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FL 40-Hour 2-20 Conversion Pre-Licensing Course

Our 2-20 General Lines Conversion Pre-Licensing Course is 100% online, including the final exam, so you can train anytime, anywhere. Once you pass the course, you’ll be ready to schedule your state licensing exam at a PearsonVue testing center. Learn at your own pace with the support of an experienced instructor—just an email or phone call away.

Study Format

Online - Self Paced

Starting date

Immediate Course Access

Duration

Unlimited Enrollment

Price

$ 99

Why should I take this course?

Learning Path

Your Career

As a licensed 2-20 agent, you’ll have the authority to sell an array of insurance products, such as automobile, homeowner’s, and commercial property insurance, giving you the opportunity to cater to a diverse clientele and build a thriving career.

Complete the entire course, including the final exam, at your own pace from the comfort of your home. Take as long as you need to prepare with unlimited enrollment! With the support of our dedicated instructors, available via email or telephone, you’ll be well-prepared to take the state examination at a PearsonVue site.

Insurance License Online offers our comprehensive and engaging courses which are designed to prepare you for success.

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522 S Hunt Club Blvd, #335
Apopka, FL 32712
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What would you say is the cornerstone of professionalism in the insurance industry?

ETHICS

Claims Adjusters are required to complete how many hours of continuing education every two years?

24 HOURS

The Gramm-Leach-Bliley Act requires you and your company to ensure the confidentiality of your customers' personally identifiable information and financial information. What was this referred to in this course?

PROTECTING CLIENT DATA

Sunshine Insurance Company’s Security Program

Privacy Notice to Clients : At Sunshine Insurance Company, safeguarding your privacy is our top priority. As a property and casualty insurance provider located in Orlando, Florida, we manage a variety of sensitive information, including social security numbers, financial records, and personal property details.

Notification of Privacy Practices: When you become a client of Sunshine Insurance, you will receive a comprehensive privacy notice. This document details the types of personal information we collect, how we use it, and with whom it may be shared. It also outlines your rights, including the option to opt-out of certain information-sharing practices.

Protecting Your Information: We employ robust physical, electronic, and procedural measures to secure your personal information. This includes secure servers, encrypted communications, and controlled access to client records. Our staff undergoes regular training to stay informed about their responsibilities under the Gramm-Leach-Bliley Act (GLBA) and to handle your information with the utmost care.

Information Sharing Policies: Sunshine Insurance does not share your personal information with non-affiliated third parties for marketing purposes without your explicit consent. We carefully vet and monitor any third-party service providers who may have access to your information, ensuring they comply with GLBA regulations.

Handling Inquiries and Complaints: Our dedicated team is available to address any questions or concerns you may have about our privacy practices. We are committed to compliance with GLBA and will promptly address any issues related to the handling of your personal information.

Annual Privacy Policy Review: Sunshine Insurance conducts an annual review of our privacy policies and practices to ensure ongoing compliance with GLBA. We update our privacy notices to reflect any changes in how we collect, use, or share your information.

Commitment to Privacy and Compliance: At Sunshine Insurance, our adherence to GLBA standards underscores our commitment to protecting your privacy and maintaining legal compliance. This dedication not only builds trust with our clients but also ensures that we maintain a high level of professionalism. You can feel confident that your sensitive information is secure, and our company is shielded from the legal and reputational risks associated with data breaches or non-compliance.

Internet Security Checklist for an Insurance Company

Secure Network Infrastructure

Ensure the company’s network is protected with firewalls.
Regularly update and patch routers and switches against vulnerabilities.

Use of Antivirus and Anti-Malware Software

Install and maintain updated antivirus and anti-malware software on all devices.
Conduct regular scans for threats and address any detections immediately.

Data Encryption

Encrypt sensitive data both in transit (e.g., emails, online transactions) and at rest.
Utilize secure protocols such as HTTPS for web-based transactions and communications.

Strong Password Policies

Implement strong, unique passwords for all systems and accounts.
Require periodic password changes and use multi-factor authentication where possible.

Regular Software Updates

Keep all software, including operating systems and applications, up to date with the latest security patches.

Employee Training and Awareness

Conduct regular training sessions for employees on cybersecurity best practices.
Keep staff informed about the latest phishing scams and social engineering tactics.

Secure Email Practices

Use email filtering tools to block spam and phishing emails.
Train employees to recognize and report suspicious emails.

Controlled Access to Sensitive Information

Limit access to sensitive data based on employee role and necessity.
Use access controls and auditing to track who accesses what data and when.

Regular Backups

Regularly back up critical data and store backups in a secure, offsite location.
Test backup restoration processes periodically.

Incident Response Plan

Develop and maintain an incident response plan for potential cybersecurity events.
Conduct regular drills to ensure preparedness.

Secure Web Browsing

Use web filters to prevent access to malicious websites.
Keep browsers updated to the latest version.

This checklist should be reviewed and updated regularly to adapt to new cybersecurity threats and technologies.

Farrell v. Grand Canyon Fasteners

Emily Farrell, a graphic designer, was involved in a serious car accident caused by a commercial truck owned and operated by Grand Canyon Fasteners, that ran a red light. The accident resulted in various losses and injuries to Emily, leading to different types of damages being awarded.

After the accident, Emily experienced both tangible and intangible losses. She suffered a broken leg and severe back pain, leading to emotional distress and mental anguish. Emily filed a claim for her medical expenses for her treatment and rehabilitation. She also filed a claim for her physical pain and suffering, and the mental trauma caused by the accident.

General damages were awarded to Emily for the intangible losses she suffered, which are not directly quantifiable but significantly impacted her life.

Pain and Suffering: For the chronic back pain and discomfort she endured post-accident.
Mental Anguish: For the emotional distress, anxiety, and depression resulting from her injuries and the trauma of the accident.
Permanent Injury: Emily’s back injury led to a permanent limitation in mobility.
Loss of Reputation: As a graphic designer, her inability to work for an extended period affected her professional reputation.

Emily also received special damages for tangible and calculable losses directly resulting from the accident.

Medical Bills: All her medical expenses, including surgery and physiotherapy costs.
Lost Wages: Compensation for the time she was unable to work due to her injuries.
Repair Invoices: Costs for repairing her damaged vehicle.

The court also awarded punitive damages against the trucking company. This was due to the company’s hiring practice of not pulling motor vehicle reports before hiring drivers; the court felt their conduct “demonstrated a gross disregard for public safety”. The punitive damages were intended to punish the trucking company and serve as a deterrent to prevent such negligence in the future.

Emily’s case illustrates the different types of damages that can be awarded in liability claims. Each type of damage played a crucial role in ensuring that Emily received fair compensation for the varied impacts of the accident on her life.

The Case of the Coffee Shop Slip and Fall

Jane, a freelance writer, decided to visit her local coffee shop, “Bean Delights,” one rainy afternoon. The shop was bustling, and the floors were wet from customers coming in from the rain. Unfortunately, the coffee shop staff had not placed any caution signs or mats to absorb the water.

As Jane walked in, she slipped and fell due to the wet floor, suffering a severe wrist fracture. This injury not only caused her physical pain but also hindered her ability to work on her writing projects, leading to a loss of income.

Is Bean Delights legally responsible for Jane’s injury?

Duty of Care: “Bean Delights” had a duty to ensure the safety of its customers.
Breach of Duty: The coffee shop breached this duty by not taking appropriate measures (like placing caution signs or mats) to prevent accidents due to the wet floor.
Cause of Injury: Jane’s fall and subsequent injury were directly caused by the coffee shop’s negligence.

Legal Relief for Jane

Medical Expenses: Jane can seek compensation for her medical treatment.
Lost Income: Compensation for the income lost due to her inability to work.
Pain and Suffering: Jane can also claim damages for the physical pain and mental distress caused by the injury.

In this scenario, “Bean Delights” is the tortfeasor as their omission (failure to address the wet floor hazard) led to Jane’s injury.

Jane decided to take legal action against “Bean Delights.” The court found the coffee shop negligent and liable for Jane’s injuries. “Bean Delights” was ordered to compensate Jane for her medical expenses, lost income, and pain and suffering, illustrating how tort law provides a remedy for those harmed due to others’ negligent acts or omissions.

This example of Jane’s accident in the coffee shop demonstrates the concept of a tort through negligence by omission. The coffee shop’s failure to take preventive measures constituted a breach of their duty of care, leading to Jane’s injury and subsequent legal claim for compensation. This scenario is a classic real-life illustration of how tort law operates, holding parties responsible for their wrongful acts or omissions that cause harm to others.

McDonald’s Coffee Case

The Liebeck vs. McDonald’s case, commonly referred to as the “McDonald’s coffee case,” became a highly publicized legal story in the 1990s, often cited in discussions about tort reform and frivolous lawsuits.

Stella Liebeck was a 79-year-old woman from Albuquerque, New Mexico. She became widely known as the plaintiff in this lawsuit against McDonald’s. In February 1992, Liebeck purchased a cup of coffee from a McDonald’s drive-thru. While seated in the passenger seat of her grandson’s parked car, she attempted to remove the lid from the cup to add cream and sugar. In doing so, the coffee spilled onto her lap, causing severe burns. The coffee was served at a temperature (around 180-190 degrees Fahrenheit) that could cause third-degree burns in a matter of seconds.

Liebeck suffered third-degree burns on her thighs, buttocks, and groin area. She was hospitalized for eight days, undergoing skin grafting and other treatments. The recovery was long and painful, involving two years of medical treatment.

Initially, Liebeck sought to settle her claim with McDonald’s for $20,000 to cover her medical expenses and lost income. McDonald’s offered only $800, leading Liebeck to file a lawsuit. Her suit claimed that McDonald’s coffee was “defectively manufactured” by being too hot and more likely to cause severe injury than coffee served at any other establishment.

During the trial, it was revealed that McDonald’s had received numerous reports of similar incidents but had not changed its coffee temperature policy. The jury found that McDonald’s was 80% responsible for the incident and Liebeck 20% responsible.

The jury awarded Liebeck $200,000 in compensatory damages (reduced to $160,000 due to her 20% fault) and $2.7 million in punitive damages, the latter of which was equivalent to about two days of McDonald’s coffee sales. The judge later reduced the punitive damages to $480,000, leading to a total award of $640,000. However, the final settlement amount was less, as Liebeck and McDonald’s later settled out of court for an undisclosed amount (believed to be less than $600,000).

The case is often misunderstood and misrepresented in popular culture and media. It became a focal point in debates on tort reform and litigation in the United States, with many people viewing it as an example of frivolous litigation due to the nature of the accident and the seemingly large initial punitive damages award. However, legal scholars and others familiar with the details of the case often point out that it highlighted significant safety concerns and corporate responsibility issues, especially regarding the serving temperature of McDonald’s coffee and the severity of Liebeck’s injuries.

The Case of “Am I Too Late?”

Overwhelmed by her medical recovery and the adaptation required for her work, Jane postponed the decision to pursue legal action against “Bean Delights.” It wasn’t until two and a half years after the incident that she filed her claim, seeking compensation for her injury and financial losses.

Living in Florida, Jane was under the state’s legal framework, where the statute of limitations for filing a negligence claim is two years. This law mandates that any legal action related to personal injury due to negligence must be initiated within this two-year window from the date of the incident.

Upon filing her lawsuit, Jane encountered a significant legal barrier. Since she initiated her claim after two and a half years, she had exceeded the two-year statute of limitations set by Florida law for negligence claims. The law sets a strict deadline for filing lawsuits. In Jane’s case, the deadline was two years from the incident.

Because Jane filed her lawsuit after the prescribed two-year period, her case was legally barred. The court would likely dismiss her lawsuit on the grounds that the statute of limitations had expired, regardless of the merits of her claim.

Jane’s situation clearly demonstrates the critical importance of statutes of limitations in legal proceedings. Despite the validity of her claim against “Bean Delights,” her delay in filing the lawsuit resulted in a lost opportunity for legal recourse. This example underscores the necessity for potential plaintiffs to act promptly and be aware of the legal time limits within which they must assert their rights. Missing these crucial deadlines can lead to the forfeiture of the right to seek justice and compensation for injuries and losses incurred.

How Endorsements are Used

Adding Coverage – “the insured adds towing and labor to her auto policy”
Modifying Coverage to Conform – “Florida Property policies statutorily add Catastrophic Ground Collapse coverage”
Changing Coverage – “the insured buys a car and adds the new vehicle to her policy”

Certificates of Insurance

While an insurance arrangement must be “written” to constitute a “policy;’ it is general knowledge that insurance may be placed into effect, or “bound;’ prior to issuance of a policy contract. It is a matter of public convenience and necessity to have a method for agents and companies to place insurance in effect immediately when a need arises.

If an insured has a policy bound and a Binder is given to the insured to evidence the new coverage this Binder acts as the insured’s “Proof of Insurance” until the actual policy is sent to the insured. Binders normally have terms of 30 or 45 days; in those instances, NO written notice of the termination of the Binder will be required to be provided to the insured. However, in some instance Binders are written in excess of 60 days AND in those instances the insurance company IS REQUIRED to send the insured a notice of the cancellation of the Binder.

Note: Binders of 60 days or less do not require formal notice of their cancellation/termination AND Binders 60 days or longer do require a formal notice of their cancellation/termination.

Risk

Risk, from an insurance perspective, means the chance of financial loss. What does the insured “risk” when deciding whether or not to insure certain items for certain losses? All insurance is designed to offset the financial impact upon an insured of such losses. It is the amount of risk the insured is willing to absorb that determines what type of insurance will be purchased, against what perils, and for what amounts.

The term has also been used to mean the insured (”ABC Furniture is the risk we wrote the policy for”) or the exposure (“The policy covers the risk of fire”) among other definitions, but it is the chance of financial loss that we are concerned with in this course.

The courts typically favor which party in a lawsuit?

THE INSURED

Insurable Interest

For property and liability insurance policies to be contracts of indemnity, the “principle of indemnity” must be present.

The principle of indemnity is that one should not profit from the response provided by the policy. Without this principle, the fundamental purpose of insurance could be undermined by persons intentionally causing losses because it was to their economic advantage.

Although most property policies provide that loss payments will not exceed the “actual cash value” of the property, examples of apparent departure from strict adherence to the indemnity rule may be found: the policy may pay full replacement costs (meaning the insurer is “giving new for old”); the insurer may agree in advance that a specific amount is the agreed upon value and will be paid if the property is destroyed.

Notice we said “apparent” departure.

(1) If an insured is paid for a new roof when the old one blows off in a hurricane, it could be said the insured was “enriched”: But doesn’t the new roof, like the old one, simply keep out the elements? The safeguard employed by insurers is to require that actual replacement take place as a condition to paying for new when old is destroyed.

(2) When the insurer agrees in advance that it will pay a given amount for loss of a specific item, it is likely to require an appraisal that, in effect, establishes a fair value with no inducement for the insured to intentionally destroy the property.

(3) In the early history of liability insurance, the coverage indemnified (reimbursed) the insured for judgments. If the insured could not pay the judgment, there was nothing to indemnify. Modern liability policies recognize legal damages against the insured and pay directly to the claimant. This arrangement is considerably more acceptable to both the insured (who avoids bankruptcy) and the claimant (who has greater assurance of recovering full damages). Although some people have argued that this invites carelessness by the insured, it does not work against the principle underlying the rule of indemnity since the insured is protected from loss, not profiting from the policy response.

The Collector's Insurance

Imagine Sarah Sheetz, a collector of rare and valuable items. She owns a unique collection of vintage jewelry, an antique vase from the Ming Dynasty, and several pieces of contemporary art. Understanding the value and rarity of her collection, Sarah decides to insure these items.

For her antique vase, valued at $50,000, Sarah opts for a valued policy. The insurer agrees that in the event of a covered loss, such as the vase being destroyed or stolen, they will pay a pre-agreed amount of $50,000. This policy is essential for Sarah as the vase’s market value might fluctuate, and finding a similar replacement could be impossible.

Sarah’s home insurance policy includes replacement cost coverage for personal property. When a fire damages her home, several pieces of her contemporary art are destroyed. The insurance company assesses that the cost to replace these art pieces is $100,000, which is higher than their depreciated actual cash value. Thanks to the replacement cost coverage, Sarah receives $100,000 from her insurer to replace the art pieces, rather than a lower amount that would have been based on their depreciated value.

