Presentation on theme: "Telcom Insurance Group"— Presentation transcript:
1 Telcom Insurance Group 800.222.4664 Telcom’s RMC 2009 Boston MA Telecommunications Operational Activities and the Resulting Exposures they Create Presented by Peter J. Elliott, CPCU, President & CEOTelcom Insurance Group
2 Seminar Topics Insurance Basics and Definitions Means to Exposure AnalysisOperational Exposures of a Telecommunications Provider and Coverage Analysis
3 Definitions“Exposure” The state of being subject to the possibility of a loss.Risk- Probability or threat of a damage, injury, liability, loss, or other negative occurrence, caused by external or internal vulnerabilities, and which may be neutralized through pre-mediated action.“Risk Management” Analyzing all exposures to the possibility of loss and determining how to handle these exposures through such practices as avoiding the risk, retaining the risk, or transferring it, usually by insurance or another contract.
4 Definitions“Insurance” A formal social device for reducing risk by transferring the risks to a third party known as an insurer. The insurer agrees, for a consideration, to assume, to a specific extent, the losses of the insured.“Insurance” A Contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril."Insurance" comes from the Latin word for "Security". The word "Policy" comes from the Italian language meaning "Promise".
5 Definitions“Liability” The state of being liable, that is legally responsible for an act or omission.“Legal liability” Responsibility imposed by law as opposed to liability arising from contracts or agreements. In law a legal liability is a situation in which a person is financially and legally responsible, such in situations of tort concerning property or reputation and, therefore, must pay compensation for any damage incurred; liability may be civil or criminal.“Insurance law” Liability is often used to refer to blame worthiness that is used to apportion responsibility for repairing damage caused.
6 Quotes about Exposure Analysis “Have you found Jesus yet, Gump?”“I didn't know I was supposed to be looking for him, sir.”“Stupid is as stupid does.”“My momma always said, “Life was like a box of chocolates. You never know what you’re gonna get.”
7 Tools for Exposure Analysis Physical VisitsInterviews with all Departments of the OrganizationFinancial StatementsUse of Checklist and CalculatorsPersonal KnowledgeInternet Searches
8 Tools for Exposure Analysis Sample of a physical visit tool- a schematic flow of service(s) from starting point to end-user to find exposure.Contract ReviewProviderAdvertise-ment ReviewsSales Practices ReviewSales ContractReviewsISP ResellerEquipmentSalesTrainingTrainingdeliveryServiceStandardsCustomerDataProtectionInternetWarningsProtectionInstallationReviewServiceEquipmentTrainingTrainingServiceVisitProceduresTrainingBillingServiceStandardsProcess ReviewTermination3rd Party
9 Tools for Exposure Analysis Worksheet ExampleInformation Technology Business Income WorksheetThis worksheet completed by:DateFRAUD WARNING NOTICE LISTLocation 1 or all Locations CombinedLocation 2Location 3Figures for yearProjection for yearendingGROSS REVENUE / INCOME(Enter)License Fees$0.00Development FeesMaintenance FeesProfessional ServicesSystems / Equipment SalesSupport FeesConsulting FeesInstallation FeesTraining FeesOther
10 Tools for Exposure Analysis Personal KnowledgeIf you have heart disease and need to have an angioplasty performed, do you go to a general practitioner or even worse to your landscaper?It is hard to argue against the fact that specialists are able to produce more consistent and favorable results.“Those who trust to chance must abide by the results of chance.”--Calvin Coolidge
11 Tools for Exposure Analysis Internet Search of Company WebsiteIndemnification. You agree that the Company shall not be responsible for any third-party claims against the Company that arise from your use of the services. Further, you agree to reimburse the company for all costs and expenses related to the defense of any such claims, including attorney's fees, unless such claims are based on the Company's willful misconduct or gross negligence. This provision will continue to apply after the agreement ends.Liabilities of the Company. Except as stated in this Section 8, the Company shall have no liability for damages of any kind arising out of or related to events, acts, rights or privileges contemplated in this Agreement.
