AAIS Coverage Form

Summary: The American Association of Insurance Services (AAIS) offers a commercial umbrella policy, UM 0200, that applies to both excess liability and umbrella liability. This article presents the form's insuring agreements, exclusions, conditions, and definitions. An analysis of these features follows the presentation.

Some parts of UM 0200 are similar to the Insurance Services Office (ISO) umbrella policy (see Commercial Liability Umbrella Policy), and these similarities will be noted but not reproduced in this article. Also, UM 0200 itself has parts that are repeated and these will be noted but not reproduced.

Topics covered:
Coverage E—excess liability
Coverage E exclusions
Coverage U—umbrella liability
Coverage U exclusions
Defense coverage
What must be done in case of loss
How much we pay
Excess insurance
Conditions
Definitions
Nuclear energy liability exclusion
Endorsements

Coverage E—Excess Liability

1.”We” pay, up to “our” limit, all sums in excess of “underlying insurance” for which an “insured” becomes legally obligated to pay as “damages” to which this insurance applies. This insurance applies only to:

a.     ”bodily injury” or “property damage”:

(1)     that is caused by an “occurrence” which takes place in the “coverage territory”;

(2)     that occurs during the policy period of this policy; and

(3)     that is covered by “underlying insurance”;

     b.     ”personal injury” arising out of an offense committed in the course of “your” business, excluding advertising, publishing, broadcasting, or telecasting done by “you” or on “your” behalf. The offense must be:

(1)     committed within the “coverage territory”;

(2)     committed during the policy period of this policy; and

(3)     covered by “underlying insurance”;

    c.”advertising injury” arising out of an offense committed in the course of advertising “your” goods, products, or services; and

d.any other negligent act, error, omission, injury, event, incident, or offense that is covered by “underlying insurance” on a “claims-made” basis. The negligent act, error, omission, injury, event, incident, or offense must take place:

(1)within the “coverage territory”; and

(2)on or after the Retroactive Date shown on the “declarations” of this policy and prior to the end of the policy period of this policy.

     This applies only if a “claim” is first made against an “insured” within this policy period or an Extended Reporting Period provided by this policy.

     A “claim” will be deemed to have been made when notice of such “claim” is received in writing by the “insured” or by “us” whichever is received first.

Analysis

This is the first insuring agreement on UM 0200. It provides coverage for damages due to bodily injury, property damage, personal injury and advertising injury; the coverage is on an excess basis. The insured is expected to have underlying, or primary, insurance for these same exposures, and if the limits of the underlying insurance policy are breached, only then will UM 0200 come into play.

Coverage E applies to occurrences and offenses that happen during the policy period. The coverage trigger is on a claims-made basis which means that a claim against the insured must be made during the policy period (or an extended reporting period) in order for UM 0200 to respond. For more information on claims-made policies, see Claims-Made CGL Form.

Note that the coverage for personal injury does not apply if the business of the named insured is advertising, publishing, broadcasting, or telecasting. For coverage to apply, the offense must be committed within the coverage territory, committed during the policy period, and covered by underlying insurance. The advertising injury coverage must arise out of an offense that is committed in the course of advertising the named insured's goods, products, or services. Of course, whether the insured is actually in the course of advertising at the time the offense is committed can be grounds for debate between the insured and the insurer.