Section 13: The Personal Liability Supplement and Personal Umbrella Policy

The Personal Umbrella Exclusions Losses arising out of, or in connection with "business activities" where compensation is received...

"professional liability" "aircraft, hovercraft" "watercraft", except to the extent that coverage is provided by the underlying policy "war" "Autos" used to transport persons or property for a fee; and while being used under written contract in "personal vehicle ride sharing programs" "Recreational Vehicles (RVs)", except when covered by underlying policy "Racing" of autos, recreational motor vehicles, or watercraft. Transmission of communicable disease, sexual molestation, corporal punishment or mental abuse and unauthorized or illegal activity involving controlled substance. "Business" property and business pursuits Damage to insured's property Losses subject to work-mans compensation coverage Directors or officers liability (D+O) "Loss assessments" made against the insured as a member of any association of property owners "uninsured/underinsured" unless endorsement is attached.

The Personal Liability Policy An "insured" under the Personal Umbrella policy means...

"you", a "family member", and/or any person using an auto, recreational motor vehicle or watercraft that is owned by the insured and covered under the policy.

The Personal Liability Policy Standard Personal Umbrella policies begin with a ...

$1 million limit and can be increased in increments of $1 million, not to exceed $10 million.

The Personal Liability Supplement The minimum limit of liability for Coverage M- Medical Payments is

$1,000 per person per occurrence.

The Personal Liability Supplement The minimum limit of liability for Coverage L- Personal Liability is

$100,000.00

The Personal Liability Supplement Coverage L- Personal Liability and Coverage M- Medical Payments to Others on the Personal Liability Supplement is virtually identical to....

Coverages E and F on the homeowners policy.

The Personal Umbrella Exclusions Intentional Acts

Expected or intended, except for the use of reasonable force to protect persons or property.

The Personal Umbrella General Provisions Bankruptcy of an Underlying Insurer

If any "underlying insurer" becomes insolvent, the umbrella policy will not replace that insurance, but will still pay as of the underlying insurance was still valid and collectible.

The Personal Umbrella General Provisions Appeals

If the "insured" or "insurer" for the underlying policy, choses not to appeal any judgment from a court that exceeds the retained limit the Umbrella policy insurer may appeal, at their own expense.

The Personal Umbrella General Provisions Our Right to Recover Payment (Subrogration)

If the Umbrella policy makes a payment, the insurer is entitled to exercise the insured's rights of recovery against any person liable for the loss. The "insured" must do nothing after the loss to prejudice those rights.

The Personal Umbrella General Provisions Liberalization Clause

If the insurance company broadens coverage under the policy without charging an additional premium, that change will automatically be included in all policy on the date the insured company makes the change within the insured state. However, the date of the change must fall within 60 days prior to or during the policy period that is stated on the declarations page. The liberalization clause does not apply to subsequent editions of the policy that changes coverage or any amendatory endorsements.

The Personal Liability Supplement When the personal liability supplement is written as a monoline (stand alone) policy, a set of five conditions that comply with state statues must be attached. They are:

Liberalization Waiver of change of policy Assignment Death and Cancellation

The Personal Liability Supplement Motor vehicle liability, as well as watercraft liability, are excluded with the following exceptions:

Motor vehicles used to service the residence Battery powered toys that are not built or modified to exceed 5mph are covered off the residence premises

The Personal Umbrella General Provisions Suit Against Us

No legal action can be brought by the "insured" against the insurance company unless the insured has fully complied with the policy provisions; and until the obligations of the "insured" has been determined by final judgment or agreement signed by insurer . No person or organization has any right under the policy to join the insurance company as a party to any legal action against the insured.

The Personal Umbrella Exclusions In case of an occurrence or an offense, the insured is required to:

Provide the insurer with prompt notice of claim or suit. Cooperate with the investigation, settlement, or defense of a claim or suit. Provide any notice, demand, summons or other process severed on the insured that relates to the occurrence or offense, to the insurance company for their review.

The Personal Liability Supplement The additional coverages for claim expenses, first-aid expenses, and damage to property of others is identical to the....

Section II additional coverages on homeowners policy.

The Personal Umbrella General Provisions Termination

The "insured" may cancel the Umbrella policy by lettering it to the insurance company or providing the insurer with advance written notice of the date of cancellation will take place. The insurer may cancel the policy by mailing notice to the insured. For non-payment of premium, the insurer must provide 1- days notice. For a policy that has been in effect for less than 60 days (the underwriting period), the insurer may cancel for any reason with 10 days notice. When a policy has been in effect for 60 days or more, the insurer must provide a 30 days notice.

The Personal Umbrella General Provisions Other Insurance

The coverage provided by an Umbrella policy is intended to be excess over any other insurance available, except when insurance is written specifically as excess over the Umbrella policy.

The Personal Umbrella General Provisions Severability of Insurance

The coverage under the Umbrella policy applies to each insured separately

The Personal Liability Policy The "additional coverages" of the Personal Umbrella Policy are very similar to those we covered in Homeowners Section II part of the course. They state that the insurer will pay:

The expenses incurred and the costs taxed against the insured in any lawsuit. Premiums or bonds that may be required in a suit, but not for bond amounts that exceed the limit of liability under the policy. The reasonable expenses incurred by an insured at the insurer's request, including actual loss of earnings (but not loss of other incomes) up to $250/day for assisting in the investigation or defense of a claim. Interest on judgment that occurs after entry of the judgment.

The Personal Umbrella General Provisions Nonrenewal

The insurance company may elect to non-renew an Umbrella policy by providing the insured with notice at least 30 days in advance of the expiration day of the policy.

