CAIB 3 Chapter 2 PDF

Please advise the difference between General and Special damages? (/4) The following slides contain the information needed to answer this question. ○  Chapter 2 The Commercial General Liability Policy (CGL)...

Please advise the difference between General and Special damages? (/4) The following slides contain the information needed to answer this question. ○  Chapter 2 The Commercial General Liability Policy (CGL) Section 1: Section 1 – Developing the Policy Form  Learning Topics Overview of the CGL Policy. ○ Coverage A – Bodily Injury & Property Damage. ○ Coverage B – Personal Injury Liability. ○ Coverage C – Medical Payments. ○ Coverage D – Tenant’s Legal Liability. Common Exclusions. Supplementary Payments. Determination of Premium.  Developing the Policy Form In 1984 Canadian Insurers paid out $30 million in claims under the CGL policy due to: ○ Disproportionately high court awards in the United States of America. ○ Environmental Disasters. ○ Aviation Disasters. ○ Inadequate assessment of potentially dangerous risks. ○ Latent bodily injury claims.  Developing the Policy Form The Commercial General Liability Policy (IBC – 2100) – An Analysis  Developing the Policy Form Policy Construction The CGL is comprised of 5 sections. Section Description Section 1 Coverages (A) Bodily Injury & Property Damage (B) Personal Injury Liability (C) Medical Payments (D) Tenant’s Legal Liability Section 2 Who is an Insured Section 3 Limits of Insurance Section 4 Commercial General Liability Conditions Section 5 Definitions  Section A: Bodily Injury & Property Damage (1) Coverage is provided for bodily injury and property damage to a third party. ○ Definition – Bodily Injury: “Bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.” Bodily Injury: Refers to the harm to the body associated with external causes. Sickness or Disease: Refers to conditions that originate within the body. Sickness: A condition which interferes with the usual activities of a person. ○  Section A: Bodily Injury & Property Damage Property Damage Defined under the policy as: ○ (a) Physical injury to tangible property, including all resulting loss or damage of that property. ○ (b) Loss of use to tangible property that is not physically injured. Definition – Tangible Property: “Property which can be felt, or touched and includes real and personal property.” Covers loss of use of the above property if the commercial space is closed down.  Section A: Bodily Injury & Property Damage (2) Payment made only for “those sums that the insured becomes legally obligated to pay…” ○ If the insured is legally liable then the policy will pay for the BI or PD of the Third Party. ○ If a third party is injured on someone's property owner is not always liable. Types of Liabilities Insured: ○ (a) Tort Liability The coverage extends beyond negligence. Any bodily injury or property damage arising out of other torts. (Nuisance, trespass) are covered unless excluded.  Section A: Bodily Injury & Property Damage ○ Types of Liabilities Insured: (b) Certain Contractual Liability. Tenants may assume liability of landlords and if tenant causes. damage tenants CGL pays. (c) Statutory Liability. If state law makes one pay the CGL will cover.  Section A: Bodily Injury & Property Damage (3) Insurer Liable for payment of compensatory damages. ○ Policy provides for the payments and covers compensatory damages only. ○ Compensatory damages are to compensate financially the injured party. ○ Does not pay for punitive damages or fines. (4) Coverage is provided only for losses that occur during the policy period. ○ Liability policies cover losses that occur during the policy period. ○ It’s easy to establish property damage though not for bodily injury claims.  Section A: Bodily Injury & Property Damage (5) Injury or damage must be caused by an occurrence. ○ Definition – Occurrence: “Means an accident, including continuous or repeated exposure to the substance and conditions.“ ○ Coverage for BI & PD provided for the following: (A) Sudden, unusual and unexpected event; or, ○ Also referred to as Sudden & Accidental (S&A) (B) Which occurs gradually. Section A: Bodily Injury & Property Damage  Section A: Bodily Injury & Property Damage (7) Insurer’s right and duty to defend any action. ○ A civil action is a matter between the insured and the aggrieved party. ○ If insured is sued the insurers has the right to defend and the duty to defend. ○ The only claims we will not defend are those that are excluded. ○ Right and duty to defend stops when coverages are exhausted. (8) Insurer Receives the right to. ○ a) investigate any claim and. ○ b) settle any claim or action at its discretion.  