For her vintage jewelry collection, valued at around $200,000, Sarah and her insurer agree on an “agreed value” coverage. This agreement states that in the event of loss or damage to the jewelry, the insurer will pay out $200,000, regardless of the fluctuating market value of the pieces at the time of the loss.

In each instance, these exceptions to the rule of indemnity ensure that Sarah is adequately compensated for the loss of items whose value might not be adequately reflected by their market price at the time of loss or by their original cost minus depreciation. These specialized insurance policies provide peace of mind and financial protection for her unique and valuable collection.

Which type of a hazard is ice on a sidewalk: physical, moral, or morale?

PHYSICAL HAZARD

Perils and Hazards

A peril may be defined as a contingency that may cause a loss (such as fire or windstorm). A hazard is a condition that introduces or increases the likelihood of loss from a peril. Thus, although they recognize hazards, insurance contracts protect the insured only against the financial consequences associated with the occurrence of some insured peril.

Hazards may be classified as physical, moral, or morale. A physical hazard is a condition stemming from the physical characteristics of an object that increases the probability and severity of loss from given perils. A moral hazard stems from the conscious mental attitude of the insured (e.g., intentional loss). A morale hazard stems from the unconscious mental attitude of the insured (e.g., accident proneness).

A good example to distinguish between a peril and a hazard in an insurance context could be a house fire. In this example, the peril is fire. A peril is a specific event or cause of loss covered by an insurance policy. In this case, it is the fire itself that damages or destroys the property.

A hazard, on the other hand, is a condition or situation that increases the likelihood or severity of the peril occurring. In the case of the house fire, a hazard might be faulty electrical wiring. While the wiring does not directly cause the loss, it increases the chances of a fire occurring.

This distinction is important in insurance because while insurance policies are designed to protect against perils (like fire, theft, flood), managing or mitigating hazards (like fixing faulty wiring, installing smoke detectors) is the responsibility of the policyholder to prevent losses from occurring in the first place.

The Case of the Slippery Banana Peel

Winston German, while shopping at Tasty-Mart, his favorite supermarket, absentmindedly ate a banana and carelessly discarded the peel onto the floor. This seemingly small act set off a chain of events. Edgar Fellow, Winston’s neighbor, unaware of the hazard, slipped on the banana peel. Edgar’s slip and fall were a direct result of Winston’s action. As Edgar fell, his steaming hot triple-caramel-mocha-frappe-latte flew out of his hand, spilling over Pastor Jones, Mrs. Jones, and three nearby choir boys.

In this sequence of events, Winston’s act of throwing the banana peel on the floor is the proximate cause of the subsequent mishaps, including Edgar’s fall and the spillage of the hot beverage on Pastor Jones and the others. It is considered the proximate cause because it was the initial action that led to all the subsequent events. Without Winston’s careless action, Edgar would not have slipped, and the spillage over Pastor Jones, Mrs. Jones, and the choir boys would not have occurred. Therefore, Winston’s action is seen as the root cause of the entire series of unfortunate events.

Direct and Indirect Loss Examples

Event	Direct Loss	Indirect Loss
Fire Loss to Dwelling	Fire Loss to Dwelling	Two Week Hotel Rental
Automobile Collision	Collision Damage to Insured Vehicle	Loss of Use of the Car; Insured’s Three-Week Car Rental

In the case of a Fire Loss to a Dwelling, the direct loss is the damage caused to the home by the fire. The indirect loss is the additional expense incurred by the insured for living in a hotel for two weeks due to the home being uninhabitable.

In the case of an Automobile Collision, the direct loss is the damage to the vehicle caused by the collision. The indirect loss includes the loss of use of the car and the expense of a rental vehicle for three weeks while the insured vehicle is being repaired.

Mortgage Clause Protections for Mortgagee

Protection Aspect	Description
Loss Payments Distribution	Loss payments are payable to both the insured and the mortgagee up to the level of loss and in proportion to their level of economic interest in the property.
Right of Recovery	A mortgage company may have a right of recovery even if the insured has been denied.
Payment of Past Due Premiums	A mortgagee has the right to pay past due premiums to maintain the insurance coverage.
Notification of Policy Changes	The mortgagee is entitled to prompt notice of all policy non-renewals and cancellations.

Mortgagee Clause

The mortgagee clause establishes that if there is a named mortgagee in the policy as denoted in the Declarations, that any loss payable under Coverage A or B will be paid to the mortgagee and the Insured, just as the interests appear in the Declarations. Also, if more than one mortgagee is named in the policy, then the order of payment will be the same as the order of precedence of the mortgages.

The second clause for mortgages highlights that in situations where the Insurer denies a claim that denial will not apply to a valid claim of the mortgagee, if the mortgagee:

Notifies the Insurer of any change in ownership or substantial change in risk;
Pays past due premiums; and
Submit a signed sworn statement within 60 days of receiving notice of the Insured’s failure to do so.

The third clause for mortgages highlights that if the Insurer decides to cancel or not renew the policy, the mortgagee will be notified at least 10 days before the date of cancellation or nonrenewal is to take effect.

The fourth clause concerning mortgages states that if the Insurer pays the mortgagee for any loss and denies the Insured payment, the Insurer subrogates to all rights of the mortgagee granted under the mortgage on the property. According to Black’s Law Dictionary, “subrogation is the substitution for on party for another whose debt the party pays, entitling the paying party to rights, remedies or securities that would otherwise belong to the debtor” (Black’s Law Dictionary, 9th ed.). This allows for the Insurer to step in the shoes of mortgagee holding the same rights and remedies against the Insured that the initial mortgagee had. The second point states that at option of the Insurer, it may pay the mortgagee the whole principal on the mortgage plus accrued interest and in return receive a full assignment and transfer of the mortgage and all securities held as collateral to the mortgage debt.

In the second scenario, an Insurer will receive the complete assignment from the mortgagee, allowing for the transfer of all securities held as collateral to the mortgage debt.

Essentially in the first scenario, the Insurer steps into the shoes as the mortgagee and purchases the right to act as the new mortgagee and the second allows the rights in the mortgaged property to be assigned to the Insurer.

The fifth mortgage clause explains that just because an Insurer pays the mortgagee for any loss and subrogates, this will not impair any claim for recovery that the mortgagee was initially entitled to.

The Case of the Sleek Sedan

In the quiet town of Maplewood, Ricky Waters was known for his prized possession: a sleek, red sedan that he had maintained meticulously over the years. One fateful evening, as Ricky was driving home from work, a deer crossed Ricky’s path causing a severe accident, leaving his beloved car in ruins.

The aftermath of the collision was a disheartening sight. Ricky’s sedan, once a symbol of his hard work and pride, now lay crumpled and twisted beyond recognition. It was a bitter moment for Ricky, who had poured not just money, but also his heart into that car.

The insurance company declared the vehicle a total loss. The cost of repairing the car would far exceed its value, or it was simply beyond repair.

The insurance company evaluated the actual cash value (ACV) of Ricky’s sedan at $10,000. Ricky had always been diligent with his insurance and understood that his policy included a $500 comprehensive deductible. When he filed the claim for his totaled vehicle, the insurance company calculated his claim payment as $9,500 – the $10,000 value of the car less the $500 deductible.

Ricky had a deep attachment to his car and wanted to keep it despite its battered state. The insurance adjuster explained the concept of salvage value to Ricky. They assessed the salvage value of his damaged sedan at $800, representing the residual worth of the vehicle in its current state. If Ricky chose to keep the car, he would need to purchase it back from the insurance company for its salvage value.

Ricky pondered over his options. Eventually, his attachment to the car won over practicality. He decided to retain the vehicle and paid the insurance company $800 for its salvage. Thus, after the insurance payout and buying back the salvage, Ricky received a net amount of $8,700.

Coinsurance

Mr. Jonathan Thompson, a resident of Oakville, owned a beautiful home valued at $1,000,000. Like any prudent homeowner, Mr. Thompson sought to insure his property. However, he made a decision that many homeowners make – insuring his home for less than its total value. He opted for a policy worth $600,000, not fully understanding the implications of the coinsurance clause in his insurance policy.

Mr. Thompson’s homeowner’s policy included an 80% coinsurance clause. This clause meant that Mr. Thompson was required to maintain insurance coverage of at least 80% of the replacement cost of his home to avoid a penalty in the event of a claim. In Mr. Thompson’s case, this meant maintaining a minimum coverage of $800,000 ($1,000,000 x 80%).

Unfortunately, a fire caused significant damage to Mr. Thompson’s home, resulting in a loss of $300,000. Mr. Thompson, assured in the belief that his insurance would cover the damages, filed a claim with his insurance provider.

The calculation of Mr. Thompson’s claim payout is governed by the coinsurance formula.

Where:

Amount of Insurance Carried = $600,000
Amount of Insurance Required = 80% of $1,000,000 (Home Value) = $800,000
Loss Amount = $300,000

Despite suffering a loss of $300,000, due to the coinsurance clause and his decision to underinsure his home, Mr. Thompson received only $225,000 from his insurance provider. This outcome left him with a substantial out-of-pocket expense of $75,000 to cover the rest of the loss.

Mr. Thompson’s case is a cautionary tale about the importance of understanding the terms of an insurance policy, especially the implications of a coinsurance clause. This case underscores the necessity for policyholders to adequately insure their property in line with the coinsurance requirements to avoid significant financial burden in the event of a loss.

Scenario: High-Value Art Collection

Mr. Anderson is an art enthusiast with a collection of rare and valuable paintings. Each piece in his collection varies significantly in value, with some being exceptionally high in worth. Mr. Anderson’s insurance agent sold him a policy with specific coverage limits per piece.

Specific limits allow Mr. Anderson to insure each painting for its appraised value, ensuring that the more valuable pieces have higher coverage limits. If a particularly valuable painting is damaged or stolen, Mr. Anderson can be assured of receiving a payout that matches its specific appraised value, rather than being constrained by a blanket limit that may not fully cover the loss. For items with significantly different values, specific limits prevent overpaying for insurance on less valuable items while underinsuring the more valuable ones.

In this scenario, specific coverage limits provide Mr. Anderson with the peace of mind that each valuable piece in his collection is adequately insured for its individual worth.

Scenario: Real Estate Developer with Multiple Properties

Ms. Garcia is a real estate developer who owns several buildings in different locations. Each building has its own unique risks and values, but collectively they represent a substantial investment. Ms. Garcia’s agent covered her commercial portfolio using a policy with blanket coverage limits.

In the event of a significant loss at one location, Ms. Garcia can utilize the aggregate coverage limit to fully address that loss, without being constrained by individual limits per building. Managing one aggregate coverage limit for all her properties simplifies Ms. Garcia’s insurance portfolio, making it easier to administer and track. Blanket coverage might offer a more cost-effective solution for insuring multiple properties, as it eliminates the need for detailed individual assessments and policies for each property.

For Ms. Garcia, a blanket coverage limit offers a more flexible and streamlined approach to insuring her diverse property portfolio, providing a safety net that can adapt to where the need is greatest.

The choice between specific and blanket coverage limits depends heavily on the nature of the assets being insured and the individual needs of the policyholder. High-value, distinct items may benefit more from specific limits due to their unique values, whereas a collection of assets with varying values and risks might be better served under a blanket coverage limit for its flexibility and efficiency.

Deductible Types

Straight Deductibles Example: Automobile Insurance
Sarah has an auto insurance policy with a straight deductible of $500. One day, she gets into a minor accident, and the total cost to repair her car is estimated at $2,000. Under her policy, Sarah is responsible for the first $500 of the repair costs (the deductible), and her insurance company will cover the remaining $1,500. If the repair cost had been $500 or less, Sarah would have had to pay the entire amount herself.

Percentage Deductibles Example: Homeowners Insurance in a Coastal AreaMark lives in a coastal area prone to hurricanes and has homeowners insurance with a 5% windstorm deductible. His home is insured for $300,000. When a hurricane damages his roof, causing $10,000 worth of damage, Mark’s deductible is calculated as 5% of his home’s insured value, which amounts to $15,000 (5% of $300,000). Since his deductible is higher than the damage cost, Mark would have to cover all the repair costs out of pocket.

Franchise Deductibles Example: Business Property InsuranceLinda owns a small bakery with a franchise deductible of $10,000 on her business property insurance. One night, a small fire caused damage to her bakery. The cost to repair the damages is estimated at $12,000. Since the damage exceeds her franchise deductible amount, the insurance company pays the entire $12,000. However, if the damage had been $9,500, below the franchise deductible threshold, Linda would have had to cover the entire cost herself, receiving no payout from her insurance.

Straight Deductibles: These involve a fixed amount that the policyholder must pay per claim, like the $500 in Sarah’s auto insurance case.
Percentage Deductibles: These are based on a percentage of the insured value, typically used in property policies covering hurricanes, as seen in Mark’s homeowners insurance.
Franchise Deductibles: These come into play only when a loss exceeds a certain amount, and if it does, the insurer pays the full loss, as illustrated by Linda’s business insurance scenario.

Understanding these types of deductibles helps policyholders make informed decisions about their insurance coverage and assess their willingness to share the risk with their insurance company.

In a liability insuring agreement, what kind of obligation must the insured have before the insurer is required to pay on behalf of the insured?

LEGAL OBLIGATION TO A THIRD PARTY

[Insurance Company’s Letterhead]

[Date]

[Insured’s Name][Insured’s Address][City, State, ZIP Code]

Re: Excess Ad Damnum Notification

Policy Number: [Policy Number]Claim Number: [Claim Number]Claimant: [Claimant’s Name]

Dear [Insured’s Name],

I am writing to you in regard to the recent claim filed by [Claimant’s Name] concerning the incident that occurred on [Date of Incident], involving [brief description of the incident].

As per our review and the subsequent legal proceedings, the claim amount sought by [Claimant’s Name] has exceeded the liability limits of your insurance policy under [Insurance Company]. Your current policy, [Policy Name/Number], provides coverage up to [Policy Limit Amount], which is the maximum amount we can allocate towards this claim.

It is important to note that the claimant’s demand currently stands at [Claim Amount], which surpasses your policy’s coverage limit by [Excess Amount]. This excess amount is beyond the scope of your insurance policy’s coverage and may become your personal financial responsibility.

We understand that this information may be of concern to you. We want to assure you that our legal team is diligently working on your behalf in this matter and is committed to representing your interests up to the limits of your policy. However, considering the potential financial implications, we strongly recommend that you seek independent legal counsel to advise you on how to proceed with the portion of the claim that exceeds your policy limits.

Please understand that this notification is a standard procedure and is intended to keep you fully informed of the developments in your case. It is also to ensure that you are aware of your potential financial responsibilities in this matter.

If you have any questions or require additional information, please do not hesitate to contact us at (555) 555-5555.

Sincerely,

[Claims Adjuster]
[Adjuster Title]
[Insurance Company]
[Contact Information]

There are three main duties the insured must fulfill when filing an insurance claim; can you name them?

PROMPT NOTICE OF LOSS - COOPERATE WITH INSURER - PRESERVE THE INSURER'S RIGHTS

The Smith Family’s Loss

The Smith family experienced a devastating loss when their house caught fire due to a faulty clothes dryer. The fire caused significant damage to their home and belongings. Thankfully, no one was injured, but the property damage was extensive.

The Smiths filed a claim with their homeowners insurance company, HomeGuard Insurance. After assessing the damage, HomeGuard Insurance determined that the claim was valid and covered under the Smiths’ policy. They compensated the Smiths for the damage to their home and personal property, which amounted to $150,000. This payment helped the Smiths to start rebuilding their home and replace their lost belongings.

HomeGuard Insurance’s investigation revealed that the cause of the fire was a manufacturing defect in the clothes dryer. With this information, HomeGuard decided to pursue subrogation against SuperDry, the manufacturer of the dryer.

By paying the Smiths’ claim, HomeGuard Insurance acquired the legal rights to seek recovery from SuperDry for the faulty appliance that caused the fire. HomeGuard Insurance initiated legal action against SuperDry, seeking reimbursement for the claim amount they paid to the Smiths. After negotiations, SuperDry agreed to a settlement, acknowledging the manufacturing defect in the dryer. They compensated HomeGuard Insurance for the full amount of the claim paid to the Smiths.

With the successful recovery of funds from SuperDry, HomeGuard Insurance was able to recoup the costs of the claim. Additionally, they reimbursed the Smiths for their deductible and any other out-of-pocket expenses incurred due to the loss.