12 Exposures and Liabilities Operations General Liability Employee BenefitsIntellectual Property Telephone DirectoryAlarm Liability Contractors Protective Failure to Supply Errors and Omissions Broadcasters Liability Communications/Media Network Security/Data Directors Liability Employment Practices Fiduciary Liability Employers Liability Automobile Liability Pollution Liability Umbrella Liability
13 Exposure and Insurance Commercial General LiabilityUnder this form of insurance and regarding a covered occurrence, the company will pay all sums the insured becomes legally obligated to pay as damages due to:1. Bodily Injury (Coverage A)2. Property Damage (Coverage B)3. Personal Injury (Coverage C)4. Advertising Injury (Coverage D)5. Medical Payments (no legal liability required)6. Tenants Legal Liability
14 Exposure and Insurance Commercial General Liability…ConceptsBodily Injury…does it include sole allegations of mental anguish?Personal Injury (Coverage C) This insurance coverage protects against false arrest, detention or imprisonment, or malicious prosecution; libel, slander, defamation, or violation of right of privacy; and wrongful entry, eviction, or other invasion of right of private occupancy.What is missing from PI?
15 Exposure and Insurance Commercial General LiabilityAdvertising Injury (Coverage D) means injury rising out of an offense committed in the course of your advertising activities, if such injury rises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition or infringement of copyright, title or slogan.How does this differ from Intellectual Property?
16 Exposure and Insurance Employee Benefits LiabilityProtects the insured employer against claims byemployees or former employees resulting from negligentacts or omissions in the administration of the insured'semployee benefits programs. The term "employeebenefits programs" is defined to include group lifeinsurance and group accident and/or health insurance;profit sharing plans; employee stock subscription plans;and workers compensation, unemployment insurance,social security benefits, disability benefits, etc.
17 Exposure Analysis Intellectual Property… Concepts IP is a legal field that refers to rights related to creations ofthe mind such as musical, literary, and artistic works;inventions; and symbols, names, images, and designs used incommerce, including copyrights, trademarks, patents, andrelated rights. Under intellectual property law, the holder ofone of these abstract properties has certain exclusive rightsrelated to the creative work, commercial symbol, orinvention by which it is covered.
18 Exposure AnalysisIntellectual Property… Concepts Intellectual property rights are a bundle of exclusive rights over creations of the mind, both artistic and commercial. Artistic is covered by copyright laws, which protect creative works, such as books, movies, music, paintings, photographs, and software, and gives the copyright holder exclusive right to control reproduction or adaptation of such works for a certain period of time. Commercial are typically created and used for industrial or commercial purposes. A patent may be granted for a new, useful, and non-obvious invention and gives the patent holder a right to prevent others from practicing the invention without a license from the inventor for a certain period of time. A trademark is a distinctive sign which is used to prevent confusion among products in the marketplace.
19 Exposure Analysis Intellectual Property and the Law The earliest use of the term intellectual property appears to be in an October 1845 Massachusetts Circuit Court ruling in the patent case , in which Justice wrote that "only in this way can we protect intellectual property, the labors of the mind, productions and interests are as much a man's own...as the wheat he cultivates, or the flocks he rears." (1 Woodb. & M. 53, 3 West.L.J. 151, 7 F.Cas. 197, No. 3662, 2 Robb.Pat.Cas. 303, Merw.Pat.Inv. 414).
20 Exposure and Insurance Intellectual Property and the CGL Are intangible/intellectual property liability exposures covered by the Commercial General Liability (CGL) policy? The CGL covers bodily injury, property damage, personal injury, advertising injury and medical payments. Many, if not all, intangible loss exposures are driven by allegations of financial loss…so the answer is?
21 Exposure and Insurance Intellectual Liability (IP)- The CGL Changed in 1986The most commonly issued CGL policy, anything after 1986, changed the definition of "advertising injury", which was a common place for coverage, to cover specified offenses, such as defamation, invasion of privacy, misappropriation of advertising ideas or style of doing business, and "infringement of copyright, title or slogan". It is significant that the 1986 and most later editions of the form deleted piracy and unfair competition from the definition of "advertising injury”.Note copyright was covered by for advertising and trademark coverage and was determined to be in place by courts 50% of the time.