Section 1: The Law - An Introduction How Laws are Established ⚫ The laws relating to Criminal and Civil matters is established in Common Law and Statute Law: ⚫ 1) Common Law – In every province other than Quebec. – History of the law: – 1066: implemented formal system law: Judges preside over settlement of disputes – Judges have authority discriminate between customs AND enforce what they thought is best – Judges give written reasons for decisions and are made public expositions (Case law) – Decisions of the courts are made by the Rule of Precedent.  One-Minute Review Students have two minutes to write a One-Minute Review (1-3 sentences) of the most important thing you learned about today, in the chat window. Remember the Forgetting Curve!  Section A: Bodily Injury & Property Damage Key Features of Coverage A: Bodily Injury and Property Damage to a Third Party. (1) Coverage is provided for bodily injury and property damage to a third party. (2) Payment is made for “sums the insured is legally obligated to pay.” (3) Insurer is liable for compensatory damages only. (4) Coverage is provided for losses which occur during the policy period. (5) Injury or damage caused on an occurrence basis. (6) Loss or damage caused in territory of coverage. (7) Insurer has right of duty to defend. (8) Insurer has right to a) investigate any claim and 2) duty to defend any claim.  Exclusions: Coverage A 2(a)“Bodily Injury” or “property damage” expected or intended from insured. Bodily injury resulting from use of reasonable force to protect persons or property is covered. ○ Reasonable force will depend greatly on the situation.  Exclusions: Coverage A 2(b)“Bodily Injury” or “property damage” where insured is obligated to pay compensatory damages…” ○ Exceptions where liability assumed under contract is covered: A Lease of Premises: The lessee or tenants may agree to hold the owner of the property harmless for BI or PD arising from use and occupancy of the location. A Sidetrack Agreement: Railroad will ask owner of property to sign agreement which will hold insured harmless for any BI or PD from the use of the tracks.  Exclusions: Coverage A An easement or license agreement in connection with vehicle or pedestrian private railroad crossing at grade. Definition – Easement: “A right to use a person's land for a special or general purpose.” Any other easement agreement. Example: Power lines going through your property.  Exclusions: Coverage A An indemnification of a municipality as required by ordinance, expect in connection with municipality work. An elevator maintenance agreements. ○ This agreement makes the tenant make all necessary adjustments, maintenance to the elevator when needed. That part of any contract for which you assume tort liability for bodily injury or property damage to a third party.  Exclusions: Coverage A 2(c) Any obligation of insured under Workers Compensation (WCB), disability benefits or unemployment compensation law or any similar law. ○ If owner fails to take out a policy above and are penalized we will not pay the fine or penalty under the policy.  Exclusions: Coverage A 2(d)“Bodily Injury” to employee of insureds arising out of their course of employment. It applies to… ○ Whether the insured may be liable as a employer or in any other capacity. ○ Any obligation to share compensatory damages with or repay someone else who needs to pay compensatory damages.  Exclusions: Coverage A 2(d)“Bodily Injury” to employee of insureds arising out of their course of employment. It applies to… ○ Exceptions to the above: ○ To liability assumed by the insured under contract or, ○ To employees on whose behalf contributions are made or required to get made by insured under workers compensation provisions. ○ An elevator maintenance agreements. In order to cover injuries of employees insured can purchase Workers Compensation through their Province or Employers Liability Coverage.  Exclusions: Coverage A 2(e)1) “Bodily Injury” or “property damage” arising out of the ownership use or operation by insured of. ○ A) Any automobile. ○ B) Any motorized snow vehicle and its trailer. ○ C) Vehicle used in speed, race test or stunting. ○ D) Any vehicle insured under its own policy. 2(e)2) “Bodily Injury” or “property damage” to which any motor vehicle liability policy is in effect or would be in effect though its termination upon exhaustion of its limits of liability or is required to in law.  Exclusions: Coverage A Types of automobiles insured under Coverage A: ○ Front end loaders. ○ Fork lifts. ○ Road graders. ○ Caterpillars. ○ Any other machinery that is classified as heavy duty.  Exclusions: Coverage A 2(f)1) “Bodily Injury” or “property damage” arising out of the ownership, maintenance, use, operation, loading or unloading , or entrustment to others of any watercraft. ○ Exceptions: A) A watercraft is ashore on premises you own or rent. B) A watercraft you do not own that is: ○ Less than 8 meters long. ○ Not used for carrying passengers for hire. C) Bodily injury to an employee of the insured who does not have workers compensation coverage.  