In this scenario, the subrogation clause in the Smiths’ homeowners insurance policy allowed HomeGuard Insurance to “step into their shoes” and seek recovery from SuperDry, the party responsible for the loss. This process not only helped the Smiths by compensating them for their loss but also allowed HomeGuard Insurance to hold the responsible party accountable. Subrogation, in this case, prevented double recovery and contributed to the overall effectiveness of the insurance system by ensuring that costs are borne by those responsible for the loss.

The insured has had a $100,000 loss and it has been discovered the she has two liability policies which both apply to the same loss. The first policy has a $500,000 limit and the second policy has a $1,000,000 limit.

How will the policies respond to the $100,000 claim if the "Other Insurance" clause in each policy states Pro-Rata Shares?

What amount will the first policy be responsible for?

$33,333 of the loss ($500,000/$1,500,000 X $100,000 loss)

What amount will the second policy be responsible for?

$66,667 of the loss ($1,000,000/$1,500,000 X $100,000 damages)

Can the claimant collect $100,000 against both the first and second policy?

No, the claimant's recovery will be relegated to their total damages of $100,000.

Other Insurance Provision

Tom purchased an insurance policy for the car he and his wife, Linda, share. Linda, unbeknownst to Tom, also purchased a policy. They now find themselves in a unique insurance situation. The first policy, with Ajax Insurance Company, has bodily injury limits of $10,000 per person and $20,000 per accident.

Their second policy, with Alpha-Omega Insurance, has higher limits of $25,000 per person and $50,000 per accident. Both policies contain an “Other Insurance” clause and specify coverage on an “equal shares” basis.

While driving, Tom is involved in an accident where the other driver is injured. The injury claim from the other driver amounts to $30,000. Both Ajax and Alpha-Omega are notified of the claim. Given the “equal shares” basis stipulated in their “Other Insurance” clauses, the insurers must coordinate to cover the claim.

The total coverage from both policies combined is $35,000 per person ($10,000 from Policy A + $25,000 from Policy B).

Since the policies state that they cover on an “equal shares” basis, each insurer contributes equally to the claim, up to their respective policy limits.

The total claim is $30,000. Both insurers split this amount equally, with each paying $15,000.

However, Insurer A’s policy limit per person is $10,000. Therefore, Insurer A pays $10,000, and Insurer B pays the remaining $20,000 to fully cover the $30,000 claim.

In this example, the “Other Insurance” clause, along with the specific provision for “equal shares” coverage, guided the resolution of the claim. In this example it was a good thing that Tom and Linda had two policies as the damages exceeded the limits of either policy. The claim was split between the two insurers, but within the limits of their respective policy coverages. This scenario demonstrates the importance of understanding the intricacies of insurance policy clauses, especially when multiple policies are involved. It ensures that the insured is adequately covered without overstepping the bounds of either policy.

Liberalization Clause

Tom and Linda renewed their Homeowners Insurance policy on January 1st, 2024. Their policy, under Homestead Insurance, included coverage for various perils, including fire, theft, and water damage.

The initial policy had a specific provision for living expenses coverage, which reimbursed the couple for additional living costs if their home became uninhabitable due to a covered peril. The coverage limit for these additional living expenses was set at $5,000.

In March 2024, Homestead Insurance adopted a new policy revision, which broadened the living expenses coverage. The new revision increased the coverage limit for additional living expenses from $5,000 to $10,000, without any additional premium. This change was part of an effort by Homestead Insurance to offer more competitive and comprehensive coverage to their clients.

In April 2021, a severe storm hit Tom and Linda’s neighborhood, causing significant damage to their home and making it temporarily uninhabitable. The couple was forced to stay in a rental property while repairs were made to their home.

When Tom and Linda filed a claim for their additional living expenses, they were initially concerned about exceeding the original $5,000 coverage limit. However, due to the liberalization clause in their policy, they benefited from the recent policy revision by Homestead Insurance. Tom and Linda submitted their claim, which totaled $6,500 in additional living expenses.

Despite their policy initially having a $5,000 limit, the liberalization clause allowed them to benefit from the enhanced coverage limit of $10,000. Therefore, their claim of $6,500 was fully covered without any additional premium.

In this scenario, the liberalization clause in Tom and Linda’s homeowners policy allowed them to benefit from improved coverage terms that Homestead Insurance introduced after the start of their policy period. As a result, their claim for additional living expenses due to the storm damage was fully covered under the enhanced limit, even though this broader coverage was not part of their original policy terms when they renewed it.

This example illustrates how the liberalization clause can provide policyholders with additional benefits at no extra cost, reflecting the insurer’s commitment to offer the best possible coverage terms to their clients.

Florida Non-Renewal Requirements

Scenario	Notice Period Required	Additional Requirements
General Policy Non-Renewal (Standard Scenario)	45 days	Reason for non-renewal must be stated on the notice.
Failure to Provide Timely Notice	Until 45 days after notice is given	Coverage remains in effect until 45 days after the notice is eventually given.
Non-Renewal of Personal Lines or Commercial Residential Property Insurance	120 days	Reason for non-renewal must be included.
Non-Renewal Following Emergency Damage	90 days after repairs are completed	Applicable for properties damaged by a loss classified as an “emergency” by the Commissioner of Insurance Regulation.

Types of Reinsurance

Proportional Reinsurance: the insurer and reinsurer establish a percentage of premium and loss exposure to be borne by each; a pro-rata distribution of the premium and the loss exposure.

Non-proportional Reinsurance: the insurer and reinsurer establish a price for the reinsurance contract and the exposure to loss is based upon a threshold to loss incurred by the insurer; the reinsurer pays all loss amounts after the threshold has been pierced.

One additional type of reinsurance, Facultative Reinsurance, is also used but is much more limited in scope. With facultative reinsurance, the insurer negotiates on a risk-by-risk basis for each exposure and the reinsurer is not obligated to accept any/all of the offered risk.

The Case of “Where Are You When I Need You?”

Situation: Robert Boneski, a resident of Florida, has a homeowner’s insurance policy covering his home for $750,000. Unfortunately, his home sustains significant damage due to a hurricane. However, when Robert files a claim, he learns that his insurance company has become insolvent and can no longer fulfill its financial obligations.

Robert must file his hurricane damage claim with FIGA, following the same process as he would with his original insurer. The Florida Insurance Guarantee Association (FIGA) steps in to handle claims from insolvent insurance companies. FIGA’s role is to provide a safety net for policyholders in such situations.

FIGA assesses the claim to ensure its validity. This involves verifying the damage, the policy coverage, and the terms of the policy under which Robert was insured. Although Robert’s home is insured for $750,000, FIGA has statutory coverage limits. For homeowner’s policies, FIGA covers up to $300,000 for property damage. The damage to Robert’s home is assessed at $500,000. After assessing the damage and deductibles, FIGA calculates the claim payment within the statutory limits. Unfortunately, Robert does not receive full reimbursement for his entire loss.

Robert’s damages significantly exceed FIGA’s statutory limits; his only recourse is to seek compensation through the liquidation proceedings of his insolvent insurer (a lengthy and uncertain process).

Post-claim, Robert needs to find a new insurance provider for future coverage, as FIGA’s role is only to handle claims and not to provide ongoing insurance coverage.

In summary, FIGA serves as a crucial protection mechanism for policyholders like Robert Boneski when their insurer becomes insolvent. However, it’s important to note that FIGA’s coverage is subject to statutory limits, which might not fully cover all losses, especially in high-value claims.

What must a misrepresenation or concealment "be" to lead to a claim denial?

FRAUDULENT OR MATERIAL TO THE RISK

The Case of “To Tell the Truth”

John Banyon applies for a homeowner’s insurance policy. In his application, he declares that his home is equipped with a hurricane-proof roof, which is a key factor for the insurer in the risk-prone area of Florida. The insurer then includes a specific provision in the policy stating that coverage is contingent on the existence and maintenance of this hurricane-proof roof. This statement by John is a warranty. If it’s discovered later that the roof is not hurricane-proof, the insurer may very likely deny a wind claim based on this breached warranty, as it’s a condition directly linked to the policy’s issuance and forms a part of the policy contract.

In the same application, John states that his house is a masonry home. However, in reality, his house is 100% frame, which he chose not to disclose to earn a lower premium. This false statement is a misrepresentation. Under Florida law, this misrepresentation would not necessarily lead to a claim denial unless it’s proven fraudulent or materially affects the risk assumed by the insurer.

Additionally, John knows that there’s an ongoing issue with his home’s electrical wiring that poses a significant fire hazard. However, he fails to disclose this when applying for insurance. This omission is an example of concealment. Similar to misrepresentation, under Florida law, concealment will not automatically result in a claim denial unless it meets certain criteria like being fraudulent or materially affecting the risk.

In summary, while a warranty is a condition of the policy itself and its breach can lead to claim denial, misrepresentation, and concealment, per Florida statutes, would only lead to claim denial if they: (1) are fraudulent; (2) materially affect the risk; or (3) had they been known, would have led the insurer to either not issue the policy or issue it under different terms.

Key Differences: Catastrophic Ground Collapse vs. Sinkhole

Extent of Damage: Catastrophic ground collapse requires the home to be condemned and vacated, while sinkhole damage can be less severe and still qualify for a claim.

Coverage: Catastrophic ground collapse is statutorily required under standard policies, whereas sinkhole coverage is optional and requires a separate purchase or endorsement.

Damage Verification: Catastrophic ground collapse is visually apparent and involves immediate and severe damage, whereas sinkhole damage might require professional geological assessment to verify.

What are the Fungi limits in a typical Florida policy?

$10,000 PER LOSS/$20,000 PER POLICY PERIOD

When can Hurricane Deductibles be changed in an insurance policy?

ONLY AT A POLICY'S RENEWAL

HOMEOWNER CLAIMS BILL OF RIGHTS

This Bill of Rights is specific to the claims process and does not represent all of your rights under Florida law regarding your policy. There are also exceptions to the stated timelines when conditions are beyond your insurance company’s control. This document does not create a civil cause of action by an individual policyholder, or a class of policyholders, against an insurer or insurers and does not prohibit an insurer from exercising its right to repair damaged property in compliance with the terms of an applicable policy.

YOU HAVE THE RIGHT TO:

Receive from your insurance company an acknowledgment of your reported claim within 7 days after the time you communicated the claim.
Upon written request, receive from your insurance company within 30 days after you have submitted a complete proof-of-loss statement to your insurance company, confirmation that your claim is covered in full, partially covered, or denied, or receive a written statement that your claim is being investigated.
Your insurance company shall provide you with a copy of any detailed estimate of the amount of the damage within 7 days after the estimate is generated by the insurance company’s adjuster.
Within 60 days, subject to any dual interest noted in the policy, receive full settlement payment for your claim or payment of the undisputed portion of your claim, or your insurance company’s denial of your claim.
Free mediation of your disputed claim by the Florida Department of Financial Services, Division of Consumer Services, under most circumstances and subject to certain restrictions.
Neutral evaluation of your disputed claim, if your claim is for damage caused by a sinkhole and is covered by your policy.
Contact the Florida Department of Financial Services, Division of Consumer Services’ toll-free helpline for assistance with any insurance claim or questions pertaining to the handling of your claim. You can reach the Helpline by phone at (toll-free phone number), or you can seek assistance online at the Florida Department of Financial Services, Division of Consumer Services’ website at (website address).

YOU (Policyholders) ARE ADVISED TO:

Contact your insurance company before entering into any contract for repairs to confirm any managed repair policy provisions or optional preferred vendors.
Make and document emergency repairs that are necessary to prevent further damage. Keep the damaged property, if feasible, keep all receipts, and take photographs of damage before and after any repairs.
Carefully read any contract that requires you to pay out-of-pocket expenses or a fee that is based on a percentage of the insurance proceeds that you will receive for repairing or replacing your property.
Confirm that the contractor you choose is licensed to do business in Florida. You can verify a contractor’s license and check to see if there are any complaints against him or her by calling the Florida Department of Business and Professional Regulation. You should also ask the contractor for references from previous work.
Require all contractors to provide proof of insurance before beginning repairs.
Take precautions if the damage requires you to leave your home, including securing your property and turning off your gas, water, and electricity, and contacting your insurance company and provide a phone number where you can be reached.

What is the over-arching importance of the Gramm-Leach-Bliley Act?

GLBA REQUIRES INSURANCE COMPANIES TO SAFEGUARD THEIR CUSTOMER'S SENSITIVE DATE

Personal Injury Protection

Alice owns a car and has a valid auto insurance policy that includes Personal Injury Protection (PIP) coverage. Bob, Alice’s boyfriend, doesn’t own a car but is a named insured on his parents’ auto insurance policy, which also includes PIP coverage. One day, Alice and Bob head off to a nearby restaurant with Bob driving Alice’s vehicle. While they are driving, Bob is involved in an at-fault accident with another vehicle. Alice, Bob, and the driver of the other vehicle sustain minor injuries in the accident

Since both Alice and Bob are insured individuals covered by PIP through their respective auto insurance policies, they can each access PIP benefits to cover their medical expenses and lost wages resulting from the accident. Alice will file a PIP claim with her insurance company and Bob will file a claim with his parents insurance company. The driver of the other vehicle will also file a PIP claim with their insurance company. It doesn’t matter who was driving or which vehicle they were in at the time of the accident; PIP benefits follow the insured individual.

Alice and Bob have immunity for the other driver’s injuries up to $10,000. Because Alice’s vehicle is insured; both Alice, the owner, and Bob, the driver, have immunity for up to $10,000 of the other driver’s injuries.

So, while both Alice and Bob can access PIP benefits regardless of the vehicle they were in, tort immunity protections primarily apply to the vehicles and their associated individuals involved in the accident.

No PIP/No Immunity

Alice owns a car and does not have it currently insured. Bob, Alice’s boyfriend, doesn’t own a car but is a named insured on his parents’ auto insurance policy, which also includes PIP coverage. One day, Alice and Bob head off to a nearby restaurant with Bob driving Alice’s vehicle. While they are driving, Bob is involved in an at-fault accident with another vehicle. Alice, Bob, and the driver of the other vehicle sustain minor injuries in the accident.

Because Alice did not carry PIP coverage on her vehicle: she, as the owner; and Bob, as the driver; are both responsible for the other driver’s injuries including any pain and suffering, lost wages, and other injury related claims he can file. Both Alice and Bob are subject to loss of their driver license, and for Alice her car’s registration.

PIP Claim Calculation

Alice owns a car and has a valid auto insurance policy that includes Personal Injury Protection (PIP) coverage with a $0 deductible. Bob, Alice’s boyfriend, doesn’t own a car but is a named insured on his parents’ auto insurance policy, which also includes PIP coverage. One day, Alice and Bob head off to a nearby restaurant with Bob driving Alice’s vehicle. While they are driving, Bob is involved in an at-fault accident with another vehicle. Alice, Bob, and the driver of the other vehicle sustain minor injuries in the accident. Alice files a PIP claim with her own insurance company.

Alice’s injuries total $8,000; and she will be paid $6,400 by her insurance company. Calculated as:

[$8,000 – $0] X 80% = $6,400

If, Alice had a $500 PIP deductible her claims payment would be $6,000.

[$8,000 – $1,000] X 80% = $6,000

And if she had a $1,000 PIP deductible her claims payment would be $5,600.

[$8,000 – $1,000] X 80% = $5,600

PIP Coverage for the Named Insured – In and Out of Florida. Does it matter?

Alice Shirley, a Florida resident, is driving her car when she’s involved in an accident caused by another driver. As a result, Alice suffers $8,000 in injuries. Fortunately, Alice has Personal Injury Protection coverage as part of her auto insurance policy. Since the accident occurred in Florida, Alice is covered by her PIP insurance. Therefore, Alice’s PIP coverage will pay for her medical expenses and other related costs up to her $10,000 policy limit.

Now image that Alice Shirley, a Florida resident, is visiting her friend in Georgia. While riding in her friend’s car, they are involved in an accident that causes Alice to suffer $8,000 in injuries. Unfortunately, Alice’s injuries are not covered by her PIP coverage. Florida PIP coverage extends to the insured when they are outside of the state of Florida only when the insured is in their own vehicle or in a vehicle owned by a resident relative.

PIP Coverage for Residing Relatives – In and Out of Florida. Does it matter?

