Other Types of Property and Casualty Insurance- From Exam Outline

Louisiana P&C Exam

Specialty Liability Insurance Policies

These are non-standard forms with unique provisions and conditions particular to the risks of the insured. These provide coverage for exclusions on the commercial general liability form.

Professional Liability

This protects certain professionals from losses that arise out of their professional conduct. There are two types of these policies for professionals that are expected to maintain a high standard of care.

Errors and Omissions Insurance

Written for professionals who provide services and whose negligent acts or omissions may result in financial harm to a third party. Minimum limit of liability is $1 million, which may include defense costs.

Employment Practices Liability (Management Liability)

This policy protects officers, directors, and other managers from losses that arise of their fiduciary responsibilities and other duties as business leaders.

Directors and Officers Liability Policy

This policy is written to protect the directors and officers of a corporation or other legal entity for wrongful acts committed while acting in their capacity as directors and officers for the organization. Three insuring agreements are available: one for claims, one for reimbursing the company for money spent indemnifying the directors and officers, and the last for insuring losses to the company itself.

Employment Practices Liability Insurance

This provides coverage against claims made by former, current, and potential employees alleging that their legal rights were violated. Rights like wrongful termination, defamation, and discrimination.

Internet Liability and Network Protection Policy

This policy provides liability coverages on a claims-made basis for risks that are specific to business use of the internet. There are 5 insuring agreement options: Website Publishing Liability, Network Security, Replacement or Restoration of Electronic Data, Cyber Extortion, and Business Income and Extra Expenses.

Commercial Umbrella

Form of excess coverage designed to insure against catastrophic losses and provide coverage that is more comprehensive than primary insurance.

Umbrella Coverage Options

Excess- pays when loss exceeds underling insurance

Broad- pays when there is no underling primary insurance

Automatic replacement- replaces coverage for underlying policies when aggregate limits are impaired or exhausted.

Commercial Umbrella Coverages

Must have underlying coverage of $1 million, coverage A is for property damage and bodily injury including defense from the insurer, and coverage B is for personal and advertising injury. Limits can range from $1-$10 million and some from $25-$50 million.

Mobile Homes Can Be Insured On…

DP-1, HO-2, or HO-3 (by endorsement).

Employee Benefits Liability Coverage Endorsement

Pays for amounts the insured is legally obligated to pay, in excess of underlying limits, for an act, error, or omission of the insured or any person for which the insured is liable. Claims-made basis. Must be reported within the retroactive date and the end of the policy period.

Umbrella Self-Insured Retention

Form of cost-sharing that applies when the policy drops down to act as primary coverage because the underlying policy does not cover a loss.

NFIP Commercial Coverage

Flood must include 2 acres of land or at least the insured’s land and an adjacent piece of property. Written on the General Property Form.

• Coverage A- Building Property

• Coverage B- Personal Property

• Coverage C- Other Coverages (additional coverages like debris removal)

• Coverage D- Increased Cost of Compliance (ordinance or law)

No indirect loss is covered.

Bonds

Provide financial protection against a risk of loss

Principal (Obligor)

The party who purchases the bond and agrees to fill the obligation.

Obligee

The party for whose benefit the bond is written (who is receiving the service). This person is paid out if the job or bond is incomplete.

Surety (guarantor)

Party who insures the bond and must guarantee fulfillment of the bond by paying damages if the job is incomplete or the principal defaults.

Fidelity Bonds

Used to protect employers against employee theft.

Surety Bonds

Designed to assure certain obligations to a third party, as demanded by contract, court, or statute.

Judicial Bonds

Guarantees that certain parties fulfill their statutory obligation in connection with court proceedings

Bid Bond

A type of contract and surety bond that is filled by the principal, and if accepted by the obligee, the contractor will proceed with the contract and replace this bond with a performance bond. Once the obligee accepts, the offer or amounts cannot be altered.

Performance Bond

Bond that guarantees that the contractor or subcontractor will perform according to the contract.

Fiduciary Bond

Guarantee the honest and faithful performance of executors, trustees, and other fiduciaries.

Labor and Materials Bond

Bond that guarantees that bills for labor and materials called for in a construction contract will be paid when due.

Farm Property Coverage Form

• A- Dwelling (RC 80% coinsurance)

• B- Other Private Structures Appurtenant to Dwellings (RC 80% coinsurance)

• C- Household Personal Property (ACV)

• D- Loss of Use

Basic, broad, and special cause of loss form applies)

Farm Personal Property Coverage Form

• E- Scheduled Farm Personal Property (ACV)

• F- Unscheduled Farm Personal Property (ACV 80% coinsurance)

Barns, Outbuildings, and Other Farm Structures Coverage Form

• G- Barns, Outbuildings, and Other Farm Structures (ACV, RC can be added through endorsement-but must have 80% coinsurance)

Farm Liability Insurance

• H- BI and PD Liability

• I- Personal and Advertising Injury Liability

• J- Medical Payments

Businessowners Policy Purpose

Written like a homeowners policy for commercial lines. It has the same liability coverage as the CGL and the cost is more competitive than monoline policies or commercial package policies. This is meant for medium to small businesses.

Businessowners Policy Eligibility

• medium to small business not engaged in high-risk or specialized operations.

• Less than 35,000 square feet

• Less than $6 million in annual gross sales

• Other factors- number of stories, business type, and characteristics of business operations.

Multi-Peril Crop Insurance

Written by private insurers and reinsured by the Federal Crop Insurance Corporation. Covered causes of loss- adverse weather, fire, insects, plant disease, wildlife, earthquake, and volcanic eruption.

Business Owners Policy Coverage Form

Section 1- Property

Section 2- Liability

Secrion 3- Common Policy Conditions

Perils Insured Against for BOP

Open perils coverage but can be changed to named perils through endorsement.

Mobile Homeowners Insurance (standalone policy) Coverage Form

Section 1- Property

A- insured home and permanently installed equipment and outdoor equipment used to service the property

B- other structures

C- personal property at 40% of coverage A

D- loss of use at 20% of coverage A

Section 2- Liability

Loss Valuation for Mobile Home Policy

Loss are RC but can be changed to ACV through endorsement. Policy can be written as named perils or open perils.

Earthquake Insurance Stand Alone Policy

Only insures the earthquake peril (including landslides and mudslides). All earthquakes in a 72 hour period are considered one event. Deductible is typically 5-20% of coverage A. HO and PAP must be in place and no flood is covered.

FAIR Plan

Provides basic property insurance to property owners who are unable to secure coverage in the standard marketplace. All authorized insurers in LA must be in this program.

Costal Plan

Offer essential insurance on property in Louisiana for those who cannot obtain insurance through the standard market. This is specifically for the coast. All authorized insurers in LA must be in this program.

Louisiana Citizens Property Insurance Corporation

nonprofit organization and operates residual market insurance programs, designated as the Coastal Plan and the FAIR Plan, which are successors to the Louisiana Insurance Underwriting Plan and the Louisiana Joint Reinsurance Plan, respectively. The Corporation is to provide essential property insurance for residential and commercial property for applicants who are in good faith entitled, but are unable, to procure insurance through the voluntary market. The Corporation does not offer private, commercial automobile, or vehicle insurance. Rates are not intended to be competitive with the voluntary market, and they will be adjusted annually.

Follow Form

the excess policy provides coverage under the same terms and conditions as the underlying insurance policy.