Exclusions: Coverage A 2(g)1) “Bodily Injury” or “property damage” arising out of the ownership, maintenance, use, operation, loading or unloading , or entrustment to others of: ○ A) Any aircraft. ○ B) Any air cushion vehicle (hovercraft). 2(g)2) “Bodily Injury” or “property damage” arising out of the ownership, existence, use, or operation for the premises for an airport, aircraft landing area. ○ The exclusion is similar to that of watercraft. ○ Many business have non-owned aircraft liability exposure: firms involved in construction/exploration use rented/chartered aircraft.  Exclusions: Coverage A The next four (4) exclusions relate specifically to property damage claims. 2(h) “Property Damage” to: ○ 1) Property you own, rent or occupy. ○ 2) Premises you sell, give away or abandon. ○ 3) Property loaned to you. ○ 4) Personal property in your care, custody or control. ○ 5) Real property that you or a subcontractor is working on. ○ 6) Any property that needs restoring, repairing or replacement.  Exclusions: Coverage A The CGL policy excludes damage to property in the care, custody and control of the insured. Examples of these losses include: ○ Property owned, rented or leased by the insured. Most insureds understand: cannot sue self for damage they cause. ○ Premises sold, given away or abandoned if the property damage arises out of any part of those premises.  Exclusions: Coverage A The CGL policy excludes damage to property in the care, custody and control of the insured. Examples of these losses include: ○ The property that is restored, repaired, or replace due to faulty workmanship / defective work. The policy will cover resultant damage. ○ Property damage to your product arising out of it or any part. The above does not cover property damage from a defective product sold to the insured from a third party.  Exclusions: Coverage A The CGL policy excludes damage to property in the care, custody and control of the insured. Examples of these losses include: ○ Property damage to your work arising out of it or any part of it and includes in the products-completed operations hazard. The above does not cover completed work by the insured. No coverage for property damage to the insured work or any issues from it. The policy is not intended to provide a guarantee of workmanship or a warranty. The above exclusion does not apply if the damaged work was performed by a subcontractor whom you hired.  Exclusions: Coverage A The CGL policy excludes damage to property in the care, custody and control of the insured. Examples of these losses include: ○ Property damage to your work arising out of it or any part of it and includes in the products-completed operations hazard. The above exclusion does not apply if the damaged work was performed by a subcontractor whom you hired.  Exclusions: Coverage A Exclusions Not Applicable to Work Performed by Subcontractors on Behalf of the Insured. ○ Note: exclusions for subcontractors does not apply if the damaged work out of which the damage arises was performed on your behalf by a subcontractor. ○ The above benefits contractors who may hire a subcontractor.  Exclusions: Coverage A The CGL policy excludes damage to property in the care, custody and control of the insured. Examples of these losses include: ○ “Property Damage” to impaired property or property that is not physically injured, arising out of: 1) A defect, deficiency, inadequacy or dangerous condition in your product or your work, or 2) A delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms. Sudden and accidental losses are covered.  Exclusions: Coverage A The CGL policy excludes damage to property in the care, custody and control of the insured. Examples of these losses include: ○ Any loss, cost or expense incurred by you or others for the loss of use, withdrawal, recall, inspection, repair, replacement, adjustment, removal or disposal of: Your product Your work Impaired property  Exclusions: Coverage A If a company knows of the defect and withdrawals the product from the marketplace we will pay for the following costs:| ○ Costs to withdrawal, recall or inspect the property. ○ Costs to repair or replace the defective product or work and the removal of the defective product or work.  Section B: Personal Injury Liability Payment made for personal injury liability exposures of a business. Definition – Personal Injury: “Injury other than bodily injury, arising out of one or more of the following.” A) False arrest, detention or imprisonment: ○ Definition – False Arrest: “Consists of holding someone without lawful justification in a place against their will.” ○ Plaintiff does not need to show that force was used. ○ If the plaintiff was humiliated or embarrassed for the above then they can sue for damages. ○ Example: Detaining someone for stealing something in a store, even though the stole nothing from the store.  