Alice Shirley, a Florida resident, is driving her car when she’s involved in an accident caused by another driver. Alice is accompanied by Betty, her mother who lives with her now on a permanent basis. As a result, Alice suffers $8,000 in injuries and Betty suffers $5,000 in injuries. Fortunately, Alice has Personal Injury Protection coverage with a $0 deductible s as part of her auto insurance policy. Since the accident occurred in Florida, Alice is covered by her PIP coverage; and Betty, her residing relative is also covered by Alice’s PIP coverage. Therefore, Alice’s PIP coverage will pay up to the $10,000 policy limit for both Alice’s and Betty’s medical expenses and other related costs on an individual basis; that is, up to $10,000 for each injured person.

Alice’s injuries total $8,000; and she will be paid $6,400 by her insurance company. Calculated as:

[$8,000 – $0] X 80% = $6,400

Betty’s injuries total $5,000; and she will be paid $4,000 by her insurance company. Calculated as:

[$5,000 – $0] X 80% = $4,000

Now image that Betty was visiting a friend in Georgia. While riding in the friends car, Betty and her friend are involved in an accident that causes Betty to suffer $5,000 in injuries. Betty’s injuries would not be covered under her daughter’s PIP coverage; she is a residing relative to be sure, but the accident occurred outside of the state of Florida and Betty was not injured while occupying the named insured’s vehicle.

If that same accident had occurred in Georgia and Betty was in Alice’s car then her medical expenses would have been covered by Alice’s PIP coverage.

Tort Exempt?

John Anderson, a Florida resident, is driving his insured motor vehicle on a busy Memorial Day near his favorite Florida beach. John looked down for just a second to change the radio station when he rear-ended another driver at a stoplight. The accident causes significant damage to John’s car and injuries to both John and the other driver, Sarah.

Under Florida’s No-Fault law, John’s Personal Injury Protection (PIP) coverage will initially cover his medical expenses and lost wages (limits apply), regardless of who was at fault in the accident. Therefore, John’s PIP coverage will pay for his medical bills and any lost income while he recovers from his injuries.

However, Sarah, the other driver, suffers from severe whiplash and experiences significant pain and suffering due to the accident. Sarah’s injuries meet one of the PIP exceptions, specifically the “significant and permanent loss of a bodily function.” As a result, Sarah can pursue legal action against John beyond her own PIP coverage limits to seek compensation for her pain, suffering, and other non-economic losses.

In this scenario, although John is initially protected by PIP coverage, Sarah’s injuries meet the threshold for exceptions outlined in Florida’s No-Fault law, allowing her to file a legal claim against John for additional damages beyond what PIP covers.

PAP Eligible Insureds and Vehicles

Insureds	Eligible
Individuals	Yes
Related persons	Yes
Unrelated persons who reside together	Yes

Vehicles	Eligible
Private passenger autos	Yes
Pickups & Vans with gross vehicle weight under 10,000 pounds	Yes (not used for goods/materials)

PAP – “Your Covered Auto”

Category	Coverage
Vehicle listed in the policy’s Declarations	Yes
Newly acquired autos	Yes
Owned trailers	Yes
Non-owned auto or non-owned trailers used as temporary replacement	Yes

Keep in mind that the coverage for any temporary substitute auto or trailer is for any vehicle described in the definition section of the policy which is out of normal use because of its:

Breakdown
Repair
Servicing
Loss
Destruction

Keep in mind that a “your covered auto” does not have coverage for physical damage to these vehicles.

The ISO Personal Auto Policy Liability Insurance Agreement states:

We will pay damages for “bodily injury” or “property damage” for which any “insured” becomes legally responsible because of an auto accident. Damages include prejudgment interest awarded against the “insured”. We will settle or defend, as we consider appropriate, any claim or suit asking for these damages. In addition to our limit of liability, we will pay all defense costs we incur. Our duty to settle or defend ends when our limit of liability for this coverage has been exhausted by payment of judgments or settlements. We have no duty to defend any suit or settle any claim for “bodily injury” or “property damage” not covered under this policy.

Reclamación de conductores sin seguro

Bert Scott sufre lesiones permanentes debido a un accidente causado por Earnie. Los daños totales de Bert (económicos y no económicos) ascienden a $50,000. Bert está cubierto por el seguro de Protección contra Lesiones Personales (PIP), del cual ya ha recibido el límite completo de $10,000. Además, Bert tiene cobertura contra conductores sin seguro (UM) con un límite de $50,000/$100,000. Earnie, el conductor culpable, tiene un seguro de responsabilidad civil con límites de 10/20/10.

La recuperación de UM de Bert se calcula de la siguiente manera:

Daños totales: $50,000

Menos recuperación de PIP: $10,000

Menos la recuperación de la cobertura del seguro de responsabilidad civil: $10,000

Bert puede cobrar los $30,000 restantes en daños bajo su cobertura para conductores sin seguro.

Stacked Uninsured Motorists Claim

Bert Scott sustains permanent injuries due to an accident caused by Earnie. Bert’s total damages (economic and non-economic) amount to $250,000. Bert is covered by Personal Injury Protection (PIP) insurance, from which he has already received the full $10,000 limit. Additionally, Bert has stacked Uninsured Motorist (UM) coverage with a limit of $50,000/$100,000, and Bert has two vehicles on his policy. Earnie, the at-fault driver, has liability insurance with limits of 10/20/10.

Bert’s UM recovery is calculated as follows:

Total damages: $250,000

Minus PIP recovery: $10,000

Minus liability insurance coverage recovery: $10,000

Bert can collect $100,000 in damages under his Uninsured Motorists coverage. Bert’s UM coverage is $50,000 per person and it is stacked; basically, he has $50,000 per person + $50,000 per person for a total of $100,000 of Uninsured Motorist coverage. Unfortunately for Bert he only carried $50,000 per person of UM coverage; and thankfully he did his UM coverage stacked so he was able to collect an extra $50,000 of UM coverage.

What if the coverage was different? If Bert Scott sustains permanent injuries due to an accident caused by Earnie. Bert’s total damages (economic and non-economic) amount to $250,000. Bert is covered by Personal Injury Protection (PIP) insurance, from which he has already received the full $10,000 limit. But in this scenario Bert has stacked Uninsured Motorist (UM) coverage with a limit of $100,000/$300,000, and Bert has two vehicles on his policy. Earnie, the at-fault driver, has liability insurance with limits of 10/20/10.

Bert’s UM recovery is calculated as follows:

Total damages: $250,000

Minus PIP recovery: $10,000

Minus liability insurance coverage recovery: $10,000

Bert can collect $200,000 in damages under his Uninsured Motorists coverage. Bert’s UM coverage is $100,000 per person and it is stacked; basically, he has $100,000 per person + $100,000 per person for a total of $100,000 of Uninsured Motorist coverage. Unfortunately for Bert he only carried $100,000 per person of UM coverage; but thankfully he did his UM coverage stacked so he was able to collect an extra $100,000 of UM coverage.

Non-Stacked Uninsured Motorists Claim

Bert Scott sustains permanent injuries due to an accident caused by Earnie. Bert’s total damages (economic and non-economic) amount to $250,000. Bert is covered by Personal Injury Protection (PIP) insurance, from which he has already received the full $10,000 limit. Additionally, Bert has non-stacked Uninsured Motorist (UM) coverage with a limit of $50,000/$100,000, and Bert has two vehicles on his policy. Earnie, the at-fault driver, has liability insurance with 10/20/10 limits.

Bert’s UM recovery is calculated as follows:

Total damages: $250,000

Minus PIP recovery: $10,000

Minus liability insurance coverage recovery: $10,000

Bert can collect $50,000 in damages under his Uninsured Motorists coverage. Bert’s UM coverage is $50,000 per person and it is non-stacked; basically, he has $50,000 per person for a total of $50,000 of Uninsured Motorist coverage.

What if the coverage was different? If Bert Scott sustains permanent injuries due to an accident caused by Earnie. Bert’s total damages (economic and non-economic) amount to $250,000. Bert is covered by Personal Injury Protection (PIP) insurance, from which he has already received the full $10,000 limit. But in this scenario Bert has non-stacked Uninsured Motorist (UM) coverage with a limit of $100,000/$300,000, and Bert has two vehicles on his policy. Earnie, the at-fault driver, has liability insurance with limits of 10/20/10.

Bert’s UM recovery is calculated as follows
Total damages: $250,000

Minus PIP recovery: $10,000

Minus liability insurance coverage recovery: $10,000

Bert can collect $100,000 in damages under his Uninsured Motorists coverage. Bert’s UM coverage is $100,000 per person and it is non-stacked; he has $100,000 per person of Uninsured Motorist coverage.

The Case of the Non-Owned Auto

John Bishop, the named insured, is driving to work in his personal car covered by his Personal Auto Policy (PAP). While driving, John realizes he needs to pick up some materials for a home renovation project. He calls his friend, Tom, who agrees to lend him his pickup truck for the afternoon.

The pickup truck lent to John by his friend Tom would be considered a “non-owned auto” under John’s PAP. This is because the pickup truck is not owned by John or furnished for his regular use but is temporarily being used by him.

If instead of borrowing the pickup truck from his friend, John decided to rent a pickup truck from a car rental agency for the same purpose, that rented pickup truck would be considered a “hired auto” under John’s PAP. This is because the pickup truck is not owned by John or furnished for his regular use but is specifically hired by him for a temporary period with a formal rental agreement.

In summary, while both terms refer to vehicles not owned by the insured, “hired autos” are intentionally rented or borrowed for a specific purpose with formal agreements like rentals or leases. “Non-owned autos” are used more incidentally and are not typically vehicles that the insured would use regularly or have formal rental agreements for.

Homeowners Perils Insured Against

Policy	Perils Insured Against
HO-2	named perils for all Section I Coverages
HO-3	"all-risk" coverage for Coverages A&B and named perils of HO-2 for Coverage C
HO-4	named perils for all Section I Coverages
HO-5	"open" perils coverage for Coverages A, B, & C (broadest form available) - keep in mind that "open perils" and "all risk perils" are the same.
HO-6	named perils coverage
HO-8	first (10) HO-2 named perils + volcanic eruption and catastrophic ground collapse; residence premises theft limited to $10,000 and building glass breakage limited to $100

The Nassar Hurricane Claim

On September 13, 2008, Hurricane Ike caused significant damage to Elie and Rhonda Nassar’s six acres of property. Their property included barns and outbuildings and over 4000 feet of fencing, including “a white picket fence at the northeast corner of their dwelling, an ornamental iron fence … in front of the dwelling, numerous cross fences, garden fences and pens, and a larger perimeter fence constructed of 2’ x 6’ lumber with wooden posts at eight-foot intervals, on which a welded wire mesh is attached.”

Their insurer valued the damage to their dwelling at $20,090.61 and the damage to their other structures at $70,449.02 but paid up to the policy limits for Coverage B, which in this case was $24,720.

The Nassars, however, believed that their fencing should be considered as part of the dwelling because it was attached to it. The policy does not define “structure,” and their fencing, they pointed out, was attached to their house at four separate points. The insurer, on the other hand, objected that “simply connecting 4,000 feet of fencing to the dwelling by four bolts does not attach the fencing to the dwelling.” Since the policy states that a fence cannot connect the dwelling to other structures, the fence itself must be an “other structure.”

The trial court found in favor of the insurance company. When the Nassars appealed, the court of appeals agreed with the trial court, but with a dissent that argued that the policy was ambiguous and that a decision should therefore have been made in favor of the Nassars. The Supreme Court then heard the case.

Based on dictionary definitions, it concluded that the fence was a structure, “composed of parts purposefully joined together,” and that it was attached, since it was “fastened to the dwelling either by being cemented to the brick and slab of the house (as the Nassars contend) or by ‘four bolts’ (as the insurance company contends). “Putting everything together and giving words their ordinary meaning in light of their common usage, the Nassars’ fencing is composed of parts purposefully joined together and fastened to the dwelling by bolts or cement…. We conclude that the Nassars’ policy interpretation is reasonable, and the applicable policy language is unambiguous.”

The court went on to note that the fencing did not fall under “other structures,” because the policy says that “other structures” are “set apart from the dwelling by clear space” and the fencing was not.

But, said the insurance company, if a fence attached to the dwelling is considered part of the dwelling and the fence is also attached at the other end to a barn, then the barn would also be attached to the dwelling—and that is exactly what the policy explicitly denies when it defines “other structures” as including “structures connected to the dwelling by only a fence.” Therefore, the fence cannot be included in the dwelling and must be seen as an “other structure” itself.

The court rejected this line of argument. It is true that the barn is not part of the dwelling since it is connected to the dwelling by only a fence. But that does not mean that the fence is not part of the dwelling. The Nassars’ fencing, “a structure clearly attached to their dwelling” so that it should be covered with the dwelling, is not required “to morph into an ‘other structure’ … simply because that same fencing cannot operate to connect other structures to the dwelling.”

But are all 4000 feet of fencing part of the dwelling? That said, the court, stated it was a matter for the trial court to resolve. “A fact finder may determine that only the fencing of the type originally bolted to the dwelling is covered” with the dwelling, whereas the pens and garden fencing and so on are “other structures.” Or perhaps, just as a barn connected to the dwelling by only a fence is an “other structure,” so a section of fence connected to the dwelling by only a section of fence should be considered an “other structure.” “Courts may have to treat fencing as both part of the ‘dwelling’ and ‘other structures’ depending on the circumstances. That is what the policy’s plain language requires.”

The court concluded that the Nassars’ interpretation of the policy was reasonable, and the insurance company’s was not, that there was no ambiguity, and that the trial court and court of appeals had both erred. It reversed the court of appeals’ judgment and remanded the case to the trial court for further proceedings consistent with this opinion.

The Case of the Knight Storm

Mary and John Knight own a house in a quiet suburban neighborhood. One evening, a severe thunderstorm swept through the area, causing a large tree to collapse onto their house, severely damaging the roof and rendering a portion of the house uninhabitable.

As a result of the covered peril (windstorm damage), Mary and John’s residence is deemed unfit for occupancy by local authorities and their insurance company. Fortunately, their ISO Homeowners Insurance policy includes Coverage D – Loss of Use.

Mary and John are forced to temporarily relocate to a nearby hotel while their home is being repaired. The insurance company covers the additional living expenses incurred by Mary and John during this period, such as hotel bills, restaurant meals, and laundry expenses, allowing them to maintain their normal standard of living despite the displacement.

Mary and John also rent out a portion of their home to tenants. Since the rented portion is now uninhabitable due to the storm damage, the insurance company reimburses them for the fair rental value of that space, less any expenses that do not continue while it remains unfit for occupancy. This ensures that Mary and John do not suffer financial loss due to the inability to collect rental income.

If local authorities prohibit Mary and John from accessing their home due to safety concerns stemming from the neighboring damage caused by the windstorm, Coverage D would also apply. The insurance company would cover the additional living expenses and fair rental value for up to two weeks while the civil authority prohibits access to the property.

In this example, Coverage D – Loss of Use provides Mary and John Knight with financial assistance to cover the temporary increase in living expenses and rental income loss incurred as a result of their home being rendered uninhabitable by a covered peril.

What is the minimum Loss Assessment coverage requirement for an HO-6 Condo Policy?

$2,000

The Case of Pfenning v. Lineman

Cassie Pfenning, sixteen years old, attended a golf outing with her grandfather. Her grandfather had volunteered to drive a beverage cart at the event. He got the cart but then joined a shorthanded group of golfers and left Pfenning at the cart with her great aunt. About ten minutes later, the great aunt joined another group of golfers, but an employee of the tavern that promoted the event joined Pfenning, who then drove the cart around the golf course while the tavern employee served beverages to the golfers.

After several such trips around the course, Pfenning was suddenly struck in the mouth by a golf ball. Joseph Lineman, about eighty yards away, had hit the ball. The low drive was straight for the first sixty or seventy yards and then hooked to the left toward the cart. Lineman shouted “fore,” but Pfenning did not hear it. The golfer heard a “yelp” and ran after the ball and found that it had struck Pfenning, who suffered injuries to her mouth, jaw, and teeth.

Pfenning filed a damage action against Lineman among others. The trial court granted summary judgment in favor of all of the defendants, and Pfenning appealed. The court of appeals affirmed the trial court’s judgment. The case came to the Supreme Court, where Pfenning argued again that summary judgment was inappropriate because there were genuine disagreements about the facts.

