chapter 1, 4 acrm 402

These flashcards cover key vocabulary related to the cyber insurance environment, focusing on challenges, types of coverage, and specific risks.

Cyber Risk

The potential for financial loss or harm resulting from a cyberattack, including threats to personal and commercial data.

Ransom Attacks

A type of cyber threat where a cybercriminal holds a victim's data hostage in exchange for payment to release it.

Supply Chain Attacks

Cyberattacks that target the weakest link in a business’s third-party vendors, posing risks to the entire supply chain.

Cloud Vulnerability

The increased risk of cyberattacks resulting from businesses' dependence on cloud services, which can affect many companies simultaneously.

Absence of Historical Loss Data

A significant challenge for insurers in assessing cyber risk due to a lack of data on past losses from cyberattacks.

Quantification

The process of measuring the impact of cyber-related losses, which can be difficult due to their intangible nature.

First-Party Coverage

Insurance coverage that protects an organization from losses directly incurred by their own actions or failures during a cyber event.

Third-Party Coverage

Insurance coverage that protects against claims made by other parties as a result of a cyber event.

Silent Cyber Exposures

Exposure where traditional policies inadvertently cover cyber risks that were not specifically intended by the insurance terms.

Cyber Risk Aggregation

The risk that a single cyber event can trigger multiple losses across various lines of coverage or insureds, leading to large-scale financial impact.

Specialized Cyber Risk Insurance Policies

Insurance products specifically designed to address the unique risks associated with cyber threats, including both first-party and third-party coverages.

Reputational Damage

Loss of reputation and trust resulting from a data breach or cyber incident that can significantly impact a business's financial performance.

Regulatory Fines and Legal Costs

Financial penalties and expenses incurred from legal action taken against organizations for failing to protect data.

liability losses

an organization is held legally liable to another individual or organization for injury or damage

prevalent commercial liability loss exposures

premises and operations

products and completed operations

automobile

workers compensation

employment practices

cyber

professional liability

Premises and Operations Liability

• arise from bodily injury or property damage

• occurs on an organization’s premises

• or is caused by the organization’s ongoing, NOT COMPLETED, operations away from its premises

• usually based on negligence

• arise out of the use of certain types of mobile equipment

  

negligence

organization’s failure to exercise the appropriate degree of care owed to a person under the circumstances

products and completed operations liability

• arise out of:

  • the manufacture

  • distribution

  • sale of an unsafe, dangerous, or defective product

  • failure of the manufacturer, distributor, or retailer to meet its legal duties to the user or consumer of the product

    

basis for Products and Completed Operations Liability

negligence, misrepresentation, fraud, deceit, and breach of warranty

what does plaintiff have to prove for products and completed ops liab

the defendant failed to take reasonable care in the design, manufacture, distribution, or sale of the article that caused the injury

strict liability

focuses on safety of product

completed operations liability

legal responsibility of a contractor, repairer, or other entity for bodily injury or property damage arising out of the entity’s completed􀁢work

forms of commercial liability exposures that orgs may face

•1. Automobile liability

•2. Workers compensation and employers liability

•3. Employment practices liability

•4. Cyber liability

•5. Professional liability

During a picnic in a family’s backyard, a wooden deck completed by a contractor a few weeks earlier collapses under some of the guests, injuring them. The guests sue the contractor for payment of their resulting medical expenses and loss of income. What type of liability does this represent

This is an example of products and completed operations liability because it arose from the contractor’s completed wor

A plaintiff must prove three elements to recover in a products liability suit based on strict liability in tort. What are those three elements

To recover in a products liability suit based on strict liability in tort, the plaintiff must prove that the product was defective when it left the manufacturer’s or supplier’s custody or control, that the defective condition made the product unreasonably dangerous, and that the defective product was the proximate cause of the plaintiff ’s injury

