LITIGATION Most Important Thing : OPM Other People’s Money!!!

1. PART 1- PROPERTY COVERAGESCOVERAGE A - DWELLINGCOVERAGE B - OTHER STRUCTURESCOVERAGE C - PERSONAL PROPERTYWHAT PROPERTY IS COVERED -COVERAGE A AND COVERAGE B1. Under COVERAGE A we cover:a. The dwelling on the residence premises shown in the declarations, used principally as a private residence,….

2. Loss Settlement and Limit of LiabilityWe will settle covered losses to buildings as follows:(b) If you elect to repair or replace,we will settle for the lower of:i. the replacement cost lessdepreciation;ii. the limit of liability statedin the declarations forCOVERAGE A for loss to thedwelling, or for COVERAGE Bfor loss to other buildings;

3. Members' Preferred Homeowners Policy Coverages and LimitsRenewal Declarations Part I Propertv CoveragesDescription Dwelling Coverage A** Deductible- YesLimits $ 244,000

4. Replacement costs means: a. With respect to buildings, the lesser of the cost, at the time of the loss, to repair or to replace covered damaged or destroyed property: (1) at the location of the residence premises; and (2) for the same use; and (3) with materials of like or reasonably similar kind and quality. Replacement cost does not include: (2) the cost of repairing, reconstructing or demolishing any property occurring as a result of the enforcement of any building ordinance or law

5. After repair or replacement is completed as required, we will settle on a replacement cost basis for any additional cost you actually and necessarily incurred to repair or replace the damaged or destroyed part of the building, not to exceed the amount of the limit of liability stated in the declarations for COVERAGE A for loss to the dwelling, ….

6. (c) If the declarations indicate that Guaranteed Replacement Cost coverage is afforded; and (I) you have elected to repair or replace the dwelling or other buildings. Any loss that exceeds the amount of the applicable limit of liability stated in the declarations for COVERAGE A or COVERAGE B will be settled as described under (b) above but without regard for the limit of liability stated in the declarations for the damaged or destroyed property.

7. Interinsurance Exchange of the Automobile Club Members' Preferred Homeowners Policy Coverages and LimitsRenewal Declarations - Form 3Part I propertv CoveragesDescription Dwelling Coverage A** Deductible- YesLimits $ 244,000**Coverage A and Coverage B – Guaranteed Replacement Cost Included

8. 5. BUILDING ORDINANCE OR LAW If a cause of loss covered under what losses are covered- coverage a and coverage b results in direct damage to the dwelling, and a building ordinance or law that was in effect at the time of the loss is enforced because of that loss, and: (b) You elect to repair or replace the dwelling,….we will pay the additional cost actually and necessarily incurred by you in connection with the direct damage to the dwelling and resulting from the enforcement of any applicable ordinance or law; (1) regulating the repair or replacement of the damaged portion of the dwelling;

9. Our limit of liability under this option shall not exceed 10% of the amount of the limit of liability of COVERAGE A for the additional cost actually and necessarily incurred by you under (1) and (2) above.

10. Appraisal If you and we fail to agree on the amount of a covered loss, either can make a written request that the amount of loss be set by appraisal. If either you or we make a written request for appraisal that is accepted, each shall select a competent, independent appraiser and notify the other of the appraiser’s identity within 20 calendar days of receipt of the request.

11. AT LEAST INSURE YOURSELF AS MUCH AS YOU INSURE EVERYONE ELSE UM V. UIM Typically, UM and UIM are less than BI limits Not Good Get an Umbrella Policy - Not Expensive - Important ProtectionRental Car - Do Not Check Box for Their Insurance

12. Tell The TruthDeny Coverage for Fraud or MisrepresentationsWhen ApplyWhen Report ClaimDUTY TO COOPERATESubmit to an EUOBe ResponsiveParticipate in Litigation and Trial

13. LITIGATIONMost Important Thing : OPMOther People’s Money!!!

14. IF GET SUED …Be InvolvedLook at Complaint If Punitive Damages Alleged ….Meet with your attorney Request in writing -All Settlement Demands -All Important Communications with Your Carrier -To Be Advised of any Potential Excess JudgmentSilver Bullet Letter

15. L Bad Can Be Really BadWhen There is Liability Involved Commercial General Liability/Umbrella/Excess Insurance By Dena Williams, Senior Vice President Lockton Insurance Brokers, Inc. 4275 Executive Square, Suite 600La Jolla, CA 92037 858-587-3100 License #0714705

16. Top Civil Tort Verdicts - 2004 Largest Categories • Medical Malpractice • Motor Vehicle • Products Liability Source: National Law Journal (2/21/05)