The golfer, Joseph Lineman, argued that “he could not be held liable under a negligence theory because [Pfenning] was a co-participant in the sporting event, and her injuries resulted from an inherent risk of the sport.” The court recognized that to establish a claim of negligence, a plaintiff must establish that there was (1) a duty owed to the plaintiff by the defendant, (2) a breach of the duty, and (3) an injury proximately caused by the breach of duty.” The court also affirmed that public policy encourages participation in athletic activities and therefore discourages “excessive litigation of claims by persons who suffer injuries from participants’ conduct.”

The court concluded that, “in negligence claims against a participant in a sports activity, if the conduct of such participant is within the range of ordinary behavior of participants in the sport, the conduct is reasonable as a matter of law and does not constitute a breach of duty.” The court recognized, though, that “a participant’s particular conduct may exceed the ambit of such reasonableness as a matter of law if the ‘participant either intentionally caused injury or engaged in [reckless] conduct.’”

In this case, Lineman’s “hitting an errant drive which resulted in [Pfennig’s] injury … is clearly within the range of ordinary behavior of golfers and thus is reasonable as a matter of law and does not establish the element of breach required for a negligence action.” Pfenning argued that golf etiquette required shouting “fore” and that, while Lineman said he said and some others testified that they heard him, Pfenning herself did not hear him. The court recognized that a number of factors could have prevented her hearing Lineman, that yelling “fore” or not doing are both within ordinary golfing behavior, and therefore that “neither the omission nor manner of yelling ‘fore’ can be a proper basis for a claim of negligence in golf ball injury cases.”

The court therefore affirmed the previous courts’ decisions that Lineman was not negligent and therefore was not liable for Pfenning’s injuries.

The Case of Sierfeld v. Sierfeld

When Jamie Sierfeld lost her job she moved back into the home of her parents, Curtis and Michele Sierfeld. About four months later, the family dog bit her, causing severe injury to her face that required several surgeries and psychological counseling. She sought compensation from her parents’ insurer both for damages for which, she said, they were liable and for medical expenses.

The insurance policy specifically excluded coverage for damages for an insured, defined to include a resident relative, and for medical expenses for “bodily injury to any insured person or regular resident of the insured premises.” The policy did not define “resident.”

The insurer denied coverage and sought summary judgment from the court on the basis of these exclusions. Jamie argued in response that the policy exclusions were ambiguous because they did not define “resident,” and therefore they must be read in such a way as to provide coverage for her. Alternatively, she said, she should not be considered a resident of her parents’ home because neither she nor her parents intended her to live there long-term. She had, in fact, moved into their house temporarily after losing her job, had planned to start her own business, and had intended to stay only six months—though she ended up staying longer after her injuries.

The trial judge mistakenly thought that the Sierfelds had given up their argument based on ambiguity, and so he focused only on whether Jamie was a resident of her parents’ home. He noted that both Jamie and her parents intended her stay to be temporary but also that “the arrangement was informal, flexible and without any specific duration … no different from any child living as a family member of a parents’ home.” She paid no rent or utility costs. She had meals occasionally with her family, though she purchased her own food because she, unlike her parents, was a vegetarian. He concluded that she “had sufficient connection to the insured premises to be considered a resident member of that household.”

When Jamie appealed, she raised the issue of ambiguity again and argued that her and her parents’ intention that her stay be temporary should have led the court to conclude that she was not a resident of her parents’ household. The Superior Court did not accept that the term “resident” in the policy was ambiguous. Whether someone is a resident of a household, they said, citing previous cases, was not simply a matter of whether he or she lived under the same roof but rather whether there was a “substantially integrated family relationship” between the insured and the party seeking coverage—in this case, between the Sierfelds and Jamie herself.

The court concluded that there was. “Among other things, [Jamie] enjoyed a relationship with the Sierfelds as a family member; she had no rental agreement and did not pay rent or utilities or contribute to household expenses; she had no set plan to move at the time of the dog bite and could have stayed with her parents beyond the six-month period; she had common use of the bathroom, kitchen and laundry room; and her driver’s license contained her parents’ address, her car was insured and registered there and she received her personal mail there. [Her] use of a bedroom other than her childhood bedroom, and her lack of socializing or sharing meals with her parents or rarely watching television with them does not compel a contrary conclusion.”

The court therefore affirmed the trial court’s decision that she was indeed a resident of her parents’ household.

Exceptions to the Motorized Land Conveyances Exclusion

Exception	Coverage
Vehicles in Dead Storage and those used to service the residence	COVERED
Golf Carts at the Insured Location and Golf Course	COVERED
Owned Off-road Recreational Vehicles (RV) at residence premises	COVERED
Non-owned RVs Worldwide	COVERED
Vehicles to Assist the Handicapped	COVERED

Declarations Page Example

What is the purpose of Wind Mitigation?

TO HELP A STRUCTURE WITHSTAND OR INCREASE RESISTANCE TO HIGH WINDS CAUSED BY MAJOR STORMS OR HURRICANES.

The NFIP definition of an insurable flood requires how many acres or properties to be affected by the flood?

2 OR MORE ACRES OR PROPERTIES

Why was the WYO program was created?

THE WYO PROGRAM WAS CREATED TO BROADEN FLOOD INSURANCE ACCESIBILITY, ENHANCE FLEXIBILITY IN ITS SALE, AND IMPROVE THE OVERALL SERVCIE CAPACITY OF FLOOD INSURANCE.

The Johnson and Smith Flood Claims

The Johnson family lives in a flood-prone area near a river. They own a single family home which incurred damage to the home and their personal property.

A major flood occurs, causing significant damage to their home. The Johnsons have an NFIP flood insurance policy. They file a claim immediately. The insurance covers the repair costs for their home, including coverage for their damaged furniture and personal items like their washer, dryer, and freezer, as well as the food lost in the freezer. Because the flood is covered by their policy, they receive a payout quickly, regardless of whether a federal disaster is declared.

The Johnsons received a quick claims process and payout with no need to repay the money received.

Their coverage limits and deductibles were already decided, providing clarity and control.

The Smith family lives on the same street as the Johnsons; they did not carry flood insurance. After the flood, they had to wait for a federal disaster declaration to become eligible for assistance. The government offered them a Small Business Administration (SBA) disaster loan to help them with repairs. The loan covered the dwelling repairs, but it must be repaid with interest over a 30-year term. The process to get this assistance took a long time, and the financial burden of the loan added to their other expenses. Unfortunately for the Smiths, they had to wait for the federal government to declare the flood a federal disaster. They did receive a loan, but that loan has to be repaid with interest.

Eligible Buildings and Eligible Contents

Eligible Buildings	Eligible Contents
Appurtenant structures	Carpets not included in building coverage
Boathouses located partially over water (under certain circumstances)	Certain types of window treatments (curtains, blinds)
Buildings entirely over water (constructed/improved before 10/01/1982)	Microwave ovens and portable dishwashers
Buildings in the course of construction (not yet walled and roofed)	Personal property (clothing, furniture, electronic equipment)
Buildings partially over water (under certain circumstances)	Portable and window air conditioning units
Cisterns	Refrigerators and freezers (excluding contents)
Silos and grain storage buildings	Valuable items (artwork, jewelry, furs) up to certain limits
	Washers and dryers

Where do specified buildings and or their contents have to be located to have access to Flood insurance?

AN ELIGIBLE COMMUNITY

What flood zones are eligible for the Preferred Risk Policy?

ZONES: X, B, AND C

Covered Items in Coverage A - Building Property

Awnings, canopies, and outdoor antennas

Blinds and permanently installed wall mirrors

Built-in dishwashers and microwaves

Carpet permanently installed over unfinished flooring

Central air conditioners, furnaces, radiators, hot water, and solar water heaters

Elevator equipment and fire sprinkler systems

Permanently installed cupboards, bookcases, cabinets, paneling, and wallpaper

Plumbing fixtures, garbage disposal units, and pumps

Walk-in freezers, ranges, cooking stoves, ovens, and refrigerators

Building Coverage for Basements

Coverage Type	Items Covered in Basements
Building Coverage	Central air conditioners
	Cisterns and the water in them
	Unfinished drywall (walls, ceilings)
	Electrical outlets, switches, junction, and circuit breaker boxes
	Elevators and related equipment
	Footings, foundations, posts, etc., required to support the building
	Fuel tanks and the fuel in them, Furnaces, water heaters, heat pumps
	Non-flammable insulation
	Sump pumps; pumps and tanks used in solar energy systems

	Stairways and staircases (attached to the building)
	Water softeners, water filters, faucets, well water tanks, and pumps
	Required utility connections for all listed items
	Clean-up
Personal Property Coverage	Portable or window air conditioning units
	Clothes washers and dryers

Food freezers and the food in them

Examples - Coverage B – Personal Property

Category	Items
Coverage B - Personal Property	Portable or window air conditioning units
	Carpets, not permanently installed, over unfinished flooring
	Carpets over finished flooring
	Clothes washers and dryers
	Cook-out grills
	Freezers (including the food in any freezer)
	Portable microwave ovens and dishwashers
Property Not Covered	Personal property outside the fully enclosed building
	Property in, on, or over water

	Walks, decks, and driveways
	Land, trees, shrubs
	Self-propelled vehicles, recreational vehicles
	Accounts, bills, coins, currency, other valuable papers
	Underground structures and equipment (e.g., septic systems)

Pools and equipment, hot tubs

The Johnson Flood Claim

After the flood, the Johnson’s home was filled with debris. Coverage C covered the costs of removing this flood-caused debris from their property, easing the cleanup process and financial burden.

Prior to the actual flood the Johnsons had taken preventive measures including sandbagging around their property and moving some of their personal property to a higher ground before the flood; these expenses were reimbursed under Coverage C of their flood insurance policy.

Due to the significant flood damage, their home was temporarily uninhabitable. During this time, Coverage C covered some of the costs associated with relocating. This was especially helpful as they had to stay away from home for an extended repair period.

Property coverage in the Boatowners Policy is covered on what "basis"?

OPEN PERILS

Which representation requires the insured to keep their watercraft in a safe and navigable condition?

THE SEAWORTHINESS REPRESENTATION

The Case of The Bigelow Family’s Boat Insurance

The Smith family purchased a boat and decided to insure it. When filling out their insurance application, they provided certain information and agreed to specific conditions (warranties) set by the insurer.

Representation: On the application, Mr. Smith stated that the boat would be used solely for recreational purposes and not for commercial fishing. This statement is a representation. It’s crucial because the insurer’s decision to provide coverage and the premium rate are based on the intended use of the boat.

Warranty: The policy included a warranty that the boat would be stored in a private dock at their lakeside property. This means the Smiths are obligated to keep the boat at the specified location as a condition of their insurance.

Breach of Representation: Six months later, Mr. Smith decided to start a small-scale commercial fishing business using the same boat. This change in the boat’s use is a breach of the representation made in the application.

Breach of Warranty: Additionally, the Smiths moved their boat to a public marina for convenience, breaching the warranty about the boat’s storage location.

Claim and Consequences: After a storm damaged the boat at the marina, the Smiths filed a claim. However, during the investigation, the insurer discovered the boat was being used for commercial purposes and was stored at a different location than what was warranted.

Result: Based on the misrepresented use of the boat and the breach of the storage warranty, the insurer had grounds to deny the claim. The insurer could argue that the policy might not have been issued or might have been written with different terms or a higher premium had they known the truth.

Commonly Insured Portable Property

Category	Portable Property Items
Anchoring Equipment	Anchors
Navigation & Safety	Oars and Tow Ropes
	Lights, Extra Batteries, and Tools
	Life Jackets and Seat Cushions
	Fire Extinguishers
Fuel & Pumping Systems	Auxiliary Fuel Tanks and Bilge Pumps
Leisure Equipment	Deck Chairs, Skis, and Surfboards

Refer to specific policy language to make sure equipment is insured properly.

SOME POLICIES COVER EQUIPMENT AFFIXED TO A WATERCRAFT AS MISCELLANEOUS PROPERTY

El caso de las aventuras en barco de Greg StantonSmall heading 3

Greg posee un velero de 24 pies asegurado con una póliza de seguro de embarcaciones. El barco se encuentra actualmente en reparaciones debido a problemas con el motor.

Uso de una embarcación de reemplazo: Mientras su embarcación está en el taller, Greg decide usar la lancha de motor de 22 pies de su amigo, que sirve como “embarcación de reemplazo” para su embarcación asegurada. La embarcación de reemplazo reemplaza temporalmente a la suya mientras está fuera de servicio.

Incidente de pérdida: Desafortunadamente, Greg daña accidentalmente el casco del barco sustituto mientras atraca.

Cobertura: Su póliza de propietario de embarcación se extiende a la embarcación sustituta, ofreciendo cobertura hasta el límite indicado en la página de declaraciones de la póliza. La reclamación se tramita bajo su póliza sin restricciones en cuanto a la eslora de la embarcación sustituta.

Uso de un barco no propio: Más adelante en la temporada, Greg alquila un barco de pesca de 25 pies durante unas vacaciones, que se considera un “barco no propio”.

Incidente de pérdida: mientras usa el bote alquilado, Greg sufre una colisión menor que provoca daños en el bote.

Cobertura: Dado que la embarcación alquilada no es de su propiedad, la póliza de Greg ofrece una cobertura adicional a cualquier otro seguro de la embarcación alquilada. La cobertura está limitada a $10,000 y aplica siempre que la embarcación tenga menos de 26 pies de eslora. Si el seguro de la compañía de alquiler cubre los daños, la póliza de Greg solo contribuiría si los costos excedieran la cobertura de la compañía de alquiler, hasta el límite de cobertura de su póliza para embarcaciones no propias.

En ambas situaciones, la póliza de propietario de embarcación de Greg ofrece protección, pero el alcance y la naturaleza de la cobertura difieren significativamente. Para la embarcación de reemplazo, su póliza actúa como cobertura principal hasta el límite de su póliza. Para la embarcación no propia, la póliza ofrece una cobertura adicional con un límite específico, que depende de la eslora de la embarcación y de cualquier seguro existente para la embarcación no propia.

Is the water skiing exposure covered in all Boatowners Policies?

MANY BOATOWNERS POLICIES EXCLUDE WATER SKIING ACTIVITIES

Personal Umbrella Liability insurance is written with a minimum liability limit of?

$1,000,000

Follow Form or Stand-Alone?

Which policy provides coverage in excess of underlying limits and DOES NOT apply the same conditions, provisions,or exclusions?

STAND ALONE EXCESS

Which policy provides coverage in excess of underlying limits applying the exact same coverages, conditions, provisions, and exclusions as the underlying policies?

FOLLOW FORM EXCESS LIABILITY

Which policy typically provides broader coverage, Excess Liability or Umbrella?

PERSONAL UMBRELLA POLICY

The Personal Umbrella requires what amount of underlying limits for the following policy types?

Homeowners Insurance Policy

$300,000

Automobile Insurance Policy

$300,000 CSL or $250,000/$500,000

Boatowners Policy

$300,000

Dwelling Fire Policy for Rental Properties

$300,000

Recreational Vehicles

$300,000

The Case of OMG is my SIR really that high?

Scenario with Underlying Coverage
Situation: Terri Toni Thomas accidentally causes a car accident, resulting in damages and injuries to others.

Underlying Coverage: Terri has an auto insurance policy with a liability limit of $300,000.

Claim: The total claim for damages and injuries is $500,000.

How It’s Handled:

Auto Insurance Coverage: Terri’s auto insurance covers the first $300,000 of the claim.

Umbrella Insurance: Since the auto insurance limit is exceeded, her umbrella policy kicks in and covers the remaining $200,000.

Scenario without Underlying Coverage
Situation: Terri Toni Thomas is sued for slander, a claim not typically covered under standard homeowners or auto insurance policies.

No Underlying Coverage: Her standard policies do not cover this type of personal injury.

Claim: The lawsuit amounts to $250,000.

Self-Insured Retention (SIR): Terri’s umbrella policy has a SIR of $10,000 for claims not covered by underlying insurance.

How It’s Handled:

Self-Payment: Terri pays the first $10,000 (SIR) out of her pocket.

Umbrella Insurance: After the SIR is met, her umbrella policy covers the remaining $240,000.

Key Differences

With Underlying Coverage: The umbrella policy acts as an excess coverage, kicking in only after the limits of the underlying policy are exhausted.

Without Underlying Coverage: The umbrella policy becomes primary coverage, but with a Self-Insured Retention (SIR) that the insured must pay before the umbrella coverage starts.