22 Exposure and Insurance Intellectual Property Insurance CoverageIntellectual Property Insurance coverage protects companies for copyright, trademark or patent infringement claims arising out of the company's operation. You need Intellectual Property insurance if the threat exists that you could be sued by a competitor for infringing on an idea or intellectual property belonging to someone else.An Intellectual Property policy will pay the costs to defend you if someone tries to claim the rights to the same business model, process, or application.
23 Exposure and Insurance Telephone Directory LiabilityProtects against allegations of personal or advertisinginjury violations and errors and omissions. The standardCGL will exclude coverage if the insured is a publisher ofthe books. However, even if they are not, the coverage is a shade of gray at best.
24 Exposure and Insurance Alarm Operations LiabilityInstallation, monitoring and design all create an exposure. Installation needs to be rated for but is covered under the CGL, unless a designated activity exclusion is applied.Monitoring is excluded by endorsement but can often be added back and coverage is granted for BI/PD. The design exposure created by installation is excluded and only a specialty liability policy will provide coverage.
25 Exposure and Insurance Independent Contractors…ConceptsSometimes it is cheaper to “out source” work than to add staff whether the task is permanent or temporary. This is generally regarded as true when looking at the hard dollar costs. But what happens if you include the soft costs like absorbing a bodily injury claim of an uninsured contractor?In some forms of insurance, like workers compensation, it is virtually impossible to avoid the claim if you have not managed the risk. What about the CGL?
26 Exposure and Insurance Commercial General LiabilityA few policies will extend named insured status to personsor organizations for your work as required by writtencontract.Most policies will require you to look at the insuredcontract coverage found in the contractual liabilityexclusion or at the leased workers definition.
27 Exposure and Insurance Commercial General Liability“Insured Contract”…Coverage exists for liability that would have existed inabsence of a contractCoverage exists for “insured contracts” which includes…acontract pertaining to business under which tort liability ofanother is assumed to a third party.Leased worker is a person leased to you by a labor leasingfirm under agreement and it does not include temporaryworkers. Temps are furnished to replace an employeeon leave or to meet short term needs.
28 Exposure and Insurance Commercial General Liability…ConceptsFailure to Supply Exclusion: This insurance does not applyto “bodily injury” or “property damage” arising out of thefailure of any insured to adequately supply, gas, oil, water,electric or steam and sometimes communications.This exclusion does not apply if the failure results fromsudden and accidental injury to tangible property owned orused by the insured.Removes- intentional and E&O exposure
29 Exposure and Insurance Commercial General Liability…ConceptsCare Custody and Control of Property ExclusionMost Liability Insurance policies exclude coverage fordamage to property in the care, custody, or control of theinsured. In some cases this type of coverage is notavailable. In other cases, it can be purchased through liabilityextensions for leased property damage and certain forms ofInland Marine Insurance, like Installation Floaters,Garagekeepers and in some cases this exclusioncan be made less restrictive by adding a Broad FormProperty Damage Endorsement.
30 Exposure and Insurance Commercial General Liability…ConceptsErrors and Omissions: Coverage for liability resulting fromerrors or omissions in the performance of professionalduties. Applicable as a general rule to professional businessactivities such as banking, accounting, law, insurance and realestate. These types of losses normally generate financiallosses.There is an exposure in general telecommunicationoperations and it can be covered elsewhere as the CGL doesnot offer protection.
31 Exposure and Insurance Error and Omissions…ConceptsAdvice v. Professional AssistanceComputer ServicesNetwork DesignOthers- Special certifications and knowledge that thegeneral public does not have creates an exposure
32 Exposure and Insurance Errors and Omissions InsuranceYou can purchase a stated activity policy where the insuredwill be covered for wrongful acts based on what activitiesthey list on their application or some insurers will provideenterprise wide coverage which covers most activities thatare professional in nature with the standard expectedexclusions like medical malpractice and architect andengineer design. An E&O Policy can pick upprogramming errors that an insured commits while workingon a computer of a customer, but any tangible damage willbe covered by the CGL property damage section.
