Liability Coverages
A CGL policy has $2m aggregate limit for Products Completed Operations Hazard. Describe products complete and what the aggregate limit means
It covers lawsuits that arise after the work is completed, or the product is sold. This could be slipping on a wet floor once the mopping is completed, 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 at least 4 examples of what types of things are considered business contents
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 do we collect building information on the building tab?
What coverage types can we offer without adding the building?
When we're adding business contents, and/or building coverage.
We can do all CGL/E&O related coverages and contractors equipment without building info.
Tell us how Employers liability could benefit a client who has workers comp.
EL steps in in cases where 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.
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 15k in lower value tools, they note one item worth 2k and another worth 3k. What would our coverage solution look like? Name the coverages and limits.
We would do 20k under the contractor's equipment blanket. The item worth 3k would be listed under contractor's equipment floater.
There are two types of realty, residential and commercial. Commercial is fine. Residential is eligible only based on some exceptions. What are some examples?
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.
CGL covers lawsuits for bodily, mental injury and property damage subject to the policy limits.
The policy limit applies to the judgement, for example if our client is found responsible and is ordered to pay 500k in damage. Tell us what occurs before this judgement and what we cover. Name and describe the legal principle that we are subject to.
The court and the legal fees associated with it. We are subject to the duty to defend. This is our legal requirement to go to court and fight for our client to prove innocence or at least lessen the percent responsible.
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.
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 owns a franchise restaurant, citing 100k in business contents. You know from experience that franchise branding itself is very expensive. You have a feeling they need far more contents and have a strong coversation, but the client is adamant on 100k being 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.