These examples illustrates how an umbrella liability policy provides additional protection over and above the standard limits of the insured’s primary policies, and how it can also offer coverage for claims that are not covered by traditional policies, subject to an SIR.

Umbrella Required Underlying Limits

Type of Coverage	Required Underlying Limits
Personal Auto Policy	$300,000/$300,000 bodily injury & $100,000 property damage $250,000/$500,000 & $100,000 property damage $300,000 combined single limits $500,000 bodily injury if drivers under 21 $500,000 combined single limits
Homeowners	$300,000 personal liability (most common) $50,000 liability loss assessment on the HO 6 Unit Owners Form Some insurers require only $100,000 personal liability (rare)
Watercraft Liability	$300,000 to $500,000 depending on watercraft’s length and horsepower
Recreational Vehicles	$300,000/$300,000 bodily injury & $100,000 property damage $300,000 combined single limits
Rental Properties	$300,000 liability coverage

Does the Personal Umbrella provide coverage to the insured for intentional bodily injury to a third party resulting from reasonable force to protect persons or property?

THE INSURED IS COVERED IF FORCED TO USE REASONABLE FORCE TO PROTECT PERSONS OR PROPERTY

Gracie is using her personal aut to run some errands for her employer. She is involved in an at-fault accident and the other party is severely injured. Will Gracie's PUP provide coverage for this accident?

PUP COVERAGE IS EXTENDED FOR USE OF AN AUTO FOR BUSINESS PUPOSES UNLESS IT IS USED TO TRANSPORT PERSONS OR PROPERTY FOR A FEE

Which Business Auto symbol is used to cover any and all vehicles the insured owns, hires, leases or borrows?

SYMBOL 1

Business Auto Policy Symbols

Symbol	Description
1	Any auto
2	Owned autos only
3	Owned private passenger autos only
4	Owned Autos other than private passenger autos only
5	Owned autos subject to No-Fault
6	Owned autos subject to a compulsory uninsured motorist’s law
7	Specifically described autos
8	Hired autos only
9	Non-owned autos only

The Case of Lexington Equipment

Lexington Equipment owns several pickup trucks and a trailer used to transport materials to various construction sites. They also own a bulldozer and a forklift used on construction sites for heavy lifting and moving materials. One of Lexington Equipment’s pickup trucks is involved in an accident while driving to a construction site. The truck is damaged, and there is property damage to a third party’s fence. And during the construction project, the bulldozer accidentally damaged a client’s wall while moving earth.

The damage to the pickup truck and the third party’s property is covered under the BAP, as the truck is classified as an “auto” and the policy covers vehicles used on public roads. The damage caused by the bulldozer is not covered under the BAP, as the bulldozer is classified as “mobile equipment” and is excluded from this policy.

The damage caused by the bulldozer should be covered under a separate CGL policy or a specific equipment policy designed for mobile equipment, which Lexington Equipment should have in place given their line of work. This example highlights how vital it is for you to make sure your insureds have the appropriate insurance policies in place.

BAP: Garaging, Radius, Usage, and Size Criteria

Criteria	Classifications
Garaging Territory	Where the vehicles are principally garaged
Radius of Operation	Local: Within 50 miles of the insured location Intermediate: 50 to 200 miles from the insured location Long Distance: Over 200 miles from the insured location
Usage	Retail: Deliver goods and merchandise to individual households Service: Travel between job sites Commercial: All other types of usage
Vehicle Size and Weight	Light: Small vehicles up to 14,000 pounds Medium: Medium-sized vehicles up to 26,000 pounds Heavy: Large vehicles up to 80,000 pounds Extra-Heavy: Extremely large vehicles exceeding 80,000 pounds

“Business Auto Rating is pretty much common sense: (1) where the vehicles located; (2) how far will they be driven; (3) how will they be used; and (4) how big they are.

Which Garage Policy symbol is used to cover customers vehicles left in the care of the garage for services?

SYMBOL 30

Garage Auto Policy Symbols

Symbol	Description
21	Any auto
22	Owned autos only
23	Owned private passenger autos only
24	Owned autos other than private passenger autos only
25	Owned autos subject to no-fault
26	Owned autos subject to compulsory UM law (not applicable in Florida)
27	Specifically described autos
28	Hired autos only
29	Non-owned autos used in a garage business

30	Autos left with you for service, repair, storage, and safekeeping
31	Dealers autos and autos held for sale by non-dealers or trailer dealers (physical damage coverage only)

The Cases of Anderson’s Towing and Repair

Incident 1: Auto-Related Liability

Situation: While towing a car, an Anderson’s Towing vehicle accidentally collides with another vehicle, causing damage.

Coverage: The Garage Operations – Auto Liability part of the policy covers the bodily injury and property damage resulting from this incident.

Incident 2: Non-Auto-Related Liability

Situation: A customer slips and falls at Anderson’s Repair Shop, sustaining an injury.

Coverage: The Garage Operations – Other than Auto Liability coverage applies to this incident, covering the bodily injury resulting from a slip and fall on the business premises.

Incident 3: Faulty Repair Work

Situation: After a brake repair by Anderson’s, a customer’s car fails to stop at a red light, resulting in an accident.

Coverage: The Products and Completed Operations coverage would cover liabilities arising from this faulty repair.

Incident 4: Personal and Advertising Injury

Situation: Anderson’s Towing and Repair runs a promotional ad which unintentionally uses a competitor’s slogan, leading to an advertising injury claim.

Coverage: Personal and Advertising Injury Liability coverage would handle liabilities arising from this offense.

Incident 5: Legal Defense

Situation: Anderson’s faces a lawsuit due to the faulty brake repair.

Coverage: Legal Defense Costs coverage assists with the expenses related to defending the lawsuit.

Incident 6: Medical Payments

Situation: The customer who slipped and fell at the repair shop incurs medical expenses.

Coverage: Medical Payments coverage may offer limited coverage for these expenses, regardless of fault.

Incident 7: Supplementary Payments

Situation: Additional costs arise during legal proceedings.

Coverage: Supplementary Payments cover costs like court fees or bail bond expenses.

The Case of Cityside Auto Repair

Cityside Auto Repair is a full-service auto repair shop that also offers vehicle storage services.

A customer, Mr. Johnson, leaves his luxury car at Cityside Auto Repair for engine repairs and routine maintenance. The car is parked in the shop’s secure storage area overnight. Overnight, vandals severely damage several cars at Cityside, including Mr. Johnson’s car while it’s parked in the storage area.

The damage to Mr. Johnson’s car falls under Section III – Garage Keepers of the Cityside Auto Repair’s ISO Business Auto policy. The damage resulted from a risk covered under the policy.

Cityside Auto Repair reports the incident to their insurance company, submitting a claim under the Garage Keepers section of their policy. The insurance company assesses the damage to Mr. Johnson’s vehicle, confirming it falls under the policy coverage. The policy covers the cost of repairs to Mr. Johnson’s car, subject to any deductibles or policy limits.

Mr. Johnson’s car is repaired without any financial burden on him for the damages that occurred while his car was under the garage’s care. And Cityside Auto Repair maintains its reputation for professionalism and customer service, as the client’s loss is adequately addressed.

Which Trucker's Policy endorsement covers a truck when it is being driving without a trailer?

BOBTAIL COVERAGE

The Case of Gary’s Carriers, Inc.

Gary’s Carriers, Inc is trucking company specializing in long-haul freight transportation across the United States. Their fleet includes 20 semi-trucks and various types of trailers.

Incident 1: Auto Accident on Interstate

Situation: One of Gary’s trucks collides with another vehicle on the interstate, causing property damage and injuries.

Coverage: The Auto Liability Coverage part of the policy covers the legal liabilities for the bodily injuries and property damage caused by the accident.

Incident 2: Truck Damaged in a Hailstorm

Situation: While parked at a truck stop, a severe hailstorm damages one of the trucks.

Coverage: The Physical Damage Coverage under comprehensive coverage handles the repair costs for the hail damage.

Incident 3: Trailer Interchange Agreement Incident

Situation: Gary’s Carriers is using a trailer owned by another company under a trailer interchange agreement. This trailer is damaged while in Gary’s possession.

Coverage: The Trailer Interchange Coverage takes care of the physical damage to the non-owned trailer.

Incident 4: Cargo Theft

Situation: A load of electronics being transported by Gary’s Carriers is stolen during transit.

Coverage: The Cargo Coverage part of the policy covers the loss of the cargo due to theft.

Incident 5: Personal Use Accident

Situation: A driver uses a company truck for personal errands and is involved in a minor collision.

Coverage: Non-Trucking Liability (Bobtail Coverage) covers liabilities arising from this non-business use of the truck.

Incident 6: Pollution Incident

Situation: A truck from Gary’s Carriers accidentally spills fuel, causing environmental damage.

Coverage: Pollution Liability covers the cleanup and potential legal liabilities.

Commercial Property Cause of Loss Forms

Which Cause of Loss Form provides the best overall coverage?

SPECIAL FORM

Which Cause of Loss Form has the least amount of coverage?

BASIC FORM

Can you name the additional perils the Broad Form has that the Basic Form does not?

FALLING OBJECTS - WEIGHT OF ICE, SNOW OR SLEET - WATER DAMAGE - COLLAPSE

Excluded Property

Category	Examples
Financial Instruments	Accounts, Bills, Currency, Deeds, Evidences of Debt, Money or Securities, Bullion, Manuscripts
Living Entities	Animals (unless boarded or held for sale)
Vehicles	Autos for Sale
Outdoor/Infrastructure	Paved Surfaces, Cost of Ground Preparation, Property Below Basement or Ground, Land, Crops, Bulkheads, Pilings, Piers, Wharves, Docks, Retaining Walls (not part of the building)
Machinery	Self-propelled Machines (other than stock), Fences
Outdoor Fixtures	Outdoor Radio/TV Antennas (including satellite dishes), Wiring, Masts, Outdoor Signs (not attached to buildings), Outdoor Trees, Shrubs, Plants

Building and Personal Property - Additional Coverages

Which Additional Coverage pays up to 5% of the Building coverage limit to cover increased building cost due to the enforcement of any ordinance or law?

INCREASED COST OF CONSTRUCTION

Which Additional Coverage pays up to 25% for a covered loss for debris removal?

DEBRIS REMOVAL

Which Additional Coverage pays up to $10,000 per policy period for removing pollutants?

POLLUTION CLEAN UP AND REMOVAL

The Case of Storm’n Norman’s Warehouse

Storm’n Norman’s Warehouses offers warehousing and storage solutions, along with logistics services.

The insured operates a large warehouse facility with office space and specialized storage equipment.

Incident 1: Fire Damages the Warehouse

Situation: A fire breaks out in the warehouse, damaging the structure and various fixtures.

Coverage: The “Building” aspect of the policy covers the damage to the warehouse structure, fixtures, permanently installed equipment, and appliances used to service the premises.

Incident 2: Machinery Breakdown

Situation: Vital machinery used for logistics operations malfunctions and requires replacement.

Coverage: “Your Business Personal Property” coverage applies to the damaged machinery, as it’s used in the company’s operations.

Incident 3: Damage to Rented Office Space

Situation: An internal flood causes damage to improvements made by Storm’n Norman’s in the rented office area of the warehouse.

Coverage: The policy covers the improvements and alterations made by Storm’n Norman’s as a tenant since they are within 100 feet of the premises.

Incident 4: Clients’ Property Damage

Situation: Goods belonging to clients, stored in the warehouse, are damaged due to a roof collapse.

Coverage: “Personal Property of Others” covers the damage to clients’ goods while in the care, custody, or control of Storm’n Norman’s at the insured location.

The Case of Bad Luck at the New Project

Storm’n Norman’s Warehouses offers warehousing and storage solutions, along with logistics services.

The insured operates a large warehouse facility with office space and specialized storage equipment. Storm’n Normans is constructing an additional warehouse to expand their storage capacity.

Incident 1: Damage to the Warehouse Under Construction

Situation: A severe storm causes significant damage to the partially constructed new warehouse.

Coverage: The Builders Risk Coverage Form covers the damage to the building under construction, as it insures buildings during the course of construction.

Incident 2: Theft of Construction Materials

Situation: Construction materials stored on-site are stolen over a weekend.

Coverage: The policy covers the stolen materials and supplies that were on-site and intended for use in the warehouse construction.

Incident 3: Vandalism at the Construction Site

Situation: Vandals damage construction equipment and partially constructed sections of the new warehouse.

Coverage: Damages from vandalism to the building under construction and the equipment on-site are covered under this form.

Incident 4: In-Transit Materials Loss

Situation: While transporting materials to the construction site, a truck is involved in an accident, resulting in the loss of building supplies.

Coverage: The Builders Risk Coverage Form extends to materials in transit, covering the lost supplies intended for the warehouse construction.

What is the objective of the Business Income Policy?

TO OFFSET THE LOSS OF BUSINESS INCOME DUE TO DAMAGE CAUSED BY A COVERED PERIL

The Case of the “brightside” of Brightside Electronics Business Income Claim

Brightside Electronics is a retail store specializing in consumer electronics. Brightside operates a single, large storefront in a busy shopping district.

Situation: A fire breaks out at Brightside Electronics due to an electrical fault, causing significant damage to the store and inventory. The store is forced to close for repairs, halting sales and business operations. The insurer covers these losses through the period of restoration, starting 72 hours after the damage and continuing until the store is repaired or the business income normalizes.

Business Income Coverage
Net Profit or Loss: The policy covers the net income Brightside Electronics would have earned if the fire had not occurred.

Payroll: Coverage includes payroll expenses, ensuring employees continue to get paid, helping Brightside retain its staff during the closure.

Extra Expense Coverage
Temporary Location and Additional Costs: Brightside Electronics incurs extra expenses to rent a temporary store in a nearby location and additional transportation costs to move the surviving inventory.

Effect on Business Income: This coverage is crucial in minimizing downtime and loss of revenue.

On the Brightside, Brightside Electronics manages to continue operations at a temporary location while the original store is being repaired, maintaining a flow of income and customer engagement. The Business Income and Extra Expense coverages ensure Brightside Electronics remains financially stable despite the interruption, covering both ongoing expenses like payroll and additional costs incurred due to the temporary relocation.

Commercial General Liability

How does the CGL protect a business?

PROVIDES COVERAGE FOR CLAIMS OF BODILY INJURY, PROPERTY DAMAGE, AND PERSONAL/ADVERTISING INJURY.

What types of exposures are covered by the CGL?

A BUSINESS'S OPERATIONS - PRODUCTS MADE OR SOLD - PREMISES EXPOSURES

Are Defense Cost covered in the CGL?

DEFENSE COST ARE COVERED IN ADDITION TO POLICY LIMITS

What is the main difference between a Claims-Made and Occurrence based CGL Policy?

THE WAY EACH POLICY HANDLES THE TIMING OF COVERED INCIDENTS AND CLAIMS

The Case of XYZ’s Faulty Wiring Claim

In 2021, a construction company, XYZ Constructions, installed faulty wiring in a building. Two years later, in 2023, this resulted in an electrical fire causing significant property damage.

Occurrence-Based CGL Policy: If XYZ Constructions had an occurrence-based policy active during 2021, this policy would cover the 2023 claim. This is because the faulty wiring (the occurrence) happened during the policy period.

Claims-Made CGL Policy: If XYZ Constructions had a claims-made policy active only in 2023, it would cover the claim, assuming the policy included a retroactive date covering 2021. If the policy started in 2023 without retroactive coverage for 2021, or if the company had no active policy in 2023, the claim wouldn’t be covered; what is regarded as a “coverage gap”.

This example demonstrates how the timing of the incident, and the claim affects coverage under different CGL policy triggers.

Offense	Fine Amount
First Offense	$250
Subsequent Offenses	$500

You are playing cards with some friends and the conversation turns to insurance. You find yourself discussing coverages, deductibles, endorsements and the like. According to Florida statute what are you in engaging in?

AN INSURANCE TRANSACTION

The Case of the “Really” Hot Coffee at Main Street Café

Main Street Café is a popular café located in a bustling downtown area. The café operates in a leased space with a favorable, long-term lease at below-market rent. A significant fire caused by a faulty coffee pot damages the building where Main Street Café is located, making the space unusable. The landlord is forced to terminate terminates Main Street Café’s lease due to extensive damage to the property.

Main Street Café now faces higher rental costs to lease a new space in the same area, as market rates have increased since their original lease was signed. The café had invested in custom fittings and renovations in the leased space, which are now lost. Fortunately, Main Street Café has a Leasehold Interest policy which provides financial compensation because the lease was terminated due to a covered peril (fire). The policy covers expenses related to relocating to a new space and potential lost profits during the transition period.

