the coverage subject to the sublimit unless the sublimit is listed on the declarations as part of the underlying coverage.
Coverage applies to personal and advertising injury caused by an offense that arises out of the insured's business but only applies to such offenses committed in the coverage territory and during the policy period. It also pays for bodily injury that results from the injury.
Exclusions must be examined carefully, because many of them have conditions, exceptions, limitations, or restrictions not shown below.
Personal and advertising injury caused by or at the insured's direction that the insured knew would violate the rights of another and inflict personal and advertising injury is not covered.
Personal and advertising injury is not covered when it arises out of material published by the insured or at its direction that the insured knew was false.
Personal and advertising injury coverage is excluded when it arises out of oral or written publication of material first published before the policy inception date.
Personal and advertising injury that arises out of criminal acts committed by the insured or at its direction is excluded.
Personal and advertising injury liability the insured assumes under a contract or agreement is excluded. There are two exceptions:
Personal and advertising injury is not covered when it arises out of a breach of contract. There is an exception for a breach of an implied contract caused when ideas of others were allegedly used in the named insured's advertisement.
Personal and advertising injury that results because goods, products, or services fail to conform to statements made in an advertisement about their quality or performance is not covered.
Personal and advertising injury is not covered when it arises out of incorrect pricing of goods, products, or services as stated in the insured's advertisement
Personal and advertising injury that arises out of infringing on copyright, patent, trademark, trade secret, or any other intellectual property rights is excluded. There are exceptions for advertisements.
Insureds are not covered for personal and advertising injury if they are in the business of advertising, broadcasting, publishing or telecasting. Coverage also does not apply if the insured's business is designing or determining the content of web sites for others, or providing Internet search, access, content, or service.
Those insured remain covered for false arrest, detention, imprisonment, malicious prosecution, and invasion of privacy issues though.
Personal and advertising injury that arises out of an electronic chatroom or bulletin board the insured hosts, owns, or controls is not covered
When the unauthorized use of other parties' names or products in the insured's e-mail address, domain name, or metatag results in a personal or advertising injury, there is no coverage. Any other tactics intended to mislead potential customers of others are also not covered.
Personal and advertising injury due to the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants at any time is excluded.
No coverage for personal and advertising injury applies when a person is not hired, is terminated or is subjected to other employment-related practices, policies, acts, or omissions. There is also no coverage for contingent injury to that person's family. This exclusion continues to apply if the insured is liable as an employer or in any other way. It also applies to any obligation the insured has to share damages with or repay another party required to pay damages because of the injury.
Personal and advertising injury that results from administering or failing to administer any professional service is not covered. The exclusion lists 13 separate professional services, but the exclusion is not limited to just them.
Personal and advertising injury arising out of any act of war, including undeclared war, civil war, insurrection, rebellion or revolution, or any act or condition of war is excluded.
Personal and advertising injury that results in any way out of any action or omission that violates or allegedly violates any statute, ordinance, or regulation that prohibits or limits sending, disposing of, transmitting, communicating, transmitting, or distributing material or information is excluded. The CAN-SPAM Act of 2003, Fair Credit Reporting Act (FRCA), Fair and Accurate Credit Transactions (FACTA), and the Telephone Consumer Protection Act (TCPA) are listed but this excludes applies to these plus any similar federal or state laws or regulations.
Coverage is not available when confidential or personal information is disclosed or accessed.
With respect to claims it investigates or settles, or suits against the insured it defends, the insurance company pays:
None of these payments reduce the limits of insurance.
When the insurance company decides to participate in the defense but is
not required to do so, it pays its own expenses but will not contribute to the
insured's or the underlying carrier's expenses.
If the insurance company defends an insured against a suit along with an indemnitee of the insured named as a party to the suit, the insurance company also pays to defend the indemnitee as a part of this section. This is subject to several conditions on and requirements of the indemnitee.
The insurance company's obligation to defend an insured's indemnitee and to pay attorney's fees and necessary litigation expenses as Supplementary Payments ends when the limit of insurance is used up paying judgments or settlements or when the indemnitee fails to comply with the terms of the defense.
This section does not apply to liability that arises out of owning, maintaining, or using covered autos.
The named insured entity on the declarations determines who is an insured under all coverages except for the auto liability:
The following are also insureds under all coverages except for the auto liability:
Newly acquired or formed organizations are insureds under all coverages except for the auto liability subject to certain conditions, exceptions, and exclusions.
With respect to liability that arises out of owning, maintaining, or
using covered autos, the following are insureds:
With respect to all coverages, including auto, any additional insured on
any underlying insurance policy is automatically an insured, subject to certain
limitations.
No party is an insured with respect to conduct of any current or past
partnership, joint venture, or limited liability company unless it is a named
insured on the declarations.