33 Exposure and Insurance Errors and Omissions InsuranceSome E&O policies will add back coverage for personal injury and advertising injury of Internet Service Providers, which is a common CGL exclusion (policies need to be read to determine if this applicable). A side benefit is that Internet E&O could be covered by a policy. This could be claims related to website design, hosting or services that are provided depending on stated activities or enterprise coverage.
34 Exposure and Insurance Broadcaster LiabilityRobust policies will not only add back coverage for personaland advertising injury excluded by the CGL for those in thebusiness of broadcasting (to transmit or make public bymeans of television) but they also will pick up potentialErrors and Omissions claims that the content was erroneousin advice offered.
35 Exposure and Insurance Communications and MediaProtects against claims or suits for damages resulting from the unauthorized use of another party's copyrighted or trademarked intellectual property, whether it's in an electronic or print format. It also covers the unauthorized use of any advertising material, or any slogan or title, of others in the advertising of the business of others. Finally, it covers exposures resulting from plagiarism of a literary or artistic format, character, or performance in a company's material.
36 Exposure and Insurance Breach DefinitionPersonal information that is in a format that can be easily read and used by thieves is stolen and personal information is in unauthorized hands.Who Is Held Accountable?Board of Directors and Senior ManagementBy Contract-- 3rd Parties?-IT Services Providers
37 Exposure and Insurance What Data Do You Keep?Credit Card Information on CustomersSocial Security Numbers- Employees or CustomersBank Routing Numbers- Employees and CustomersDriver’s License Data- EmployeesCredit Reports- Employees or CustomersBackground Checks- Employees and potential hires
38 Exposure and Insurance Known Breach Data As Of ITRCbreaches with 11.6 million records exposed.breaches with 35.6 million records exposed.breaches with 127 million records exposed.breaches with 20 million records exposed.breaches with 64.8 million records exposed.
39 Exposure and Insurance Federal LawsThere are bills under consideration- Senate's Notification of Risk to Personal Data Act and Personal Data Privacy and Security Act as well as the Data Accountability and Trust Act, Social Security Number Protection Act, and Prevention of Fraudulent Access to Phone Records Act -- all of which are under consideration in the House.
40 Exposure and Insurance State LawsState Security and Data Breach Laws- New laws are literally being passed on a monthly basis but as of the date of this presentation the following states have laws: AK, AR, AZ, CA, CO, CT, DE, DC, FL, GA, HI, ID, IL, IN, IA, KS, LA, MA, MD, ME, MI, MN, MT, NE, NV, NH, NJ, NY, NC, ND, OH, OK, OR, PA, PR, RI, SC, TN, TX, UT, VI, VA, VT, WA, WV, WI and WY.
41 Exposure and Insurance Beyond the State-Federal Trade Commission- FTC/FCCOriginally, this consumer protection agency reasoned that a company’s failure to follow a published policy was a deceptive act and should be regulated by the FTC. Later, the agency expanded enforcement under the theory that a company’s failure to take reasonable measures to protect customers personal information is, in itself, an unfair practice. They will levy fines, requiring higher security and also the payment of the FTC’s legal costs.CPNI and Red Flags Rules…
42 Exposure and Insurance Commercial General Liability and BreachesCommon Injuries:Bodily Injury (BI) CGL Property Damage (PD) CGLPersonal Injury (PI) CGL Advertising Injury (AI) CGLSpecial Damages CGLWhy not under PD or PI?
43 Exposure and Insurance Commercial General Liability and BreachesIt is not PD or PI?PD is limited to coverage from loss to tangible property.The PI section of policies does not cover damages due to failure to protect data, the coverage territory might be limited to the US only, subcontractors are not automatically part of the “named insured” definition on most policies, and there is no claims trigger for financial loss (only that is not part a result of a covered allegation).