The policy covers the financial impact over the period necessary to restore Main Street Café’s situation to what it would have been if the lease had not been terminated. Main Street Café receives compensation that covers the increased costs of renting a new space, the value of lost leasehold improvements, and other associated financial losses and expenses. Despite the setback, the café is able to relocate and resume operations without devastating financial strain, thanks to the Leasehold Interest coverage.

Claims-Made Disclosure Form

To ensure that policyholders understand the coverage gaps and/or defense limit exposures and gaps they may be subject to in a claims-made liability policy our agency requires formal written notice and acceptance by the insured when selling a claims-made liability policy.

DISCLOSURE FORM
CLAIMS-MADE POLICY

IMPORTANT NOTICE TO POLICYHOLDER

THIS DISCLOSURE FORM IS NOT YOUR POLICY. IT DESCRIBES SOME OF THE MAJOR FEATURES OF THE CLAIMS-MADE POLICY YOU ARE PURCHASSING. READ YOUR POLICY CAREFULLY TO DETERMINE RIGHTS, DUTIES, AND WHAT IS AND IS NOT COVERED. ONLY THE PROVISIONS OF YOUR POLICY DETERMINE THE SCOPE OF YOUR INSURANCE PROTECTION.

YOUR POLICY

Your policy is a claims-made policy. It provides coverage only for injury or damage occurring after the policy retroactive date (if any) shown on your policy and the incident is reported to your insurer prior to the end of the policy period. Upon termination of your claims-made policy an extended reporting period option is available from your insurer.

There is no difference in the kind of injury or damage covered by occurrence or claims-made policies. Claims for damages may be assigned to different policy periods, depending on which type of policy you have.

If you make a claim under your claims-made policy, the claim must be a demand for damages by an injured party. Under most circumstances, a claim is considered to be made when it is received and recorded by us or the insurance company. Sometimes, a claim may be deemed made at an earlier time. This can happen when another claim for the same injury or damage has already been made, or when the claim is received and recorded during an extended reporting period.

PRINCIPAL BENEFITS

This policy provides for ______ (insert brief description of coverage) up to the maximum dollar limit specified in the policy.

The principal benefits and coverages are explained in detail in your claims-made policy. Please read it carefully and consult your insurance producer about any questions you might have.

EXCEPTIONS, REDUCTIONS AND LIMITATIONS

Your claims-made policy contains certain exceptions, reductions, and limitations. Please read them carefully and consult your insurance producer about any questions you might have.

RENEWALS AND EXTENDED REPORTING PERIODS

Your claims-made policy has some unique features relating to renewal, extended reporting periods and coverage for events with long periods of potential liability exposure.

If there is a retroactive date in your policy, no event or occurrence prior to that date will be covered under the policy even if reported during the policy period. It is therefore important for you to be certain that there are no gaps in your insurance coverage. These gaps can occur in several ways, including:

1. If you switch from an occurrence policy to a claims-made policy, the retroactive date in your claims-made policy should be no later than the expiration date of the occurrence policy.

2. When replacing a claims-made policy with a claims-made policy, you should consider the following:

a. The retroactive date in the replacement policy should extend far enough back in time to cover any events with long periods of liability exposure, or

b. If the retroactive date in the replacement policy does not extend far enough back in time to cover events with long periods of liability exposure, you should consider purchasing extended reporting period coverage under the old claims-made policy.

3. If you replace this claims-made policy with an occurrence policy, you may not have insurance coverage for a claim arising during the period of claims-made coverage unless you have purchased an extended reporting period under the claims-made policy. Extended reporting period coverage must be offered to you by law for at least one year after the expiration of the claims-made policy at a premium not to exceed 200% of your last policy premium.

CAREFULLY REVIEW YOUR POLICY REGARDING THE AVAILABLE EXTENDED REPORTING PERIOD COVERAGE, INCLUDING THE LENGTH OF COVERAGE, THE PRICE AND THE TIME PERIOD DURING WHICH YOU MUST PURCHASE OR ACCEPT ANY OFFER FOR EXTENDED REPORTING PERIOD COVERAGE.

The Case of XYZ’s Faulty Wiring Claim

XYZ Constructions installed faulty wiring in 2019 and their claims-made CGL policy expired in December 2022.

In February 2023, a fire caused by this wiring leads to a claim. Although their policy has expired, thanks to the Basic Extended Reporting Period (BERP), XYZ can still report this claim. BERP allows reporting of claims for 60 days post-expiration for incidents that occurred during the policy period. Since the faulty wiring (the incident) happened during the policy and the claim was reported within 60 days of policy expiration, the claim is covered.

This case illustrates how BERP provides a safety net for reporting claims post-policy expiration for incidents that occurred while the policy was active.

The Case of XYZ’s Faulty Wiring Claim

Once again, consider XYZ Constructions with their 2021 faulty wiring installation. Their claims-made CGL policy expired in 2022, and the fire occurred in 2023. XYZ purchased the Supplemental Extended Reporting Period (SERP) after their policy ended. Now, in 2025, when a new claim arises due to late-discovered damages from the same wiring issue, XYZ is still able to report this claim under SERP. This is because SERP allows an indefinite reporting period for incidents that occurred during the policy term. Moreover, SERP provides additional coverage limits, acting as excess coverage over any other insurance XYZ might have.

Montrose Chemical Corporation v. Admiral Insurance Company

The Montrose Chemical Corporation v. Admiral Insurance Company case, decided by the California Supreme Court in 1995, revolved around the issue of insurance coverage for continuous or progressively deteriorating property damage and bodily injuries due to environmental contamination.

Montrose Chemical Corporation had deposited chemical waste at the Stringfellow disposal site between 1968 and 1972. Early signs of toxic waste seeping from the site were observed in 1970, and by 1975, the site was declared a public nuisance. This case included claims for continuous property damage and bodily injuries, including wrongful deaths that occurred between 1982 and 1986, during the policy periods of Admiral’s Commercial General Liability (CGL) policies issued to Montrose.

Montrose sought a declaration from its insurers, including Admiral, for their duty to defend and indemnify in the lawsuits related to the environmental contamination. Admiral argued against their duty to defend or indemnify, citing that the damages were either known before the policy’s effective date or the discovery of contamination occurred before their policy period. However, the trial court’s summary judgment in favor of Admiral was reversed on appeal.

The court rejected the “manifestation of loss” trigger for coverage, typically used in first-party insurance cases, finding it incompatible with the language of Admiral’s third-party CGL policies. Instead, the court considered a “continuous injury trigger” analysis, under which if injury or damage is continuous throughout successive policy periods, coverage is triggered under the policies in effect for all those periods.

This case significantly impacted how continuous or progressively deteriorating damages were treated in the context of liability insurance, particularly in environmental contamination cases. It highlighted the complexities involved in determining the “occurrence” or “loss” in such cases, leading to important clarifications in the interpretation of insurance policies.

The decision in the Montrose Chemical Corporation v. Admiral Insurance Company case prompted changes to the ISO Commercial General Liability (CGL) policy. Specifically, it led to the inclusion of “anti-Montrose” provisions in the policy’s insuring agreement. These provisions, introduced in the 2001 revision of the ISO standard policy (form CG 00 01), are designed to limit coverage for continuous or progressive injury or damage to a single policy year. They aim to clarify and restrict coverage for cases involving continuous or progressively deteriorating losses, a response to the Supreme Court’s ruling that damage continuous over several policy periods could potentially trigger coverage under all relevant policies.

The Case of a Striking Resemblance

ABC Widgets has launched an advertising campaign for its new product. The campaign includes a slogan and visual elements strikingly similar to those of a competitor, XYZ Gizmos. XYZ Gizmos, seeing their brand’s distinctive style replicated, files a lawsuit against ABC Widgets for advertising injury, claiming that the campaign misappropriates their advertising ideas and style, causing confusion among consumers and damaging their brand.

ABC Widgets turns to their Commercial General Liability (CGL) insurance for coverage under the advertising injury component of their policy, seeking protection against this legal action and potential damages.

The CGL’s Coverage B – Personal and Advertising Injury coverage covers legal liabilities arising from advertising activities. This includes claims of infringement of copyrighted or trademarked material, misappropriation of advertising ideas or style, defamation (libel and slander) in advertisements, and violation of privacy rights. Fortunately for ABC Widgets they have a CGL which is designed to protect against legal actions and damages resulting from advertising activities that inadvertently infringe upon another party’s rights or cause reputational harm.

The Case of the Browsing Customer

BookNook is a small bookstore in your town. The bookstore, owned by Ms. Emily, is a popular spot for locals and tourists. One afternoon, Mr. Johnson, a regular customer, is browsing through the aisles. Unfortunately, he doesn’t notice a small step down into a sunken section of the store. He trips over the step and falls, injuring his ankle.

Mr. Johnson requires medical attention for his injury. He visits the local emergency room, where he receives treatment, including an X-ray and a cast for a minor fracture. The medical expenses come up to $2,500.

Mr. Johnson does not want to sue Ms. Emily or her bookstore, as he understands it was an accident and he has been a long-time customer. However, he is concerned about the medical bills. He informs Ms. Emily about the incident and the resulting medical expenses.

Ms. Emily, in turn, contacts her insurance company. She has a Commercial General Liability (CGL) insurance policy, which includes Coverage C – Medical Payments. This coverage is designed to pay for medical expenses incurred by a non-employee who is injured on the business’s premises or due to the business’s operations, regardless of fault.

The insurance company reviews the claim and finds that the incident is covered under the CGL policy. They agree to pay the $2,500 in medical expenses incurred by Mr. Johnson. This payment is made irrespective of legal liability, meaning it doesn’t matter whether the bookstore was negligent or not.

Thus, Coverage C – Medical Payments under the CGL policy helps BookNook cover the medical expenses for Mr. Johnson’s injury, maintaining good customer relations while avoiding potential litigation.

The Case of Alphabet Soup

Your city has decided to renovate its central park. The city has hired ABC Construction, a reputable construction company, to handle the project. As part of the contract, ABC Construction is required to obtain an Owners and Contractors Protective (OCP) Liability policy to protect your city against specific liabilities arising from ABC Construction’s operations.

During the renovation, ABC Construction subcontracted a portion of the work to XYZ Electrical Services to install new lighting in the park. Unfortunately, while working, one of XYZ’s employees accidentally damages an underground water line, causing a significant water leak. This leak leads to flooding in a nearby area, damaging property and causing a temporary shutdown of a local business.

The damaged business owner files a claim against your city, for the losses incurred due to the flooding. Since the damage occurred as a result of the construction operations, the city turns to the OCP policy it required ABC Construction to purchase.

Upon receiving the claim, the insurance company investigates and confirms that the damage was indeed a result of the subcontractor’s actions during the park renovation. The OCP policy is designed to cover the city for liability arising out of the contractor’s work but performed by the subcontractors. Hence, the insurance company under the OCP policy covers the damages and any legal costs associated with the claim.

In this scenario, the OCP policy acts as a safeguard for your city, ensuring that the city is protected from liability claims arising directly from the contractor’s work, even though the actual damage was caused by a subcontractor. This helps to mitigate financial risks for the city and maintains the contractual relationship between the city and the contractor, ABC Construction.

The Case of Too Much of a Good Thing

Imagine a beautiful, upscale wedding venue called “Elegant Occasions,” known for hosting lavish weddings. The venue offers a full-service package, which includes catering and serving alcohol at events. They have an ISO Commercial General Liability policy with added Liquor Liability Coverage, as they regularly serve alcohol at their events.

One summer evening, Elegant Occasions hosts a wedding reception. The event is joyous, with guests enjoying the festivities and the open bar. Towards the end of the evening, one of the guests, Mr. Dawson, who has consumed a significant amount of alcohol, decides to drive home. Unfortunately, on his way, he is involved in a car accident, causing serious injury to another driver.

The injured driver files a lawsuit against both Mr. Dawson for driving under the influence and Elegant Occasions for overserving alcohol to Mr. Dawson, contributing to his impaired state. The claim against Elegant Occasions alleges that they were negligent in monitoring the alcohol consumption of their guests, particularly Mr. Dawson.

Elegant Occasions contacts their insurance provider about the lawsuit. Their Liquor Liability Coverage is specifically designed to protect businesses that serve, sell, or furnish alcohol against claims that occur due to the actions of an intoxicated person. The insurance company investigates the claim and determines that the venue did indeed overserve alcohol to Mr. Dawson, contributing to his impairment and the subsequent accident.

Thanks to their Liquor Liability Coverage, Elegant Occasions is covered for the legal defense costs, and any settlements or judgments that may arise from this claim, up to the policy limits. Without this coverage, the venue would have been financially responsible for these costs, which could have been substantial and potentially damaging to their business. This coverage helps to protect Elegant Occasions from the unique risks associated with serving alcohol at events.

The Case of What Goes Up Might Come Down… Unexpectedly

“Global Equipment Manufacturing Corp.” (GEMC) is a well-established company known for producing heavy machinery used in construction and mining. Recognizing a niche market, GEMC recently expanded its product line to include specialized helicopters designed for construction applications, such as airlifting heavy materials to hard-to-reach building sites.

Given the unique risks associated with manufacturing and operating helicopters, GEMC’s management team realized that their standard Commercial General Liability (CGL) policy was insufficient to cover the potential liabilities of their new helicopter line. The standard policy had lower limits and did not adequately address the specific risks associated with aviation products. To mitigate these risks, GEMC decided to purchase a monoline Products and Completed Operations Liability Coverage policy exclusively for their helicopter line.

This specialized policy was tailored to provide higher coverage limits and specific protections that catered to the nuances of aviation liability. It included coverage for claims arising from any defects or malfunctions of the helicopters, as well as any accidents occurring during their operational life, post-manufacture.

A few months after the launch of the helicopter line, an incident occurred. One of the helicopters sold to a construction company experienced a mechanical failure during operation, leading to an emergency landing on a construction site. Thankfully, no one was injured, but the emergency landing caused significant property damage to the construction site and the helicopter itself.

The construction company filed a claim against GEMC, alleging that a defect in the helicopter’s design caused the mechanical failure. GEMC immediately reported the incident to their insurance provider under their monoline Products and Completed Operations Liability Coverage.

The insurance company conducted a thorough investigation and concluded that a flaw in the helicopter’s manufacturing process had led to the failure. The monoline policy covered the legal defense costs for GEMC and the damages claimed by the construction company, up to the policy limits.

The specialized nature of the helicopter line, with its inherent risks, required higher coverage limits than what was provided under GEMC’s standard CGL policy. The monoline policy was specifically designed to cover the unique risks associated with the manufacturing and operation of helicopters, a coverage not adequately provided by the standard CGL policy. By having a separate policy for the helicopter line, GEMC ensured that claims related to this line would not impact the premiums or limits of their other insurance policies.

This example demonstrates the importance and effectiveness of a monoline Products and Completed Operations Liability policy in providing specialized and comprehensive coverage for specific high-risk product lines that are not adequately covered under standard CGL policies.

The Case of InkPro’s Not-So-Pro Mishap

InkPro Manufacturing Co” is a company that specializes in producing and distributing high-quality ink for printer cartridges. They operate a large manufacturing facility where various chemicals are used and stored to create the ink. Aware of the environmental risks associated with handling these chemicals, InkPro has an ISO Pollution Liability coverage form as part of their insurance portfolio.

During a particularly busy production period, a malfunction occurs in one of the storage tanks, resulting in a significant leak of a hazardous chemical used in the ink-making process. The chemical quickly seeped into the ground, contaminating the local groundwater and soil.

The contamination was discovered when local residents, living near the facility, started experiencing water quality issues, and an investigation traced the problem back to InkPro’s facility. Environmental agencies quickly got involved, and InkPro was faced with claims for environmental damage, including cleanup costs, property damage to the affected residents, and potential health claims.

InkPro immediately notified their insurance company about the incident. The Pollution Liability coverage form is designed to address claims for bodily injury, property damage, and environmental damage caused by pollution incidents such as this chemical leak.

Upon review, the insurance company confirmed that the incident is covered under the policy. The coverage helped InkPro handle the costs associated with the cleanup of the contaminated soil and water, legal defense costs, and any settlements or judgments related to property damage and bodily injury claims from the affected residents.

