Liability Coverages
Describe Products Completed and what the aggregate limit means on the CGL coverage A
It covers lawsuits that arise after the work is completed, or the product is sold. a fire starting due to an electrician wiring poorly, or food poisoning from a meal that wasn't correctly prepared.
The aggregate limit means the policy is capped at X millions per year, regardless of the number of claims. a $2m CGL client has 5 lawsuits in a year, each with the judgement at $500k. Other than being a very bad risk, they're on their own for that 5th lawsuit of 500k.
What has to be true for an error and omission claim to arise?
Provide an example or two.
A financial loss. This can be extra expenses (Having to pay to redo the work) or money lost (our client's customer is no longer able to offer their services due to our client's error).
Describe business contents and provide examples of what this includes.
Items typical to the business at the location insured. This includes stock, equipment, merchandise, improvements & betterment and bailee contents (care, custody and control)
Describe Contractor's equipment with a few examples, and what industry/SIC codes it is applicable for
Tools used on the jobsite such as power or hand tools. It is used in the CE&I industry (tradesman, home renos/construction).
When we're insuring a legal entity, what operations and revenue must we consider?
All of it. We cannot insure only part of a companies operations.
For example, offers accounting services as their main revenue stream. However, they also do IT consulting. This entire policy would be a decline, as IT consulting is out of scope.
Tell us how Employers' liability could benefit a client who has workers comp.
Employers' Liability steps in when workers comp is not applicable, such as a lawsuit by the employee or a loved one for financial hardship or gross negligence.
Provide an example of how E&O could benefit a residential plumber.
Include both a concise explanation and a real world examples.
Example response:
The plumbers work was not done correctly, and the work had to be redone by another professional at the clients expense.
Ex. A year later it's found that a pipe was never correctly sealed. It started to leak, and the homeowner had to spend 30k to repair the damages.
Describe miscellaneous property and what it's designed to cover.
Misc property covers contents that are removed from location insured. It's designed to cover portable items that leave the location insured such as a photographers camera or a very expensive laptop.
Generally designed for items over $5k.
A contractor has 20k in tools. In addition to 17k in general tools, they note one item worth 3k to replace. How would we insure this?
We would do 20k under the contractor's equipment blanket. The item worth 3k would be listed under contractor's equipment floater.
What coverage types can we offer without adding the building?
We can do all CGL/E&O related coverages and contractors equipment without building info.
Describe the duty to defend, and the common exclusion we must discuss with clients from a certain industry
Our legal obligation to go to fight to reduce or remove the % responsible for our clients.
Abuse allegations is the exclusion, applicable to healthcare workers.
We do E&O for consultants. Does this mean that every consultant we insure is eligible for E&O? Explain your reasoning.
No. Some higher risk industries are acceptable for CGL, however E&O will prompt a decline or an UWing referral. The navigator tool will tell you the decision point.
What is the purpose of co-insurance?
To avoid clients' underinsuring to save a marginal premium, and to ensure we aren't paying a larger percentage of the loss than the client is willing to insure.
A contractor has 20k in tools. He carries only ~10k in tools with him at a time, and the other 10k will always remain in his garage - the business is home based.
Tell us how we would insure this and why
All 20k will go under contractor's floater due to co-insurance & the possibility of moving these tools away from the premises.
A client asks why we need their revenue. There are many reasons, but what are some of the more important ones we could name to handle the objections?
- Does the revenue makes sense based on other disclosures? Ex. # of Employees, operational details
- Liability - More susceptible to larger/more lawsuits
- Business income - pricing is largely revenue based
Consider coverage CGL Coverages A, B, C & D for this scenario.
An electrician is wiring lights in their customers bedroom. They fall, breaking an expensive crystal vase. Their customer comes running in, trips and cuts themselves on the glass. Which coverages apply, and which don't? Why?
Coverage A Bodily/Mental injury and property damage covers the vase.
Coverage C - Voluntary Payments could apply for the injury to the customer.
Claims made means the date of loss is considered from the day the claim is reported for the purposes of determining if coverage is in place.
This differs from the occurrence basis of the CGL, which is the actual date the loss occurred.
The client advises 100k business contents is adequate.
Provide an example of what the co-insurance conversation could sound like. Include an example dollar value of a potential partial loss after a co-insurance penalty.
We can insure you for 100k. However, our policies are subject to 90% co-insurance. This mean if you're underinsured by 90% or more, there will a penalty, a partial payout, if there's a partial loss.
Example: If you had 200k contents, but 100k listed and had a loss of 50k, you would receive a payout of only about 30k.
If you do find this number to be inadequate, please call us back ASAP, being on the hook for 10s of thousands for the sake of a few bucks isn't ideal.
A contractor has more than 25k in tools. Our dropdown option is capped at 25k. How do we insure their tools in full so we aren't subjecting them to co-insurance?
Add 25k under the contractors blanket limit. Add the additional amount required under the equipment floater titled "misc tools" and include a detailed note.
There are two types of realty; residential and commercial. Commercial doesn't require exceptions to underwrite. Residential is eligible only based our written exceptions. What are these exceptions?
7+ units in the building
5 rentals insured with personal lines
Over 18 units with personal lines
Building owned by a corporation and the corp is owned by 2+ owners who are not married.
You're talking to a retail store. Describe liability to them in a concise manner. Explain it once, covering both the submission and binding process in one go.
Assume the client doesn't want to hear about any of the specific conditions or has any questions.
CGL - Bodily injury/property damage (slip & fall)
Products completed - Injury after product is sold
Limit & deductible - explain aggregate/deductible
Includes Pers/advert liab & damage to landlords property.
Did you want a more detailed review?
A consultant says the following:
I am responsible for finding solutions for the companies I work with. I help make sure they have no supply chain interruptions, and have suggested new computer programs in the past. I also touch on their procedures to make them more efficient. I basically review their stuff to ensure there's no operation or productivity losses/inefficiencies.
What are some of your follow up questions?
- What are the specific companies you work with?
- Do you train on these new systems? Do you do the integration, or sign off?
- Are you held responsible for updating the procedures, or sign off on them?
- Do you do any of the implementation of your "suggestions"?
It can be challenging for a client to price all of their stuff if we simply ask "what is the value of business contents and leasehold improvements".
What is the best practice to helping the client come up with a more accurate number? Give an example of how you'd speak with the client.
Break it does by item category.
What is the value to replace your stock/merchanise?
What about any equipment or items needed to do the job?
Leasehold improvements?
Consider what you may be responsible for - Ex. Cooking appliances in a restaurant
Bailee contents? - Care custody and control
Your client makes and installs custom cabinets.
They disclose the following items:
10k in assorted tools
6k Utility trailer
3k for a fancy tool used for installation
14k in items for making the cabinets
10k in assorted tools - Contractor's blanket
6k Utility trailer - IRCA! Cross quote :)
3k for a fancy tool used for installation - Contractor's floater
14k in items for making the cabinets - Business contents
When it comes to consultants, what are some of the criteria that makes them almost always ineligible for CGL and E&O?
Hands on work, such as in the integration, training or rollout of their advice. Simply put, if they're responsible for the work and not just providing advice/suggestions, they're out of scope (usually, it's not always black and white).
Who they work for is also a factor, especially for E&O