The Personal Umbrella General Provisions Transfer of Your Interest in this Policy (Assignment)

The insured cannot assign their rights and duties under the policy to another person without written consent from the insurance company. However, if the named insured dies, coverage will be provided for the following people, but only until the end of the policy period; -The surviving spouse if he/she is a resident in the same household at the time of the insured's death. - Any member of the diseased insured's household who is defined as an "insured" at the time of the named insured's death, but coverage only applies while a resident of the residence premises. - The legal representative of the deceased insured as if he/she is a "named insured" on the declarations page of the policy, and only as it relates to the maintenance or use of the deceased's automobiles or residence premises.

The Personal Umbrella General Provisions Bankruptcy of the Insured

The insured's bankruptcy or insolvency will not: -Relieve the insurer from its obligation under the umbrella policy -Cause the umbrella policy to become primary in the event that the insured is unable to pay the retained limit because of insufficient underlying insurance or insufficient assets.

The Personal Umbrella General Provisions Fraud

The insurer will not provide coverage if any insured has made fraudulent statements or engaged in fraudulent conduct in connection with any "occurrence" or "offense" made by the insured for which a claim is being made.

The Personal Umbrella General Provisions Wavier or Change of Policy Provisions

The policy contains all of the agreements between the insured and the insurance company and cannot be changed or waived except by endorsement issued by the insurance company.

The Personal Umbrella General Provisions Policy Period and Territory

The policy period is stated on the declarations page of the policy. The Umbrella policy will cover any "occurrence" or "offense" that takes place anywhere in the world during the policy period.

The Personal Umbrella General Provisions Other Cancellation Provisions

When the policy is cancelled, premium for the period of the date of cancellation to the expiration date of the policy. The unearned premium is returned on a pro-rata basis.

The Personal Liability Supplement The policy Specifies that the insurer's duty to defend continues until...

a settlement is reached or a judgement is rendered.

The Personal Liability Policy Any person using a temporary substitute for the insured's auto or recreational vehicle is...

also an insured

The Personal Liability Policy Umbrella policies not only increase the limits of an underlying policy, but can also

broaden coverage. Therefore, it is possible that a loss that is excluded by the underlying policy, can be covered by the umbrella policy.

The Personal Liability Supplement The additional coverage for "loss assessment" that is included on the Homeowners forms must be added...

by endorsement if the insured requests this coverage on the personal liability supplement.

The Personal Liability Supplement The exclusion for intentional injury and property damage is amended on the supplement to cover this damage if the insured...

caused the damage while attempting to protect persons or property.

The Personal Liability Supplement The exclusion for controlled substance is also amended to provide coverage to an insured if they are under the influence of...

drugs prescribed by a licensed healthcare professional.

The Personal Liability Supplement The Personal Liability Supplement promises to pay damages for which the insured is legally liable, as long as coverage is not...

excluded and the coverage limits are sufficient

The Personal Liability Policy A Personal Umbrella policy cannot be written as a mono-line and can only be triggered to provide coverage when the limit of liability of the underlying policy has been...

exhausted

The Personal Liability Policy The Personal Umbrella policy contains a deductible

for claims that are not covered by the underlying policy but are covered under the umbrella policy.

The Personal Umbrella Exclusions Libel or Slander

if the insured knows that the libel or slander is false or would violate the rights of another.

The Personal Liability Policy A personal umbrella policy can only be written to...

increase the limits of liability and/or broaden coverage of an existing policy.

The Personal Liability Supplement The Personal Liability Supplement policy can be written as a monoline or it can be attached to a dwelling policy an an endorsement to provide...

liability coverage on the policy.

The Personal Liability Policy The insuring agreement of the policy states that the insurer will pay damages in excess of the retained limit, for bodily injury or property damage for which an insured becomes legally liable due to an...

occurrence

The Personal Liability Policy The insurer will require the insured to carry...

reasonable liability limits on these underlying policies before writing the Personal Umbrella policy. The insured can increase underlying limits, but cannot reduct the limits of the underlying policy without a penalty, if a covered claim should occur.

The Personal Liability Policy A "family member" under the Personal Umbrella policy is a..

resident of the insured household who is a relative, including award or fosterchild also anyone under the age of 21 and in the care of any "insured" that is age 21 or older.

Excess Liability Policies Excess Liability policies may be written as stand-alone, self contained policies with specific coverages defined, but many are written on a "follow form" basis, which means...

that the coverage is not defined in the policy but the form simply states that the coverage follows the underlying policy coverages.

The Personal Liability Policy The Personal Umbrella deductible will range from $500 to $10,000 under the standardized policies. This deductible is considered part of....

the "retained limits" or "self insured retention". (SIR)

The Personal Liability Policy Damages will also include "prejudgment intrust" award against an insured. This interest accrues on the amount of a judgment from...

the date the lawsuit commences but BEFORE the actual amount of the award is made by the court.

The Personal Liability Policy The total limit of liability for all damages resulting from any one occurrence or offense will not exceed the limit of liability shown on...

the declaration of the policy, regardless of the number of insured, claims made, persons injured, or vehicles involved in the accident.

The Personal Liability Policy The insurer will also pay for "personal injury" in which...

the insured becomes legally liable.

The Personal Liability Policy Before writing a Personal Umbrella policy, the insurance company will review...

the underlying limits carried by the insured on their personal insurance policies such as Homeowners, personal automobile, boat owners, or other policies that include liability coverage.

Excess Liability Policies Excess liability policies do not broaden coverage by providing coverage for items that are not covered by the underlying policy like an Umbrella policy. They are written only...

to increase the limits of liability.

The Personal Liability Policy A "retained limit" refers to the total limits of any...

underlying policy, along with any other insurance coverage that applies to an occurrence or offense, and the deductible, if there is one. This limit will be listed on the Umbrella policy on the "schedule of underlying insurance", which lists the underlying policies that must be in place before an umbrella policy can be triggered.