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ISO Coverage Form

Summary: Insurance Services Office (ISO) has developed a commercial excess liability coverage part. (CX 00 01 09 08 ) was introduced as a part of the Commercial Umbrella Liability program and is designed to sit atop various ISO and independent company programs, including general liability, commercial auto, employers liability, and businessowners.

The following article is a general overview of the current ISO commercial excess liability coverage form. The coverages, exclusions, conditions, and definitions of the form are herein noted and analyzed.

Topics covered: Section I-Coverages Section I-Exclusions Limits of Insurance Conditions Definitions

Section I-Coverages

1.Insuring Agreement

a.We will pay on behalf of the insured the “ultimate net loss” in excess of the “retained limit” because of “injury or damage” to which insurance provided under this Coverage Part applies. We will have the right and duty to defend the insured against any suit seeking damages for such “injury or damage” when the applicable limits of “controlling underlying insurance” have been exhausted in accordance with the provisions of such “controlling underlying insurance”.

When we have no duty to defend, we will have the right to defend, or to participate in the defense of, the insured against any other suit seeking damages for “injury or damage”. However, we will have no duty to defend the insured against any suit seeking damages for which insurance under this policy does not apply.

At our discretion, we may investigate any “event” that may involve this insurance and settle any resultant claim or suit, for which we have the duty to defend. But:

(1)The amount we will pay for “ultimate net loss” is limited as described in Section II Limits Of Insurance; and

(2)Our right and duty to defend ends when we have used up the applicable limit of insurance in the payment of judgments or settlements under this Coverage Part. However, if the policy of “controlling underlying insurance” specifies that limits are reduced by defense expenses, our right and duty to defend ends when we have used up the applicable limit of insurance in the payment of defense expenses, judgments or settlements under this Coverage Part.

b.This insurance applies to “injury or damage” that is subject to an applicable “retained limit”. If any other limit, such as, a sublimit, is specified in the “controlling underlying insurance”, this insurance does not apply to “injury or damage” arising out of that exposure unless that limit is specified in the Declarations under the Schedule of “controlling underlying insurance”.

c.If the “controlling underlying insurance” requires, for a particular claim, that the “injury or damage” occur during its policy period in order for that coverage to apply, then this insurance will only apply to that “injury or damage” if it occurs during the policy period of this Coverage Part. If the “controlling underlying insurance” requires that the “event” causing the particular “injury or damage” takes place during its policy period in order for that coverage to apply, then this insurance will apply to the claim only if the “event” causing that “injury or damage” takes place during the policy period of this Coverage Part.

d.Any additional insured under any policy of “controlling underlying insurance” will automatically be an additional insured under this insurance. If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance required by the contract, less any amounts payable by any “controlling underlying insurance”.

Additional insured coverage provided by this insurance will not be broader than coverage provided by the “controlling underlying insurance”.

Analysis

This section of the policy explains that the insured agrees to pay on behalf of the insured the total sum, after reduction for recoveries, or salvages collectible, that the insured becomes legally obligated to pay as damages by reason of settlements, judgments, binding arbitration, or any other binding alternate dispute resolution proceeding entered into with the insurers consent. This amount is to be in excess of the available limits of controlling underlying insurance applicable to the claim because of injury or damage.

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