Section B: Personal Injury Liability B) Malicious Prosecution: ○ A business may be exposed to the above claim if the following conditions are shown by the plaintiff. The complainant was arrested and later released and, Evidence provided revealed the person making the complaint didn’t have an honest belief that a crime had been committed, but was guided to humiliate and harass the victim.  Section B: Personal Injury Liability C) Wrongful entry into, or eviction of a person from a room, dwelling or premises that the person occupies. ○ Tenants are entitled to a safe, quiet and reasonable use of the premises. ○ If landlord comes onto the premises without permission and/or evicts tenant with no legal grounds tenant can sue and the above will cover if landlord is negligent re the above.  Section B: Personal Injury Liability D) 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. ○ Definition – Libel: “Written defamation.” ○ Definition – Slander: “Spoken defamation.” ○ Definition – Defamation: “A statement that causes unjustified injury to the reputation of another person which results in a loss of that person's esteem, confidence, respect and goodwill within the community they live.” ○ The only defense against the above is the truth.  Section B: Personal Injury Liability E) Oral or written publication of material that violates a person's right of privacy. ○ If a business owner violates one's privacy and the victim sues, the above will cover loss up to policy limits if the insured is deemed negligent re the above. Section B: Personal Injury Liability  Exclusions: Coverage B Any oral or written publication of material which is known to be false at the time. Any claims not within the policy period. Any deliberate or criminal wrong.  Section C: Medical Payments The agreement provides businesses with Medical Payments Coverage. The insurer agrees to voluntarily pay for certain medical expenses from a third party if injured on or near the insured’s premises. Expenses insured under Medical Payments up to policy limit. ○ Immediate first aid ○ X-rays ○ Ambulance charges ○ Medical, surgical or dental services ○ Funeral expenses  Section C: Medical Payments Benefit of paying claims under Section C – Medical Payments ○ The chances of permanent disability are reduced if attention is sought immediately. ○ Potential for negligence claims is reduced. ○ A legal confrontation with the injured party is reduced.  Exclusions: Section C Any claim under Coverage A or B. No payment for claims to: ○ The Insured ○ The Insured’s Employees ○ Other persons working on behalf of the insured (Contractors) ○ Persons participating in athletics.  Section D: Tenant’s Legal Liability Insuring Agreement People may conduct operations in places they do not own. Extent of tenant’s legal liability to owner of premises is a matter of: ○ Tort Liability If tenant’s negligence causes the loss or damage to the rented property legally need to compensate the owner. ○ Contractual Liability If contract makes tenant liable they needs to deal with damages caused to the rented location. Tenant needs to make sure they have enough liability to cover a loss if they are negligent in tort or under contract law.  Common Exclusions: Section A, C and D The following losses are excluded under sections A, C and D of the CGL policy: 1) Pollution Liability ○ Excludes loss or damage arising out of pollutants located On the insured’s Premises At any waste disposal site used for or by the insured While transported, handled, stored or disposed of At any work sire when bought onto the site by the insured ○ Majority of the costs are for the clean-up and remediation of the pollutants  Common Exclusions: Section A, C and D 2) Nuclear Energy ○ Excludes losses arising out of the operation of nuclear facilities. ○ Excludes possession, consumption, use, handling or transportation of isotopes. 3) War Risks ○ Exclude all war-like events.  Supplementary Payments: Section A, B and D Following payments can be made under the above sections of the CGL policy: 1) Insurer’s Cost ○ Any costs to reconstruct, investigate or prepare a defense with legal is covered under the policy. 2) Cost of bonds to release attachments ○ The courts may seize a assets belonging to a defendant to make sure there is money to pay the loss. ○ The cost to release those seized assets are covered under the policy.  Supplementary Payments: Section A, B and D 3) Reasonable expenses to investigate and defend a claim, including loss of earning of $100/day due to time missed from work. ○ If insured assists us in the defense and they need to miss work we will pay them up to $100/day. 4) Reasonable expenses incurred (Investigation/Defense) ○ If insured is asked to come to court we will pay for any expenses: Travel, accommodation, gas, etc.  