Underwriting General Liability - Premises And Operations

Front 1

commercial general liability policies

Back 1

protect business owners and operators against a wide range of liability exposures

Front 2

general liability exposures include

Back 2

premises and operations exposures, products and completed operations exposures, and contractual liability exposures

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3 classification steps

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1.classify the insured's business operation
2.check the classification for inclusions, exclusions, and footnotes
3.apply additional rules

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1st classification steps:
classify the insured's business operation

Back 4

choose the classification that best describes the insured's business operations. multiple businesses may divide their total exposures btw two or more classifications

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2nd classification steps:
check the classification for inclusions, exclusions, and footnotes

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each classification includes some incidental operations and excludes others.
classify and rate the insured's excluded operations separately

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3rd classification steps:
apply additional rules -

Back 6

specific classification rules and premium bases apply to each of the 5 business groups

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what are the specific classification rules and premium base for:
mercantile

Back 7

rated on gross sales basis using rates applicable to each business location.

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what are the specific classification rules and premium base for:
manufacturing/processing

Back 8

rated on gross sales basis using rates applicable to the location of production or assembly
they are classified according to 3 principals:
1. each names insured is separately classified and rates
2.retail operations are separately classified and rated
3.the final product is classified, not its components or any interim processes

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what are the specific classification rules and premium base for:
contracting/servicing

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rated on payroll basis using rates applicable to the job locations

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what are the specific classification rules and premium base for:
building/premises

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classification depends on ownership or occupancy.

buildings owned and entirely occupied by the insured are classified by occupancy.

buildings occupied but not owned by the insured are classified by occupancy too.

buildings owned and not entirely occupied by the insured are classified by owner'occupancy(up to the stated percentage)and the rest is classified according to the lessor's risk only' classifications.

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what are the specific classification rules and premium base for:
miscellaneous

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insureds that dont meet any classification use the closet one and are rated accordingly

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use Best's Underwriting Guide and Best's Loss engineering guide to evaluate new accounts:

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exposure classifications
exposure bases
CLM symbols and codes
coverage forms

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the exposure base

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measures the size of the account and is multiplied by the rate to determine the premium

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insurance advisory orginizations want a premium bae that

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1. measures the level of activity that produces claims
2. is easy for the insured to identify
3. is easu for the u/w to verify

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name the 7 premium bases

Back 15

gross sales
payroll
admissions
area
each
total cost
unit

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gross sales

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gross amount of money charged by the names insured and those trading under the insured's name for
1. goods and products
2. operations performed during the policy period
3. rentals

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receipts

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cash received by the seller from the buyer, and rarely equal gross sales

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intercompany sales

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(exchange of goods btw two legal separate named insured's on the same policy)

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insured's tend to include intercompany sales if

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1.the insured has products liability coverage for intercompany sales
2.the participating companies are likely to sue one another

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the separation of insureds condition

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holds that insurance applies as if each named insured were the only named insured and separately to each insured against whom claim is made.
that condition allows each named insured to sue each other and should agree conclusively for the inclusion of intercompany sales

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admission

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the total nuber of person other then employees admitted to the insured event or all events held at the insured premises

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area of the

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the total number of square feet of floor space at the insured premises, excluding floor openings and area where at least 50% of the space is used for shops, building maintenance, or equipement storage

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total cost

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total cost of all work let or sublet for a specfic project

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total operating expenditures

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premium base for governmental subdivisons. it equals total expenditures without regard to sources of revenue received during the policy period

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unit

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a room or group of rooms intended for separate occupancy

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NOC

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"not otherwise classified" -
describes an insured's business if no other classification more specifically describes the business

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NPD

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"no payoll division" -
indicates tat payroll can't be divided with another classification

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Plus sign (+)

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products-completed operations coverage is included at no additional premium charge

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m

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means the premium base is admissions

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p

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means the premium base is payroll

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occurrence basis coverage

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form CG 00 01 - covers events that take place (occur) during the policy period

