(August 2022)
All PF&M subscribers are permitted to reprint the following
insurance proposal sample language when preparing insurance presentations for
their commercial insurance customers. Other uses require permission by The
Rough Notes Company, Inc.
The following paragraph or similar language must be included in all
insurance proposals:
Consult
the policy for definitions and limitations. The terms of this proposal do not
represent contract terms. The policy is subject to company underwriting
practices.
This proposal language is not intended to be an entire insurance proposal.
A client-specific section including the name and address of the insured, the
insurance company(s) and the agent, and information about them, a list of
locations, limits, deductibles, and similar customer specific items are not
included and should be prepared.
The intent of any insurance proposal is not
to be a reproduction of the insurance policy but to give a summary of possible
coverages.
Paragraphs explaining coverages unique to
this policy form may be the most important addition to your insurance proposal
and sales effort. Coverage examples can be tailored to your individual
customer. When altering any proposal language, be careful not to imply that
coverage is broader than what exists in the policy.
This proposal should be combined with proposals
for other lines of business, such as commercial property, general liability,
workers compensation, and umbrella liability, for a complete account proposal.
Related Articles:
Employment-related Practices Liability Coverage provides broad insurance protection from employment-related claims and lawsuits brought against an entity, its managers, its employees and/or its directors and officers. It covers such things as age and gender discrimination, sexual harassment, wrongful discipline, termination, and negligent decisions involving hiring, promotion, and compensation. It also applies to breach of employment contract, emotional distress, and mental anguish, invasion of privacy, libel, slander, and mismanagement of employee benefits. The exposures presented by a given employer can vary substantially, depending on the particular factors involved. This includes the number of employees, the location of the risk, the specific industry, employment practices, unique characteristics of the operation and loss experience.
The insurance company agrees to pay amounts the insured is legally obligated to pay as damages for wrongful acts that are covered by the insurance provided, up to the limits of insurance. A wrongful act means any one or more of the following employment-related acts:
The insurance company has both the right and the duty to defend any suit against an insured for those damages and it may investigate or settle any claim or suit at any time and at its sole discretion. The company's obligation to pay ends when the limits of insurance are exhausted by the payment of defense expenses, judgments and/or settlements.
Exclusions must be examined carefully because many of them have conditions, exceptions, limitations or restrictions not shown below. Coverage does not apply to:
An insured's liability as a result of criminal, fraudulent or malicious acts or omissions by that insured is excluded. The insurance company's defense duty remains until legally determining criminal, fraudulent or malicious act or omission have been legally determined.
No coverage is available when the liability
is solely due to an insured assuming an obligation for a wrongful under a
contract or agreement.
Any obligations of the insured imposed by any workers compensation, disability benefits, unemployment compensation or similar law are excluded.
Coverage does not apply to the named insured's violation of its responsibilities or duties required by any federal, state or local statute, rule or regulation, and any related rules and regulations developed to apply to them. The exceptions are any of the following:
o Title VII of the Civil Rights Act of 1964
o
The Americans with Disabilities Act (
o The Age Discrimination in Employment Act
o The Equal Pay Act
o The Pregnancy Discrimination Act of 1978
o The Immigration Reform and Control Act of 1986
o The Family and Medical Leave Act of 1993
o The Genetic Information Nondiscrimination Act of 2008
o Any other similar state or local statute, rule or regulation that prescribes responsibilities or duties involving the same acts or omissions.
o Amendments to the above
A wrongful act that is the result of the named insured's failure to comply with required accommodations for the disabled and any expenses incurred resulting from required accommodations for the disabled due to ADA or any amendments to the act continues to be excluded.
There is no exclusion for claims alleging retaliatory treatment by an insured against any person making a claim as a result of that person's rights under any statute, rule, or regulation.
Any wrongful act committed against any
striking or locked-out employee, or to an employee temporarily or permanently
replaced due to a labor dispute is excluded.
No claim or suit that is brought against any insured is covered if that suit or claim existed or was pending before the applicable Pending or Prior Litigation Date shown on the declarations. This exclusion applies to claims or suits that arise out of the same or substantially the same facts, circumstances, or allegations that are the subject of or are the basis for such claims or suits.
If a claim had been reported or a notice had been given under a prior insurance policy, there is no coverage under this insurance policy for any wrongful act within that reported claim or notice. There is a requirement that the prior insurance policy must provide coverage similar to that which is part of this insurance policy.
With respect to claims it investigates or settles, or suits against the insured it defends, the insurance company pays:
These payments do not reduce the limit of insurance and are not subject to any deductible.
The following are insureds based on the type of entity entered on the declarations:
The named insured's employees and former employees are also insureds unless specifically excluded.