Supplementary Payments: Section A, B and D 5) Loss of earnings ○ Insureds earning will be paid if court case is delayed causing them to miss work. 6) Costs taxed against the insured and any interest accruing after judgment levied. We can pay the following: ○ Court Costs If insured needs to pay all court costs we will pay them under the policy. ○ Interest on amount of judgment Insurer agrees to pay interest lost to the plaintiff from the date of the judgment.  Determination of Premium 1) Coverage A: Bodily Injury and Property Damage Liability A) Premises and Operations Liability: ○ Square footage (area) of the building or portion of the building occupied by the insured. ○ Occupancy. ○ Payroll. ○ Location. B) Products Liability: ○ Types of products sold. ○ Salves volume. ○ Territories in which the products are sold.  Determination of Premium 2) Coverage B: Personal Injury Liability ○ There is normally no additional cost for the above. It is all under the total premium of the CGL policy. 3) Coverage C: Medical Payments ○ There is normally no additional cost for the above. It is all under the total premium of the CGL policy. 4) Coverage D: Tenants Legal Liability ○ Premium is normally 35% of the rate for the actual building.  Section 2 Additional Policy Sections  Learning Objectives Who is an insured Limits of insurance Commercial General Liability Conditions Definitions Purchasing Liability Insurance – Important Factors to Consider  Who is an Insured The CGL policy may be in the name of: ○ 1) Individuals ○ 2) Partnerships or joint ventures ○ 3) Organizations other than partnerships or joint ventures Persons insured: ○ A) Owners, partners, spouses, directors and officers ○ B) Employees ○ C) A non-employee or organization acting as the insured’s real estate manager  Who is an Insured Persons insured: ○ D) Those having temporary custody of property after the death of the insured. ○ E) Upon the death of the insured, the legal representative appointed to assume control of the company. When the owner of a company passes their rights transfer to their legal counsel or representative.  The Muddiest Point Students take two minutes to write down the most confusing concept. What do you find difficult to understand? Remember the Forgetting Curve!  Limits of Insurance Insuring Business Formed or Acquired During Policy Period The structure of a company can change during the policy period. ○ When the named insured purchases all or a majority interest in an existing business or forms another one during policy period we will automatically extend coverage unless another policy exists. ○ Businesses which qualify for automatic coverage under the policy are insured for 90 days or until the expiry whichever, is sooner. After the above 90 days the coverage ceases unless it is endorsed.  Limits of Insurance Section III – Limits of Insurance Under CGL payment is made on an Aggregate Limit and an Occurrence Limit Aggregate Limit ○ The amount shown on declaration page is the maximum amount payable during policy period for all claims. ○ Example: Limit is $1,500,000 that is the most we will pay during the policy term even if the insured has 3 claims totally $2,000,000.  Limits of Insurance Occurrence Limit ○ The maximum paid by the insurer in any one occurrence involving the following: Coverage A: Bodily Injury and Property Damage Liability; and, Coverage C: Medical Payments; and, Coverage D: Tenants’ Legal Liability  Commercial General Liability Conditions 1) Bankruptcy or insolvency of insured or the insured’s estate. ○ Insureds are insolvent if they cannot pay their debts as they come due. ○ Insurer cannot use the above to avoid paying its liability under policy. 2) Canadian Currency Clause ○ Policy is paid in Canadian; therefore, claims are paid in Canadian  Commercial General Liability Conditions 3) Cancellation ○ A) Any cancellation request by insured must be under the signature of the first named insured. ○ B) If insurer requests cancellation of the policy notice needs to get sent to the first named insured. ○ C) Any refund of premium is payable to the first named insured. ○ D) 15 days notice of cancellation required if insurer is going to cancel for non-payment, 30 days for all other cancellations.  Commercial General Liability Conditions 4) Changes ○ Any changes requested by the named insured will be done by the insurer. 5) Duties in the Event of Occurrence, Claim or Action. ○ It is the insured’s obligation to cooperate with the insurer on all claims. ○ A) Promptly notify insurer of any occurrence or claim. ○ B) Promptly provide written notice to insurer Provide any legal correspondence they received. Authorize insurer to obtain records and other information. Cooperate with insurer in the investigation, settlement and defense. Assist in recovering any amounts  Commercial General Liability Conditions 6) Examination of Your Books and Records ○ The above allows insurer to inspect at any time and up to three years after the expiry of the policy any books or records of the company. 