44 Exposure and Insurance Network Security and Data Liability and CPNI/Red FlagsIt will pay for damages incurred by claimants from a breach and the expense incurred due to the violation. It will also cover the regulatory fines from failure to abide by laws and regulations and this will include CPNI, Cable TV Operators, and any applicable state issues. Generally, punitive is covered if allowable by state law.It is more than identity theft which is a veneer of protection. ID theft is partial help after a loss of data occurs, but it is not protection before an event happens.
45 Exposure and Insurance Network Security and Data LiabilityNetwork and Data Liability standard coverage exclusions include: fraud, SEC violations, fiduciary claims, RICO and collusion events, ERISA, EPLI, D&O, insured vs. insured, war, terrorism, pollution, and BI/PD.Network and Data Liability coverage enhancements include: PR expenses, crisis management expense, paper breaches, laptop and peripheral carriers, and notification expense.
46 Exposure and Insurance Liability…ConceptsClaims Made- liability coverage only if a written claim ismade during the policy period or any applicable extendedreporting period. For example, a claim made in the currentyear could be charged against the current policy even if theinjury or loss occurred many years in the past. If the policyhas a retroactive date, an occurrence prior to that date is notcovered.Occurrence Coverage- liability coverage only for injury ordamage that occurs during the policy period, regardless ofwhen the claim is actually made. For example, a claim madein the current policy year could be charged against a priorpolicy period, or may not be covered, if it arises from anoccurrence prior to the effective date.
47 Exposure and Insurance Liability…ConceptsAggregate Limit- Generally reserved for liability basedpolicies and limits and insurers maximum exposure on thepolicy to the stated limit in the policy year unless areinstatement clause has been provided.Punitive Damages- Judgments meant to teach thedefendant a lesson for the pain and suffering or loss ofservices their actions caused.
48 Exposure and Insurance Liability…ConceptsProtective Policies: Most common are railroad andcontractors protective policies. Quite often these entitieswant their own limit that is not shared for a specificproject and they want the additional control that isafforded by having the policy written in their name.
49 Exposure and Insurance Directors and Officers Liability…ConceptsInsurance that protects directors and officers fromliability claims arising out of alleged errors in judgment,breaches of duty, and wrongful acts related to theirorganizational activities.Examples of Responsibility that Create Exposures:Duty of CareDuty of LoyaltyDuty of ObedienceStatutory Duties1933 SEC ActSarbanes-Oxley 2002
50 Exposure and Insurance Directors and Officers Liability…ConceptsMost lawsuits don't come from shareholders, but from creditors, contractors, competitors, government bodies, employees, and anyone else who might be affected by the decisions of directors and officers. Contrary to popular belief, these groups account for more than 50 percent of lawsuits covered by D&O liability insurance. Even if corporations have by-laws indemnifying officers and directors for suits brought against them, the corporation's balance sheet will be adversely affected by legal fees and any settlement. The possibility of the corporation becoming insolvent or going bankrupt, in which case directors and officers can become personally liable, also exists.
51 Exposure and Insurance Directors and Officers Liability…ConceptsThe first D&O Policy was created and written by Lloyd's of London following the stock market crash of the 1930’s. As initially developed it covered just the Directors and Officers against allegations of failure to perform their duties.Common Sources of Claims-Merger and Acquisitions Deceptive Trade PracticesContract Disputes Restraint of TradeDishonesty Anti-TrustTax Issues Regulatory ProblemsFinancial Performance Executive CompensationConflicts of Interest Inadequate DisclosureFaulty Financial Reporting
52 Exposure and Insurance Directors and Officers LiabilityCoverage A- Protects Directors that are not indemnified bythe EntityCoverage B- Covers the Entities obligation to indemnifythe Directors and Officers via by-laws or state lawCoverage C- Entity Coverage- Protects the entity itselfSide A Towers v. Entity Coverage Issue
53 Exposure and Insurance Directors and Officers Liability…ConceptsDuty to DefendPay on BehalfExtended Discovery and Supplemental Report PeriodPrior and PendingContinuity DateInsured v. InsuredChange in ControlRescindableOutside Entity ProtectionBankruptcy Exclusion
54 Exposure and Insurance Employment Practices Liability…ConceptsSuits brought against businesses by allegedly aggrieved employees are a very serious problem today. Examples of covered acts include: misrepresentation, retaliation, libel, slander, humiliation, harassment, defamation, failure to employ or promote and the like. 1 in 3+ (35%) private companies will be sued according to a Chubb study from 2007.