Any newly formed or acquired organization over which the named insured maintains ownership or majority interest qualifies as a named insured but only when no other similar insurance applies for that organization. This extension does not apply to partnerships, joint ventures or limited liability companies.
The named insured must inform the insurance company of the new organization as soon as practicable but lasts no longer than 90 days or the coverage expiration, whichever is shorter.
No organization or person is an insured concerning the conduct of any current or previous partnership, joint venture or limited liability company that is not listed as a named insured on the declarations.
The limits apply separately to each consecutive annual period and to any remaining period of less than 12 months. This begins with the coverage inception date shown on the declarations unless extended after issuance for any additional period of less than 12 months. If that occurs, the additional period is treated as part of the last preceding period for the purpose of determining the limits of insurance.
The insurance company does not pay for its share of damages and defense expenses until the deductible amount is exceeded. Damages and defense expenses are then paid up to the limit of insurance.
The deductible amount is a common cause deductible applying to all claims arising out of the same wrongful act or series of incidents, circumstances or behaviors resulting from that common cause. The insurance company can pay all or any part of the deductible in order to expedite settlement of a claim, and when it does, the named insured is required to reimburse the company for any deductible amounts it paid.
The insurance company is not relieved of its obligations in the event of the insured's or the insured estate's bankruptcy or insolvency.
The named insured has the right not to consent to a settlement between the insurance company and a claimant. However, when such a refusal occurs, the most the company pays as damages is limited to the amount for which the claim could have been settled.
o The named insured is responsible for
immediately recording when any claims from the named insured or any insured are
received. The insurer is required to receive a written notice of the claim from
the named insured as soon as practical.
o Every insured involved in or with the claim
must immediately send the insurance company copies of demands, notices,
summonses and legal documents that are part of a claim or suit. Authorization
must be provided so that the insurer can obtain records and other needed
information. It is vital that cooperation take place when the insurer is investigating
and/or settling a claim or defending against a suit. After settlement or
judgment, cooperation is also required to that the insurer can enforce any rights they may have against
any person or organization that is liable for injury or damage.
o An insured may voluntarily make payments,
assume any obligations, and incur expenses, but the insurance company will not
reimburse or accept obligations unless the insurance company consented, in
writing, to them.
o The named insured must inform the insurance company in writing as soon as practicable if it has knowledge of a wrongful act that may lead to a claim. The information should be as detailed as possible, including how the insured became aware of the act.
The insurance
company cannot be joined into a lawsuit against an insured, and the insurer
cannot be sued by an insured unless all terms of the policy have been met. The
insurance company is not liable for any amount in excess of limit of insurance
or for payment of amounts that a part of the deductible.
The coverage provided is primary. If another policy is
also primary for the same loss, the two companies will pay a claim covered by
both either on a contribution by equal shared or contribution by limit.
The named insured
continues to be responsible for the full deductible.
o All premiums are calculated according to the insurance company's rules and rates.
o The initial premium collected is a deposit premium. The actual premium is determined at the end of the audit period. When the premium is calculated, a return premium is provided to the named insured if the actual is less than the deposit. If the actual premium is higher the deposit, the premium is due as of the date of the billing notice. It is the responsibility of the first named insured to keep the records so that the insurance company can make the final calculations.
o The insurance company must conduct an audit and develop the actual premium unless the named insured agrees to its waiver.
By accepting the insurance policy, the named insured agrees that all information is accurate and based on the applications and representations it made.
Each named insured is treated as a separate named insured and each insured is treated as a separate insured. The only exceptions to this are that the first named insured has some additional rights and responsibilities and the limit of insurance section.
The insured
transfers its rights of recoveries against others to the insurance company. The
insured must not do anything to hinder its rights and must assist the insurance
company in enforcing those rights.
The named insured can request its own defense counsel. When granted, the insurance company retains the right to settle, approve or disapprove the settlement of any claim or suit and appeal any judgment, award or ruling at its own expense and at its discretion.
When the insurance company is defending under a reservation of rights, both counsels must keep records that relate to the named insured's defense expenses in order to determine an allocation of defense expenses.
Because defense expenses are within the limit of
insurance, this condition is included to detail the procedures to be taken when
the defense is transferred from the insurance company to the named insured when
the available limits have been exhausted.
The insurance must provide a minimum of 30 days’ notice it will be nonrenewing.
Claims that are received after a policy period has ended are not covered unless the period in which to report claims has been extended.
o The claim is first made during the Extended Reporting Period
o The wrongful act occurs before the end of the policy period
o The wrongful act did not begin before the Retroactive Date.
Refer to the policy for a list and description of policy definitions.