[h] CPCU 552 – Module 9
[q] Personal property
[a] Any property that is not real property. It can be tangible or intangible.
[q] Tangible property
[a] Property that has a physical form, such as a computer.
[q] Intangible property
[a] Property that does not have a physical form, such as a trademark.
[q] First-party cyber insurance
[a] A form of cyber insurance that focuses on restoring an organization’s income lost because of a covered cyber event and helping an organization return to business as usual.
[q] Cyber extortion
[a] The act of cyber criminals demanding payment through the use of or threat of some form of malicious activity against a victim, such as data compromise or denial of service attack.
[q] Breach response coverage
[a] A type of first-party cyber insurance coverage that provides for services after an insured organization suffers a data breach. These services typically include hiring an expert.
[q] Computer crime insurance
[a] A type of first-party cyber insurance coverage that can reimburse an organization for money lost because of fraud.
[q] Third-party cyber insurance
[a] A form of cyber insurance that insures an organization against the damages it may owe others in the event of a data breach or another cyber event.
[q] Third-party cyber insurance characteristics
[a] Shared characteristics:
The coverage territory is typically worldwide.
Policies apply on a claims-made basis.
Subsidiaries acquired by the named insured during the policy period are automatically covered.
[q] Data and network liability coverage
[a] A type of third-party cyber insurance coverage that applies to damages an organization is legally obligated to pay because of a data or security breach.
[q] Regulatory defense and penalties coverage
[a] A type of third-party cyber insurance coverage that covers losses as a result of failure to comply with regulatory actions.
[q] Payment card liabilities and costs coverage
[a] A type of third-party cyber insurance coverage that applies to organizations that must comply with payment card industry data-security standards because of collecting or distributing credit card data.
[q] Media liability coverage
[a] A type of third-party cyber insurance coverage that covers losses resulting from material published on an organization’s own website.
[a] A wrongful act other than a breach of contract or crime. Tort liability for pollution can be based on negligence, intentional torts, or strict liability.
[a] A civil wrong that is unintentional.
[a] A type of intentional tort that involves interfering with the use or enjoyment of property.
[q] Environmental trespass
[a] A type of intentional tort that involves physically depositing pollutants onto the property of the claimant alleging injury.
[q] Strict liability
[a] Liability imposed by a statute or a court in the absence of fault.
[q] Clean Water Act
[a] An environmental Act that prohibits and regulates the discharge of pollutants into navigable waters.
[q] Clean Air Act
[a] An environmental Act that seeks to improve the quality of ambient air by regulating emissions from both mobile and stationary sources of air pollution.
[q] Toxic Substance Control Act
[a] An environmental Act that regulates the chemical manufacturing industry and prevents the import or manufacture of dangerous chemicals without safeguards.
[q] Resource Conservation and Recovery Act
[a] An environmental Act that imposes strict waste management requirements on generators and transporters of hazardous wastes and on disposal facilities.
[q] Motor Carrier Act of 1980
[a] An environmental Act that established minimum levels of financial responsibility for carriers of hazardous materials. This Act protects the environment from releases of harmful materials during transportation.
[q] Comprehensive Environmental Response, Compensation, and Liability Act
[a] An environmental Act, also known as the Superfund Act, that imposes strict liability for environmental cleanup costs on potentially responsible parties.
[q] Oil Pollution Act
[a] An environmental Act that seeks to reduce spills of hazardous materials into U.S. coastal or navigable waters by mandating technical standards for facilities and vessels operating in or near such waters.
[q] Characteristics of environmental exposures
Difficult to identify.
Tend to elude traditional exposure identification methods.
Amount of loss may be difficult to measure.
Claims may result from a perceived, rather than real, exposure.
Environmental losses are often very severe.
Many remediation laws impose a let the polluter pay funding concept.
Technology can change the loss exposure.
Loss can increase over time as contamination spreads farther from its source.
[q] Site-specific environmental impairment liability (ElL) policy
[a] A policy that covers third-party claims arising from releases of pollutants from specified locations.
[q] Cleanup costs
[a] Costs necessary to investigate and remediate pollution conditions.
[q] Site-specific ElL policy typical exclusions
[a] Typical exclusions:
Known preexisting conditions.
Deliberate noncompliance with laws.
Sold or leased premises.
Nuclear liability, acid rain.
Damage to the insured site.
[q] Underground storage tank compliance policy
[a] A policy that provides proof of financial responsibility under governmental regulations that apply to the owners and operators of underground storage tanks containing hazardous materials.