55 Exposure and Insurance Employment Practices LiabilityEmployment Practices Liability is an exposure to legalliability caused by an employee, past employee orpotential employee claiming their rights have beenviolated. Coverage is available to protect the corporation,directors & officers and employees for claims resulting fromwrongful termination, discrimination, sexual harassment,wrongful discipline and failure to employ or promote.It is not Employee Benefits Liability!
56 Exposure and Insurance Potential Claims Allegations:Wrongful terminationSexual harassmentDiscriminationWorkplace tortsWhat are first and third party exposure?Employment Practices Liability…Concepts
57 Exposure and Insurance Employment Practices Liability…ConceptsDefinition of EmployeeFirst and Third Party ExposureHammer ClausesIndividual v. Aggregate LimitsWage and Hour ClaimsChoice of Defense Representation
58 Exposure and Insurance Fiduciary Liability…ConceptsA wrongful act includes any violation of theresponsibilities, obligations, or duties imposed onfiduciaries by the Employee Retirement Income SecurityAct (ERISA), as well as acts, errors, or omissions in theperformance of the duties of the plan administrator.The ERISA definition of a fiduciary is very broad. It is anyperson so named in the plan or any person who exercisesany discretionary authority or control with respect to themanagement or administration of the plan or its assets
59 Exposure and Insurance Fiduciary Liability…ConceptsThe rules and regulations of ERISA include strictguidelines for fiduciaries. Failure to comply can result inlawsuits from employees, former employees, andbeneficiaries, as well as the Secretary of Labor, TreasuryDepartment, and Pension Benefit Guarantee Corp. Thesponsor corporation as well as the individual fiduciaries areat risk.ERISA also has a broad definition of what is considered anemployee benefit plan. It includes any plan, fund, orprogram established or maintained for the purpose ofproviding employee benefits to its participants orbeneficiaries.
60 Exposure and Insurance Fiduciary LiabilityUnder a fiduciary liability policy, the insured includes thefollowing:The sponsor organizationThe plan(s)Any natural person in his/her capacity as fiduciaryor administrator of the plan(s)Personal assets can be attached. This makes the lastinsured very important!
61 Exposure and Insurance Fiduciary Liability…ConceptsPotential Claim Allegations: Benefits dispute, benefitsreduction, managing plan assets, selecting service providers,misrepresentations, benefit communications, poorinvestments, and plan termination.LaRue v. DeWolff, Boberg & Associates authorizes individual defined contribution plan participants to sue for fiduciary breaches that impair the value of plan assets in the individual’s plan account.Dr. Anthony Iorio had appointed Lafferty & Partners LLC, a New Jersey-based investment firm as the investment manager for his firm's 401(k) plan. Apparently, the owner of Lafferty & Partners (Jeffrey Lafferty) stole thousands of dollars from the plan and Iorio was charged with breaching his fiduciary duties by not adequately monitoring the activities of Lafferty & Partners. According to the article, Dr. Iorio is required to restore $32, to the plan and to pay a $6, civil penalty.
62 Exposure and Insurance Workers Compensation…ConceptsSimply defined, workers compensation recompenses, gives something to a worker, one who performs labor for another, for services rendered or for injuries. This simple definition is taken in part from Webster's Ninth New Collegiate Dictionary and in studying this subject closely, we find this definition extremely accurate. Workers compensation is not "insurance", rather, it is social insurance, much the same as unemployment compensation and social security. It is however, the oldest form of social insurance.
63 Exposure and Insurance Workers Compensation…ConceptsUnder the various workers compensation systems,insurance is purchased or provided by employers throughindividual insurance companies, funds, or self insuranceplans to provide the worker with the wage indemnity,medical benefits, and a source of compensation whenemployer liability in involved. All of these protections arerequired by the laws or acts of the various states orprovinces for many years.