7) Inspections and Surveys ○ Insurer is able to conduct inspections of the premises and recommend changes. ○ They are also allowed to obtain surveys of the property.  Commercial General Liability Conditions 8) Legal Action Against Us ○ Any action against the insurer is permitted only after the insured has complied with all terms of the policy. 9) Other Insurance ○ The insurance provided is primary unless otherwise stated. 10) Premium Audit ○ The amount paid by the insured is deemed a deposit premium. ○ Above allows the insurer to charge a premium which is based on sales of the company.  Commercial General Liability Conditions 11) Premiums ○ Details the duties and liability of the insured and the insurer. 12) Representations. ○ Definition – Representation: “A statement of fact made to induce another to enter into a contract.” ○ If the representation is false the insurer can rescind the policy.  Commercial General Liability Conditions 13) Separation of Insureds, Cross Liability ○ The insurance provided by the CGL is separated to each person insured. A breach by one insured will not affect the coverages to the other insured. An exclusions to one insured may not apply to the other insured. 14) Transfer of Rights of Recovery Against Others to Us ○ This allows the insurer to subrogate on behalf of the insured 15) Transfer of your Rights and Duties Under This Policy ○ The policy cannot get transferred to another party unless the insurer agrees.  Definitions 1) Products Liability ○ Consumer of goods has the legal right to expect that they will be safe for use. ○ The CGL Policy refers to goods sold by Insured as “Your Products” ○ Definition – Your Products: A) Any good or product, other than real property, manufactured, sold, handled, distributed or disposed by: Insured; Others trading under the company name Person's or organization whose business or assets have been acquired. B) Containers (other than vehicles) materials, parts or equipment furnished in connection with such goods or products.  Definitions 1) Products Liability ○ The CGL Policy refers to goods sold by Insured as “One’s Products” ○ Definition – One’s Products: A) Products manufactured, sold, handled, distributed or otherwise disposed of by the insured. B) Containers (other than vehicles) materials, parts or equipment furnished in connection with such goods or products. Example: A bottle that is used to contain the insured’s product. C) Warranties or representations made respecting the fitness, quality, durability or performance of such products, including their containers.  Definitions 2) Completed Operations ○ A completed operations exposure arises out of the work performed by an insured. ○ If the work is defective and causes injury or damage, person who performed work can be sued. ○ Definition – Your Work: A) Work or operation by you or on your behalf; and, B) Materials, parts or equipment furnished in connection with such work or operations..  Definitions 2) Completed Operations ○ Definition – Insured’s Work: A) Work that is actually done by the insured. B) Work performed on behalf of the insured by contractors. C) Materials, part or equipment furnished in connection with such work or operations. D) Any warranties or representations regarding the fitness, quality, durability or performance of work and materials used.  Purchasing Liability Insurance 1) How Much Insurance is Enough? ○ Agent are asked all the time “how much insurance is enough?” ○ Some important factors for the above question include the following: The extent of previous awards made by the courts for similar types of businesses. Inflation Existence of Insurance If insurance is present courts like to rule in favor of injured party. Territory of Operations Ability of a business to absorb certain losses.  Purchasing Liability Insurance 2) Effect of Judgment for Damages on Business ○ If the defendant is unable to pay, the plaintiff is entitled to use all legal means to collect the monies. ○ To pay above business may need to liquidate their assets. ○ If they still do not have enough money then courts can garnish accounts, securities, etc... 3) Fraudulent Claims ○ Many liability claims are based on fraud. ○ A liability policy gives the following benefits to insureds who are faced with fraud  Section 3 Miscellaneous Policy Forms  Learning Objectives Commercial General Liability Policy (Claims Made Form) IBC 2200 Professional Liability Directors and Officers Liability (D&O) Umbrella Policies  Miscellaneous Policy Forms Commercial General Liability Policy (Claims Made Form) IBC 2200 ○ The above addresses issues where there may be a shortcoming in coverages to pay a loss with bodily injuries. Latent Bodily Injury – The History of the Problem ○ When insured under an occurrence policy a bodily injury claim can be brought forward at any time. ○ Insurer labile only if they insured the risk at the time.  