The aggregate limit applies separately to each consecutive annual policy period and to any remaining period of less than 12 months. This starts with the policy period on the declarations, unless it is extended after issuance for an additional period of less than 12 months. If that occurs, the additional period is considered part of the last prior period in order to determine the limits of insurance.
The insurance company can appeal a judgment
that exceeds the retained limit if neither the underlying carrier nor the
insured appeals. It does so at its own expense and is liable for taxable costs,
pre-judgment interest, post-judgment interest, and disbursements.
Bankruptcy or insolvency of the insured, its estate, or the underlying carrier does not relieve the insurance company of its obligations. This insurance does not replace the underlying insurance if the underlying carrier becomes bankrupt or insolvent. It still applies as though the underlying insurance was in full effect.
No person or organization has the right to include the insurance company as a party to a suit that seeks damages from an insured or to sue it concerning this coverage form until all its terms are met. The company may be sued on an agreed settlement or final judgment against an insured. However, it is not liable for damages that this coverage form does not require be paid or that exceed the limit of insurance that applies.
This insurance is excess over and does not contribute with any other insurance. This condition does not apply to insurance written specifically as excess over this coverage form.
When this insurance is excess, the insurance company is not obligated to defend the insured against any suit when another carrier(s) has that duty. If no other carrier defends, the insurance company will do so. However, it becomes entitled to any rights of recovery the insured has against the carrier(s).
The insurance company pays only its share of the ultimate net loss that exceeds the total of the amount all other insurance would pay for the loss without this insurance after applying their deductibles and self-insured amounts.
Premiums are calculated based on the insurance company's rules and rates. Advance or deposit premiums are subject to audit and adjustment at the close of each audit period. If the advance premium is less than the audit earned premium, the first named insured pays the difference. If the advance premium is more than the audit earned premium, the insurance company returns the difference to the first named insured. The first named insured must keep records of the information needed for the audit and the premium calculations and send copies to the insurance company when it requests them.
The insured agrees that the entries on the declarations are accurate and complete, are based on representations it made to the insurance company, and that coverage is based on those representations. The coverage provided is void in cases of fraud by the named insured as it relates to the coverage form or a claim brought against the coverage form.
Insurance applies to each insured as if it is the only named insured and separately to each insured that is the subject of a claim or suit. This condition does not apply with respect to the limits of insurance and any rights or duties specifically assigned to the first named insured.
The insured's rights of recovery against others responsible for a loss the insurance company pays transfer to the insurance company unless the insured waived those rights in writing before the loss occurred. The insured cannot do anything after a loss to impair any rights not previously waived. If the insurance company requests, the insured must bring suit or transfer those rights to the company and assist it to enforce them.
If the insurance company decides to not renew this coverage, it mails or delivers notice of its intent to the first named insured at least 30 days before the expiration date. If the notice is mailed, proof of mailing is enough proof of notice.
The insurance company is not to pay under this form until the insured or the underlying carrier is required to pay the retained limit and the insured's responsibility to pay part of the ultimate net loss is determined through a written agreement. The insured, the insurance company and the claimant must be parties to the agreement that requires payment above the retained limit.
The duty to defend the insured transfers to the umbrella carrier when the underlying carrier exhausts its limits by paying judgments and settlements. The insurance company agrees to cooperate in transferring control of any outstanding claims or suits that this insurance covers that the underlying insurance also covered except that its limits are used up.
The underlying insurance on the declarations must remain in force for the entire policy period. This requirement does not apply with respect to the aggregate limit being reduced due to paying claims, settlements, or judgments. Failing to maintain underlying insurance does not invalidate this insurance but instead this policy will apply as though the underlying insurance was maintained.
Any broadening of any underlying coverage during the umbrella policy period does not affect or change the umbrella liability coverage provided. The insured must tell the insurance company when any underlying insurance is no longer in effect or if the limits or its scope of coverage changes.
The insured must initiate defense of a suit if the insurance company is prevented from doing so in a suit brought in the coverage territory outside the United States of America, its territories and possessions, Puerto Rico, or Canada. In such a situation, the insurance company reimburses the insured under Supplementary Payments.
When the insurance company is not permitted to pay in the expanded territory, the insurance company reimburses the insured for any amounts it becomes legally obligated to pay because of covered damages. Payments are made in United States currency. The exchange rate is based on the date the insured expenses are incurred.
Disputes between the insured and the insurance company with respect to this insurance must be filed in the courts of the United States of America, its territories and possessions, Puerto Rico, or Canada.
The insured may be required to have specific types of insurance coverage in the expanded coverage territory. If so, the responsibility is on the insured and not the insurance company. Failing to do so does not invalidate this insurance but instead this insurance will respond as though the mandatory underlying coverage was in effect.
Refer to the coverage form for the definitions.