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claims-made basis coverage

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form CG 00 02 - covers claims first made or presented during the policy period for events that occurred after the policy's retro date

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coverage A - BI and PD liability

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pays for BI and PD losses for which the insured is liable and defend the insured against claims and suits alleging liability for BI and PD losses
coverage A offers very broad coverage, which is limited by coverage A exclusions

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the each occurrence limit

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sets the maximum amount the insurer will pay for damages resulting from a single occurrence

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products-completed operations aggregate limit

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sets the maximum amount the insurer will pay for that particular hazard

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general aggregate limit

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sets the maximum amount the insurer will pay for all other claims

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coverage B - personal and advertising liability

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pays for damages the insured is legally obligated to pay because of libel, slander, false arrest, and other forms of personal and advertising injury. coverage B payment reduce the general aggregate limit

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coverage C - medical payments

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pays for medical expenses, regardless of liability, for injuries to noninsureds on the insured's premises caused by the insured's operations

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the premises exposure

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exists when there is ownership or occupancy for real property

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the operations exposure

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exists when there is any activity performed or not performed

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extent of public exposure

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to what extent are the insured's customers, suppliers, business associates, and members of the general public exposed to the hazards of the insured's business and operations and what is the legal status of the persons likely to be on the premises

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physical hazards

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what conditions or hazards of the premises are likely to cause BI and PD? what conditions or hazards of the business operations are likely to cause BI and PD?

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pollution

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CGL excludes pollution liability coverage except when arising out of products/completed operations hazard and contractors who cause pollution incidents not related to their own work or own pollutants

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the total pollution exclusion

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eliminates all pollution exclusions

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pollution liability coverage extension

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eliminates paragraph (1) of pollution exclusion (f) of coverage A

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limited pollution liability extension endorsement

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protects against some on-premises pollution exposures subject to an aggregate limit

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liquor liability - liquor liability exclusion or dram shop exclusion

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applies to firms that manufacture, distribute, sell, serve, or furnish alcoholic beverages

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liquor liability exclusion excludes BI and PD coverage for claims if the insured

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1. caused or contributed to another's intoxication
2. furnished alcoholic beverages to underaged or intoxicated person
3. violated any statue, ordinance, or regulation relating to the sale, gift, distrubtion, or use of alcoholic beverages (known as dram shop acts or alcoholic beverage control acts)

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host liquor liability coverage

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extends liquor liability coverage to firms that do not sell alcohol and do not need a liquor license for their businesses

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contractual liability exclusion

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excludes BI and PD liability assumed by contract, but liability under an insured contract is covered if the damage occurs after contract execution.
liability that would have been assumed even with out a contract is also covered

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insured contracts

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1. lease of premises - fire damage legal is not covered here
2. railroad sidetrack agreement
3. easements - excluding construction or demolition near a railroad
4. indemnification of a municipality - except in connection with work for the municipality
5. elevator maintenance agreement
6. assumptions of others' tort liabilities made prior to any loss

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mobile equipment exclusion -
elimintes coverage for mobile eqipement when the BI and PD arises out out

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1. transport of such equipment by an auto owned, rented, or loaned to any insured
2. the use of mobile equipment in connection with racing, speed, demolition, or stunting activities

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personal injury means injury, other than bodily injury, arising from

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1. false arrest, detention, or imprisionment
2. malicious prosecution
3. wrongful entry into or eviction of a person from a location that the person occupies by or on behalf of the owner, landlord, or lessor
4. libel or slander disparaging another's goods or services
5. libel or slander violating aanother's right or privacy

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advertising injury means injury arising from

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1. libel or slander disparaging another's goods or services
2. libel or slander violating another's right of privacy
3. misappropriation of another's right of privacy
4. infringement of copyright, title, or slogan

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premium adjustment period

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policies written on an auditable basis need an adequate premium exposure base and an insured that is finacially able to pay additional earned premium

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premium audits

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calculate the actual premium at the end of the policy term

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allocated loss adjustment expenses

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(expenses that can be tied to a specific claim) which reflect defense and investigation costs for each claim