64 Exposure and Insurance Employers LiabilityThe second coverage part of the policy. It protects the insured against liability imposed by law for injury to employees in the course of employment that is not covered as part of wage loss or medical injury.Limits determine the coverage afforded for:BI by accident per employeeBI by disease per employeeBI by disease per policy
65 Exposure and Insurance Employers LiabilityIn some states, claims can be brought by spouses anddependents of injured workers for loss of consortium,companionship, comfort, and affection.Third parties are also capable/eligible to bring legal actionfor contributory negligence.
66 Exposure and Insurance Employers Liability…ConceptsThe phrase “out of and in the course of employment” is acrucial element to determining if coverage applies. Thepolicy does not define this phrase so courts have the finalsay when the act is in question.BI must occur in the policy period and the lawsuits must bebrought in the US, its territories and possessions, or Canada.
67 Exposure and Insurance Employers Liability…ConceptsDespite the reasoning and goal of having workerscompensation/employers liability protection there are 12exclusions to the employers liability sections and here are afew:Intentional acts and violations of lawThose assumed by ContractFines or penalties imposed for violating state or federal lawPunitive damagesA general exclusion for employment practicestype events
68 Exposure and Insurance Commercial Automobile Liability…ConceptsLiability covers the user for designated vehiclesThe concept of a permissible user comes into play inliability coverage. Whereas, physical damage protectioncovers the auto basically regardless of who is driving.The liability protection for operation of permanently attached equipment like cherry pickers is potentially covered by the BAP but could be the CGL. On the road hazard versus operating is the key.
69 Exposure and Insurance Commercial Automobile LiabilityThere are three parts to the liability insuring agreement:Pay all sums an insured must legally pay because of BI/PD caused by the ownership, maintenance or use of a covered auto.Pay all sums (actually very limited) for pollution clean-upthat the insured is legally responsible for.Insurer agrees to defend the insured from suits thatseek damages or covered pollution clean-up expense.
70 Exposure and Insurance Commercial Automobile LiabilityNumerical symbols are used on the policy declarations page and they show the coverage scope the insured has chosen. Liability Symbol 1 is the broadest.If symbol 1 is denoted on the policy the insuredhas liability for any automobile exposure andany means any auto!A common phrase is that fleet coverage applies
71 Exposure and Insurance Commercial Automobile LiabilityUninsured/Underinsured Motorist- Sometimes calledreverse liability or a cross between no-fault insuranceand liability.Covers an injured insured person for damages caused by a third party as if that parties liability policy is responding.The third party can have no insurance, less than thatrequired by state law, or be a hit and run driver.
72 Exposure and Insurance Commercial Automobile LiabilityNon-Owned LiabilityThis covers, on an excess basis, the exposureyour entity faces if an employee or anyone else for that matter is in an accident while using a personal vehicle forcompany business. The drivers insurance is the primary means of coverage.There is no physical damage protection
73 Exposure and Insurance Commercial Automobile CoverageHired Car LiabilityThis coverage is for short term (30 days orless) rental exposure. The protection can be primaryand excess limits would apply in the event of aserious accident.Unless your liability limits are inadequate, thereshould be no need to take rental insurance atthe dealers counter.
74 Exposure and Insurance Pollution LiabilityPays on your behalf all sums you are legally obligated to pay as a result of emission, discharge, release, or escape of any contaminants, irritants, or pollutants into or on land, the atmosphere, or any water course or body of water, provided this results in "environmental damage."Additionally, pays to reimburse your expense for reasonable and necessary cleanup costs incurred in the discharge of a legal obligation validly imposed through governmental action, provided such expense is incurred because of "environmental damage."Pays for defense of any claim or suit that is the subject of this insurance.
75 Exposure and Insurance Pollution LiabilityPollution "Environmental damage" is defined in the policy as "the injurious presence in or on land, the atmosphere, or any water course or body of water of solid, liquid, gaseous, or thermal contaminants, irritants, or pollutants.