InkPro is protected against claims that standard Commercial General Liability policies typically exclude, such as environmental contamination. Their policy covers the expensive cleanup operations required to remediate the contaminated area, which could be financially crippling without insurance. The policy also provides legal defense for claims related to the pollution event.

This claim demonstrates the critical importance of Pollution Liability coverage for businesses that handle potentially hazardous materials. Without this coverage, InkPro would have faced significant financial burdens due to the cleanup costs and legal claims, potentially threatening the company’s financial stability and reputation.

Excess Liability Policy Recommendation

A business might choose to purchase an Excess Liability policy instead of a Commercial Umbrella policy based on their specific insurance needs and risk profile. Here are key reasons for this choice:

Specific Coverage Needs: Excess Liability policies generally extend the limits of an underlying liability policy. If a business has identified that their primary risk exposure is adequately covered by their existing policies (like General Liability, Employer’s Liability, or Auto Liability) but the coverage limits are insufficient, an Excess Liability policy can provide the additional limit needed without broadening the coverage.

Cost Considerations: Excess Liability policies can be more cost-effective than Commercial Umbrella policies in certain situations. If a business is primarily concerned with increasing the limits of their existing coverage rather than broadening the scope of coverage, an Excess Liability policy might be a more economical choice.

Consistency in Coverage Terms: Since Excess Liability coverage typically follows the terms and conditions of the underlying policy, businesses can have a clear understanding of coverage without the need to manage differing terms that might come with a Commercial Umbrella policy.

Risk Management Strategy: For businesses with a high risk in a specific area covered by their primary policy, an Excess Liability policy can provide the necessary additional coverage. This can be a strategic choice for companies that have assessed their risk profiles and determined that their greatest exposures are adequately addressed by their existing policies, but with limits that are too low.

Industry-Specific Needs: Certain industries might find that Excess Liability policies better fit their risk profiles. For example, a company operating in a highly specialized industry with unique risks may find that standard Umbrella policies do not offer the level of tailored coverage they require for their primary risks.

Regulatory or Contractual Requirements: Sometimes, contractual obligations or regulations may require businesses to have higher limits on their existing liability policies, which can be effectively addressed by an Excess Liability policy.

Simplicity and Control: Businesses may prefer the simplicity of having an Excess policy that clearly aligns with their underlying policy’s terms, conditions, and exclusions, offering more predictability in the event of a claim.

In summary, while Commercial Umbrella policies offer broader coverage which extends beyond the limits of primary policies and can cover areas that are not included in the primary policies, Excess Liability policies are focused on providing additional limits to an existing coverage. The decision between the two depends on the specific needs, risk appetite, and financial considerations of the business.

The Case of The Really Big Claim

CityScape Constructors, a large construction company, specializes in high-rise commercial buildings. They operate in urban areas where the risk of significant property damage or injury is higher due to the densely populated surroundings. CityScape has a standard Commercial General Liability (CGL) policy with a coverage limit of $2 million per occurrence.

CityScape is contracted to build a new skyscraper in a busy downtown area. Aware of the potential high-risk incidents in such a project — like falling debris or construction accidents — they conduct a risk assessment. The assessment reveals that while their CGL policy covers the general risks associated with construction, the $2 million limit may not suffice in a worst-case scenario involving substantial property damage or multiple injuries.

To manage this risk, CityScape opts for an Excess Liability policy rather than a Commercial Umbrella policy for the following reasons:

Their primary risk, large-scale construction accidents, is already covered under the CGL policy, but the policy limit is not high enough for the scale of their projects.

An Excess Liability policy is more cost-effective for increasing coverage limits without broadening the scope of coverage, which is not needed in their case.

Some of their contracts with clients might require higher liability limits than what their standard CGL policy offers.

During construction, an unfortunate incident occurs where a piece of construction material falls and damages several cars and a storefront. The total claims for property damage and business interruption exceed $3 million.

CityScape’s CGL policy covers the first $2 million of the damages. Their Excess Liability policy then provides coverage for the additional $1 million. This extra layer of protection shields CityScape from significant financial loss and potential bankruptcy.

In this case, CityScape Constructors’ decision to purchase an Excess Liability policy was strategically aligned with their high-risk operations in construction. The policy offered an effective solution to extend their existing liability coverage limits, addressing their primary concern of potential high-cost damages and claims associated with their construction projects.

Commercial Umbrella Policy Recommendation

CityScape Constructors, while primarily focused on high-rise construction, has diversified its services. Alongside their main construction projects, they have started offering consulting services for building safety and have begun renting out construction equipment. These new ventures introduce a range of liabilities that might not be fully covered under their existing Commercial General Liability (CGL) and other specific policies.

With the expansion of their business activities, CityScape realizes that they now face a broader spectrum of risks. While their CGL policy covers general liability issues related to construction, it may not fully encompass the risks associated with their consulting services or the equipment rental business. There are potential professional liability risks in consulting and property risks in equipment rental that might not be adequately covered.

Given the diversity of their new risks, CityScape opts for a Commercial Umbrella policy to cover these diverse exposures for the following reasons:

The Umbrella policy not only provides additional coverage limits over their CGL policy but also fills in coverage gaps that might exist in their professional liability and property policies related to consulting and equipment rental. The new business segments introduce liabilities that are different from their core construction activities, necessitating a policy that offers a wider scope of coverage. A Commercial Umbrella policy aligns with their strategy to manage the diverse risks associated with the multiple facets of their business.

While CityScape’s core construction activities proceed without major incidents, a significant claim arises from their consulting division. An error in their safety consultation results in a client’s project encountering structural issues, leading to delays and additional costs. The client sued CityScape for negligence in their consulting services.

Additionally, a rented piece of equipment malfunctions while in use by a client, causing property damage. The equipment rental insurance has limits that are exceeded by this claim. In both cases, the claims exceed the limits of CityScape’s Professional Liability and Equipment Rental policies. The Commercial Umbrella policy kicks in, covering the excess claims. This includes the legal defense costs and any settlements or judgments, ensuring CityScape is protected from these substantial financial liabilities.

In this updated case, the decision to opt for a Commercial Umbrella policy is more fitting for CityScape Constructors due to the diversification of their business operations. The Umbrella policy provides a safety net that extends beyond just increasing limits—it addresses various aspects of their expanded risk profile, making it a strategic choice for comprehensive risk management.

The Case of John Goode Had a Bad Day

Policy Type: Lawyers
Professional Liability, claims-made policy
Policy Period: January 01, 2023 – December 31, 2023
Retroactive Date: January 01, 2020
Coverage Limit: $1,000,000, including defense costs
Deductible: $10,000

John Goode, Attorney-at-Law, reviews a complex property sale contract for his client, Sarah in 2021. He misses a crucial clause that exposes Sarah to significant financial risk. Sarah’s real estate deal goes through, but the overlooked clause in the contract results in her incurring substantial financial losses. She decides to sue John for negligence in 2023. He immediately notifies his insurance provider about the claim.

John informs his insurer about the claim in 2023 that occurred in 2021. The retroactive date in his 2023 policy is January 01, 2020, which means any claim that occurred on or after January 01, 2020, and within the current policy term is covered.

The total cost for John’s defense and the eventual settlement with Sarah amounts to $800,000. Since John’s policy has a limit of $1,000,000 which includes claim expenses, the settlement and defense costs eat up a significant portion of this limit. John is responsible for the $10,000 deductible, which is paid out-of-pocket before the insurance coverage kicks in. The insurance company covers the remaining $790,000 of the claim, as it falls within the policy’s coverage limit.

John Goode’s claim is covered because it was made and reported while John’s policy was in effect and after the retroactive date listed in his policy. The policy limit includes defense costs, not just the settlement or judgment amounts. In John’s case, this meant that the available funds for settlement were reduced by the defense costs.

EPLI Exclusions

Exclusion Category	Description
Criminal, Fraudulent, or Malicious Acts	Excludes acts that are criminal, fraudulent, or done with malicious intent.
Americans with Disabilities Act Claims	Excludes claims related to violations of the Americans with Disabilities Act.
Violation of Laws Applicable to Employers	Excludes claims arising from violations of laws that apply to employers.
Strikes and Lockouts	Excludes issues related to strikes and lockouts initiated by employees.
Sexual Harassment (with exception)	Excludes sexual harassment claims but covers the vicarious liability of the employer in some cases.
Employment Termination/Relocation	Excludes claims related to employment termination or relocation due to business decisions.
Intentional Injury	Excludes claims involving intentional injury caused by the employer or employees.
Retaliatory Actions	Excludes retaliatory actions against whistleblowers or employees who report misconduct or violations.

In the EPL Policy are Defense Cost covered?

POLICY LIMITS ARE INCLUSIVE OF DEFENSE COST - DEFENSE COST ARE NOT IN ADDITION TO POLICY LIMITS

The Helping Hands EPLI Case

Policy Type: Employment Related Practices, claims-made policy
Policy Period: January 01, 2023 – December 31, 2023
Retroactive Date: January 01, 2020
Coverage Limit: $1,000,000 with 5% Co-Pay
Deductible: $2,500

Emily Johnson was the Program Coordinator for Helping Hands, a non-profit located in Leesburg, Florida. Emily alleges wrongful termination, claiming that her dismissal from Helping Hands was based on discriminatory practices related to her disability. Emily, who has a hearing impairment, asserts that her termination was not due to performance issues but rather due to her request for reasonable accommodations; such as specialized communication equipment and a flexible work schedule).

Despite multiple requests, Helping Hands failed to provide necessary accommodations to facilitate her effective communication and productivity in the workplace. Emily alleges that comments were made by her supervisor that were discriminatory in nature, referring to her disability in a demeaning way. Emily asserts that she was performing her duties satisfactorily and that her termination was directly related to her disability and the request for accommodations.

Helping Hands responded to the claim by stating that Emily’s termination was due to budget cuts and restructuring, which led to the elimination of her position. They assert that the decision was not related to her disability or her request for accommodations.

Helping Hands EPL policy covers claims of wrongful termination, discrimination, and failure to provide reasonable accommodations. The policy will provide coverage for legal defense costs, potential settlements, or damages awarded if the claim is found to be valid. The policy may also cover the costs of any required accommodations that were not previously implemented, should it be determined that the non-profit was at fault.

Can you guess how much Cyber Attacks cost in 2023?

$12.5 BILLION

The Case of the Consulting Firm Needing a Consultant

XYZ Consulting is a small consulting firm that provides IT services to its clients. It has a claims-made Cyber Liability insurance policy with a policy period from January 1, 2022, to December 31, 2022, and a retroactive date of January 1, 2020.

In November 2022, one of XYZ Consulting’s clients files a lawsuit against the company, alleging that their confidential information was compromised due to a security breach caused by XYZ Consulting’s negligence. The client claims that XYZ Consulting failed to implement proper security measures, resulting in the client’s data being compromised. XYZ Consulting reports the claim to its insurance company immediately after being served with the lawsuit.

The claim falls within the retroactive period of the policy, and it was reported during the policy period, so it is covered under XYZ Consulting’s Cyber Liability insurance policy.

In this case, the claims-made policy provides coverage for claims made during the policy period, regardless of when the incident occurred, as long as it falls within the retroactive period and is reported during the policy period.

Exposure Analysis

Nestled in the heart of downtown Orlando, Florida, Savory Bites is conveniently situated in a bustling area known for its vibrant dining scene. The restaurant boasts a modern yet cozy ambiance, with tasteful décor that includes warm lighting, comfortable seating, and a blend of rustic and contemporary design elements. It has a seating capacity of around 100 guests, including a main dining area, a private dining room for special events, and an outdoor patio that’s especially popular in warmer months. The atmosphere is welcoming and sophisticated, making it a popular destination for both casual diners and those seeking a more upscale dining experience. Savory Bites specializes in a fusion of local Florida flavors with international culinary techniques, offering a unique menu that includes gourmet dishes and creative appetizers. Their signature dishes often incorporate locally sourced ingredients, highlighting the best of regional produce.

The restaurant features a well-stocked bar, serving an array of fine wines, craft beers, and artisanal cocktails. The bar area is a lively space, attracting a crowd that enjoys the combination of innovative drinks and a relaxed social setting. Savory Bites attracts a diverse clientele, including local professionals, food enthusiasts, tourists, and families. The restaurant is known for its excellent service, and its staff is trained to provide a memorable dining experience. Apart from dining-in, Savory Bites offers catering services for events and a robust delivery system for local patrons.

Savory Bites stands out in Orlando’s culinary landscape for its delightful fusion cuisine, inviting atmosphere, and commitment to quality service, making it a cherished establishment in the local community. With that said, Savory Bites has a number of exposures that can be insured in a Commercial Package policy.

Exposures

Premises Liability: Given the foot traffic of customers and staff, there’s a constant risk of slips, trips, and falls within the restaurant. Wet floors, uneven surfaces, or accidental spills increase this risk.
Product Liability: This pertains to the food and beverages served. There’s a risk of foodborne illnesses, allergic reactions, or other health issues related to the consumption of the restaurant’s offerings.
Personal and Advertising Injury: This includes risks such as libel, slander, or violation of privacy rights. For instance, issues might arise from the restaurant’s marketing materials or social media interactions.
Liquor Liability: While typically covered under a separate policy, if Savory Bites serves alcohol, there’s an exposure to claims arising from the actions of intoxicated patrons.
Property Damage: Risk of fire, theft, or other damage to the building and contents.
Third-party Property Damage: Damage to a customer’s property while on the premises (like damage to personal belongings due to a restaurant-caused incident) falls under this category.
Commercial Auto: Accidents involving delivery vehicles.
Workers’ Compensation: Employee injuries occurring in the kitchen or on-premises.
Employment Practices Liability: Claims related to employment issues like discrimination, wrongful termination, or harassment.

Savory Bites agent has proposed a Commercial Package Policy which provides a well-integrated and comprehensive insurance solution. It effectively addresses the diverse and specific risks associated with operating a mid-sized upscale dining restaurant, from property damage to liability issues, offering a streamlined approach to risk management.

Commercial Package Policy Components
Commercial Property Insurance
Coverage: Protects against damage to the restaurant building and contents, including kitchen equipment, furniture, and inventory.

Relevance: Addresses the high risk of property damage inherent in restaurant operations.

Liquor Liability Insurance
Coverage: Provides protection against claims arising from the serving of alcohol, like property damage or injury claims.

Relevance: Essential for “Savory Bites” due to the bar area and alcohol service.

Commercial Auto Insurance
Coverage: Covers liabilities and damages in case of accidents involving the restaurant’s delivery vehicles.

Relevance: Crucial for delivery services offered by the restaurant, safeguarding against vehicular risks.

Workers’ Compensation Insurance
Coverage: Offers benefits to employees who are injured or fall ill as a result of their job.

Relevance: Protects the restaurant from financial liabilities of workplace injuries, common in kitchen environments and service areas.

Employment Practices Liability Insurance (EPLI)
Coverage: Protects against claims of employment-related issues such as wrongful termination, discrimination, or harassment.

Relevance: Critical for mitigating risks associated with managing a diverse staff and ensuring a safe, respectful workplace.

This package addresses a wide range of risks specific to Savory Bites and restaurant operations in general. Cost-Effective: Bundling multiple coverages in a package is typically more economical than purchasing them separately. The CPP will be easier to manage as one comprehensive policy versus multiple individual policies. The policy has been tailored to the unique needs and risks of Savory Bites and limits gaps and overlaps in coverage, ensuring a well-rounded protection.

Excluded Businesses	Description of Excluded Exposure
Automobile-related Businesses	Excludes automobile repair/service stations, auto dealers, parking lots/garages, except if incidental to another eligible class.
Bars and Pubs	Excludes bars and pubs.
Certain Condominium Associations	Excludes condominium associations other than office or residential condominiums.
Manufacturing or Processing Occupancies	Excludes buildings partly/wholly for manufacturing/processing, unless they are eligible processing risks.
Businesses with Manufacturing/Processing Sites	Excludes insureds with manufacturing, processing, or servicing locations, unless designated as eligible and meet all criteria.
Household Personal Property	Excludes household personal property.
Certain Dwellings	Excludes one- or two-family dwellings, except garden apartments with multiple units under common ownership/control.
Places of Amusement	Excludes places of amusement.
Financial Institutions	Excludes banks, loan associations, credit unions, stockbrokers, etc.

Self-Storage with Outdoor Vehicle Storage

Excludes self-storage facilities offering outdoor storage for motorized vehicles.