Miscellaneous Policy Forms Latent Bodily Injury – The History of the Problem ○ Three (3) Theories that can be used to determine when the loss occurred. A) Exposure Theory Assumes that the injury occurred when the person was in physical contact with the harmful substance. Exposure can occur over a short period or long term. Example: Exposure to chemicals.  Miscellaneous Policy Forms Latent Bodily Injury – The History of the Problem ○ Three (3) Theories that can be used to determine when the loss occurred. B) Exposure in Residence Theory Assumption made that the actual disease or other bodily injury continues after the exposure of the harmful substance has ceased. C) Manifestation Theory The injury is assumed to have occurred only when recognized or diagnosed.  Professional Liability Features of the Claims Made Policy ○ Coverage is triggered when claim for damages is made ○ Coverage is limited by retroactive date Policy will not pay for losses outside of the policy term ○ Reporting period can be extended for additional premiums Professional Liability These policies insure different exposures that are covered under the CGL policy. The focus of this policy is to provide payment for damages arising out of the rendering or failure to render services. Definition – Professional: “Someone who possesses or claims to possess the special knowledge and sill to render a professional service.”  Professional Liability Professionals fall generally into the following categories: ○ Those who administer health care or other professional medical services. ○ Those who give advice and counselling. ○ Examples: Lawyers, accountants, architects, engineers, etc. Basis of legal action ○ A claim against a professional can commence in Tort or Contract ○ Action in Tort: Under law, professionals are to exercise a higher standard of care than others. If the information or standard of care is wrong the professional did not exercise appropriate care and can be negligent for any damages.  Professional Liability Basis of legal action ○ Action in Contract: When professional services are purchase there is a promise made that they will be performed with due care. A breach of contract will be success if plaintiff can show the professional failed at that promise. Three (3) recognized levels of performance. 1) Complete of satisfactory performance – The level of performance meets accepted standards. 2) Substantial performance – The level of performance falls short of complete performance only in minor respects. 3) Material breach – The level of performance is grossly inadequate.  Directors and Officers Liability A company will consist of shareholders and a much smaller body called a board of directors, elected by the shareholders. Duty Owed by Boards of Directors. ○ The first duty is to the company as a whole rather than to the shareholders. ○ Directors who willfully ignore mistakes, misconduct or acquiesce in matters a board may be liable for loss. ○ D&O Insurance can be purchased to protect and indemnify a board if a wrong decision is make.  Umbrella Policies At times you may need additional liability policies due to: ○ Inadequate Limits ○ Inadequate Coverage ○ An umbrella policy can deal with the above two issues.  Umbrella Policy How The Umbrella Policy Works: ○ A business may have a number of liability policies in place including: CGL Policy Commercial Automobile Policy Professional Liability Policy ○ The policy is designed to respond after the primary policy is exhausted. ○ The policies will normally respond when: Inadequate limits under primary policy. Inadequate coverage under primary policy. Serves as a deductible for losses not anticipated by the insurer. Encourages the insured to purchase coverage against obvious liability exposures excluded under the policy.  Important Terms So Far Students take two minutes to write down one important term that has been discussed so far in the course, in the chat window. Remember the Forgetting Curve!  Key Terms Easement Defamation False Imprisonment Slander False Arrest Libel Malicious Prosecution Aggregate Limit  Your Assignment Please refer to your IGO assignment in your student portal and use information from the Chapter 2 slides to answer the question. You can submit your IGO activity to your facilitator or ask questions in class. For an explanation of the slide information and an answer to the activity, please check out the “IGO Answers” videos in your student portal. Please ask questions if you need to! What are the 8 key features of Coverage A? (/8)