[q] Contractors pollution liability (CPL) policy
[a] A policy that addresses the needs of contractors performing environmental remediation services by covering operations at project sites.
[q] Contractors pollution liability (CPL) policy typical exclusions
[a] CPL policies often exclude these exposures:
Asbestos abatement operations.
Claims arising out of the insured’s products.
Damage to sites owned by or leased to the insured.
[q] CGL/CPL combination policy
[a] A policy that combines a CGL policy with a claims-made or an occurrence-based CPL policy.
[q] Environmental professional errors and omissions (E&O) liability policy
[a] A type of environmental policy that resembles the coverages offered in traditional engineers professional liability policies.
[q] Amendment of Coverage Territory-Worldwide Coverage endorsement
[a] An endorsement added to the Commercial General Liability policy that extends the coverage territory to anywhere in the world. Covers suits brought in foreign courts.
[q] Voluntary Compensation endorsement
[a] An endorsement to the standard workers compensation policy that covers injuries outside U.S. or Canada.
[q] Repatriation expense coverage endorsement
[a] An endorsement to the standard workers compensation policy that pays expenses to bring an injured employee to a U.S. hospital.
[q] Advantages of territorial endorsements
Provides adequate coverage for minimal foreign loss exposures.
Low premiums and convenience.
[q] Disadvantages of territorial endorsements
Local courts and governments do not recognize the coverage provided by these endorsements.
Many U.S. insurers have little experience with international claims.
[q] Nonadmitted insurer
[a] An insurer not authorized by the state insurance department to do business within that state.
[q] International package policy
[a] A policy, typically issued by a U.S. insurer, that bundles the property and casualty coverages commonly needed by businesses with international loss exposures.
[q] Advantages of an international package policy
Broad coverages at low prices.
[q] Advantages of purchasing coverage from a nonaffiliated local insurer
Compliance with local laws.
Policies are designed to specifically match local coverage requirements.
Local insurers can provide knowledgeable in-country claims support.
Working with local insurers maintains a good citizen image.
Familiarity with coverages.
[q] Disadvantages of purchasing coverage from a nonaffiliated local insurer
Policies may be written in a foreign language, making it difficult for home office managers to determine the adequacy of protection.
Policies in individual markets do not offer economies of scale and provide no leverage during disputes.
Local policies complicate efforts to maintain central control and overall continuity of protection.
[q] Controlled master program (CMP)
[a] An insurance arrangement that provides comprehensive coverage for organizations operating internationally. Links policies in an organization’s home country with foreign policies where they do business.
[q] Advantages of writing a CMP
Economies of scale.
[q] Disadvantages of writing a CMP
Not easy to set up and manage.
Managing a CMP requires extraordinary cooperation and communication.
Som programs take several years to fully implement.
Organization may find it challenging to find partners in the right countries.
[q] Terrorism Risk Insurance Act
[a] An Act that allowed the insurance industry and the federal government to jointly pay claims resulting from acts of terrorism.
[q] Terrorism Risk Insurance Program Reauthorization Act
[a] Federal Act that reauthorized the Terrorism Risk Insurance Act. Under the Act, events with aggregate losses less than or equal to $5,000,000 are not considered acts of terrorism.
[q] Terrorism Risk Insurance Program Reauthorization Act cap on covered losses
[a] The total annual aggregate for government and insurer liability is capped at $100 billion.
[q] TRIPRA required disclosures to insureds
[a] Required disclosures:
The portion of the policy premium that is attributed to certified acts of terrorism and the coverages to which that premium applies.
The federal share of compensation for certified acts of terrorism and the amount of the federal share of losses attributed to certified acts of terrorism.
The amount of the program cap.
[q] Program cap endorsement
[a] An ISO terrorism endorsement that must be attached to a terrorism policy. The endorsement defines a certified act of terrorism.
[q] Certified acts exclusion endorsement
[a] An ISO terrorism endorsement that excludes coverage for acts of terrorism.
[q] Certified acts of terrorism aggregate limits endorsement
[a] An ISO terrorism endorsement that limits the insurer’s exposure and provides limited liability coverage for certified acts of terrorism in exchange for a reduced premium.
[q] Punitive damages exclusion endorsement
[a] An ISO terrorism endorsement that excludes coverage for terrorism-related punitive damages that result from civil actions.
[q] Other acts exclusion endorsement
[a] An ISO terrorism endorsement that excludes losses resulting from terrorism-related acts other than certified acts of terrorism.
[q] Automobile endorsement
[a] An ISO terrorism endorsement that excludes coverage for commercial auto policies.