CGL coverages

•Coverage A—Bodily Injury and Property Damage Liability,

•Coverage B—Personal and Advertising Injury Liability, and

Coverage C—Medical Payments

rate calculation for Bodily injury and property damage liability

premises and operations rate applied to appropriate exposure base

products and completed operations rate applied to appropriate exposure base

covered losses under bodily injury and property damage liability

injuries caused by finished products

• defective appliances, poorly constructed buildings that could collapse

t/f bodily injury and property damage resulting from use of mobile equipment are included in premises and operations liability within a CGL

T

t/f bodily injury/prop damage from use of aircraft, autos, watercraft is included in prem/ops liab within a CGL

F

coverage b under CGL

personal and advertising injury liability

personal and advertising injury liability

any injury (loss of reputation, humiliation, economic loss, bodily injury) arising from offenses (false arrest, wrongful eviction, libel, slander, infringing on copyright on an advertisement)

coverage A under CGL

bodily injury and property damage liability

coverage C under CGL

medical payments

CGL - coverage c medical payments

pays medical expenses of others in certain circumstances

medical exp must be from bodily injury caused by accident on insured’s premises/ arising from insured’s operations (NOT COMPLETED OPS) anywhere in coverage territory

t/f - CGL coverage c is liability insurance

f - coverage c doesn’t require insured to be legally liable, so its not technically liability insurance

parts of CGL policy

• declarations

• coverage forms

  • a - bodily injury and property damage

  • b - personal and advertising injury

  • c - medical payments

  • any extra coverage forms will include

    • who is an insured

    • limits of insurance

    • conditions

    • definitions

• endorsements

policy endorsement

allow you to tailor a general liability coverage form to your needs

• make policy comply w state laws

• eliminate exposures insurer isn’t willing to insure

what 3 insuring agreements are included in a typical CGL coverage form?

a - bodily injur personal property damage

b - personal advertising injury

c - medical payments

what are the components of a CGL coverage part?

1+ GL liability declaration form, 1+ GL coverage form, any endorsements

declaration forms available with a commercial auto coverage form

1. business auto declarations

2. auto dealers declarations

3. motor carrier declarations

types of commercial auto coverage forms

1. business auto coverage form

2. auto dealers coverage form

3. motor carrier coverage form

why did ISO (Insurance Services Office) develop 2 commercial auto endorsements

in response to the rise in transportation network companies (TNC)

2 ISO developed commercial auto endorsements

• public or livery passenger conveyance endorsement

• A second endorsement containing both a Public or Livery Passenger Conveyance exclusion and a similar exclusion applicable to TNC delivery services

  

3 components of commercial auto coverage part

• commercial auto declarations form

• commercial auto coverage form

• endorsements

BACF

business auto coverage form

what types of organizations are usually ineligible for coverage under BACF

• auto dealers

• trailer dealers

• other land motor vehicle dealers

• organizations providing transport by auto for a commercial enterprise

CPP Commercial Package Policy

covers 2+ lines of business by combining ISO’ s commercial lines coverage parts

monoline policy

policy covering a single line of business

•Jake owns a car dealership and approaches his insurer about coverage under the Business Auto Coverage Form (BACF). What can Jake expect to learn about the dealership’s eligibility for this form?

Jake will find out that auto dealers, trailer dealers, other land motor vehicle dealers, and organizations providing transportation by auto in furtherance of a commercial enterprise typically are not eligible for coverage under the BACF.

why would a corp by a D&O liability policy

to protect its directors and officers against liability claims alleging:

• breach of fiduciary duty that results in financial/reputational loss for the corporation

• and/or to finance its indemnification agreements with directors and officers

3 insuring agreements in a D&O policy

A- direct coverage for directors and officers

b- indemnification coverage

c- entity coverage

when does D&O policy coverage kick in?

• claims-made coverage trigger (coverage triggers when a claim is made within a policy period, not when a claim occurs)

• criminal proceedings not included in the claim

what is a loss (D&O)

defense costs, damages

wrongful act (D&O)

multiple claims arising from one wrongful act are treated as one

usually restricted by exclusions and other limitations

A corporation is insured under a D&O policy that provides only Coverage A and Coverage B. A director is held liable for loss caused by a covered wrongful act, and the corporation is lawfully able to indemnify the director. Which coverage will the loss be paid under: Coverage A or Coverage B?