76 Exposure and Insurance Umbrella Liability…ConceptsA coverage basically affording high limit coverage inexcess of the limits of the primary policies as well asadditional liability coverages. These additional coveragesare usually subject to a substantial self-insured retentionThe term "umbrella" is derived from the fact that it is aseparate policy over and above any other basic Liabilitypolicies the insured may have.
77 Exposure and Insurance Umbrella LiabilityPolicies have two limits and two retentions:Occurrence LimitAggregate LimitPolicy RetentionSelf Insured Retention
78 Exposure and Insurance Umbrella Liability PolicyPolicies can be either a true umbrella, which can providebroader coverage than the underlying insurance, or anexcess following form, which only covers above theprimary policies.There are requirements on the limits that must be held onthe primary policies and the quality of the insurerproviding the initial protection.
79 Thank You It has always been a matter of trust… 6301 Ivy Lane Suite 506 Greenbelt, MD 20770Phone Fax
80 Telcom Insurance Group 800.222.4664 Telcom’s RMC 2009 Boston MA Business Income The Upstream and Downstream Exposure Presented by Peter J. Elliott, CPCU, President & CEOTelcom Insurance Group
81 Exposure and Insurance Indirect Loss a.k.a - Business Income and Extra Expense, Business Interruption, Time Element, Use and Occupancy CoverageIndirect loss insurance provides insurance for a covered incident resulting in loss of use of property for a period of time. The loss is considered to be time lost, not actual property damage. Examples of time element coverage are Business Interruption, Extra Expense, Tuition Fees, Rents and Rental Value, Additional Living Expenses, and Leasehold Interest coverage.It covers a severity exposure.
82 Exposure and Insurance Indirect Loss a.k.a - Business Income and Extra Expense, Business Interruption, Time Element, Use and Occupancy CoverageIts purpose is to replace for the insured during a period of business interruption what the business would have done had no loss occurred.It is akin to what disability insurance does for us personally should we become injured and unable to work – it protects our income stream and our ability to pay bills.
83 Exposure and Insurance Business Income and Extra Expense…ConceptsBusiness Income is generally defined as net profit or loss before taxes, plus continuing normal operating expenses, including payroll. Coverage is usually limited to the loss of income sustained until the property is restored, or for twelve months following the physical loss or damage.Coverage is intended to be applicable for the period of recovery which should commence with “reasonable speed”.What covers the period when customers have not returned?
84 Exposure and Insurance Business Income and Extra Expense Exposure AnalysisAll the standards apply; Physical Visits, Interviews with all Departments of the Organization, Financial Statements Analysis, Use of Checklist and Calculators, Personal Knowledge, Internet Searches.An emphasis must be placed on two items;The right limit of insurance/indemnificationThe upstream and downstream identification
85 Exposure and Insurance Business Income and Extra Expense…ConceptsUpstream Example: What would happen if a service youre-sell or utilities were unavailable due to a loss at the providers location?Downstream Example: How do you account for lost customers after your operation is back up and running but they left because they could not live without service?Another: Are there any key customers that would impair income if they suffered a loss and were unable tooperate their business?
86 Exposure and Insurance Business Income and Extra Expense…ConceptsContingent BI- 4 Scenarios-depend on something else happeningContributing Locations - Entities that deliver material or services to the insured or to the insured’s clients for that insured's benefit or account. However, these operations do not include water, communication, or power supply servicesRecipient Locations - Entities that accept the products or services of the insured
87 Exposure and Insurance Business Income and Extra Expense…ConceptsContingent BIManufacturing Locations - Operations that manufacture product(s) for delivery to customers of the insured, under contract(s) of sale. Manufacturers of component parts, etc., are included in "contributing" locations on the previous slide.Leader Locations – Physical locations that attract other to your site.
88 Exposure and Insurance Business Income and Extra Expense…ConceptsCan you replace the limit for a policy period to what is actually lost?How long can the extended recovery period be?Can you afford to not have this coverage and limit adequately covered?
89 Thank You It has always been a matter of trust… 6301 Ivy Lane Suite 506 Greenbelt, MD 20770Phone Fax