17. The Top Ten Tort VerdictsF/Y 2004

18. The Top Ten Tort Verdicts(continued)

19. The Top Ten Tort Verdicts(continued)

20. October 27, 2005Port Authority Found Negligent in 1993 Bombing *** In order to reach a verdict, at least five of the six jurors had to agree. The jury voted unanimously that the Port Authority was negligent. It found the authority 68 percent at fault for the bombing, while the terrorists who carried it out were 32 percent at fault. ***

21. The U. S. Chamber of Commerce estimates that the tort system costs small businesses $88 billion a year. 4.5% of the cost of making everything, from clothing to cars, is related to the costs of litigation. Source http:\\www.chiefexecutive.net\depts\chiefconcern\210.htm

22. Public Mentality – Causative Factors • Athletes’ contracts – AROD - $252 million • Rock stars – Jimmy Buffet - $45 million/year • Lotteries • Instant dot com billionaires • Verdicts notoriety

23. Commercial General Liability • Coverage: • Ownership or use of the premises • Operations • Contractual agreements • Products made, sold, or distributed • Completed operations • Personal and advertising injury • Medical payments coverage Considerations: • Claims-made vs. occurrence • Per project → per location coverage • Limits → what is enough?

24. Buyer Survey (2330) National and Global Account(s) • Average Limits Purchased: • $105 million • $102 million • $96 million • $87 million • $77 million

25. How much limits are enough when virtually any loss scenario can produce a significant liability exposure? Current loss trends continue to rise and legacy exposures continue to plague industry – long tail of casualty exposures highlight inadequate limits purchased over the years. Due to unpredictability of liability environment, limits purchased should be well in excess of “foreseeable” exposure.

26. Commercial Umbrella vs.Excess Policies • Both provide higher limits • Umbrella may provide coverage for gaps found in primary liability policies vs.Excess → only provides higher limits and coverage is no broader than the underlying primary policies • Dual umbrella/excess form

27. Commercial Umbrella/Excess PolicyKey Considerations Provision for policy dropping down to replace insolvent underlying insurance Definition of Personal Injury → include Mental Anguish? Cover UM/UIM? All layers on concurrent dates? Deletion of any requirement to reinstate underlying insurance that has been diminished or exhausted by claims Schedule foreign liability policies/review coverage territory Verify no exclusions on employers liability for occupational disease

28. So What About Me?

29. L Bad Can Be Really BadWhen It’s Personal Personal Homeowners, Automobile, Umbrella By G. Scott Ferguson, Vice President Lockton Insurance Brokers, Inc. 4275 Executive Square, Suite 600La Jolla, CA 92037 858-587-3100 License #0714705

30. Personal Lines • Homeowners Property and Liability • Automobile Property and Liability • Umbrella Limits

31. Homeowners ISO Forms • HO-2 Broad • Dwelling on Named Peril and Replacement Cost • Personal Property on Named Peril and Actual Cash Value • HO-3 Special • Dwelling on OPEN Peril and Replacement Cost • Personal Property on Named Peril and Actual Cash Value • HO-5 Comprehensive • Dwelling on OPEN Peril and Replacement Cost • Personal Property on OPEN Peril and Actual Cash Value • HO-6 Unit-Owners Form same as HO-2 Broad

32. Homeowners Coverage Parts • Coverage A-Dwelling • Replacement Cost • Coverage B-Other Structures • 10% of Coverage A for HO-3 and 5; included in limit on HO-6 • Defined • Coverage C-Personal Property • 50% of Coverage A for HO-3 and 5; TBD on HO-6 • Defined

33. Homeowners Coverage Parts • Coverage D-Loss of Use • 30% of Coverage A for HO-3; 50% of Coverage A for HO-5; 50% of Coverage C (Personal Property) for HO-6 • Defined • Coverage E-Personal Liability • ISO form provides $100,000 per Occurrence • Buy as much as you can depending upon your Personal Liquid and Hard Assets

34. Homeowners-Liability • ISO form contains a provision of Medical Payments • Limits of Medical Payments-$1000 • Who is an Insured: • Husband/Wife or Domestic Partners if Registered • Resident Relatives • Anyone under the age of 21 and in the care of you or resident relatives • Full-time Student if a resident of your household before attending school and either a relative under the age of 24 OR under 21 and in the care of you or a resident relative

35. Homeowners-Liability • Liability Coverage is BROADER than Property and Casualty • Defined: If a claim is made or a suit is brought against an “insured” for damages because of “bodily injury” or “property damage” caused by an “occurrence” to which this coverage applies, we will • Pay up to limits legally liable • Provide a defense at our expense …even if the suit is groundless, false, or fraudulent • Duty to settle or defend ends when our limit of liability has been exhausted by payment of judgment or settlement

36. Homeowners-Liability • Exclusions are to Personal Injury (i.e. false arrest, detention, wrongful entry into, invasion of privacy; libel or slander or violation of a person’s right of privacy) • Can be added back to via HO 24 82 Endorsement • Will always exclude Intentional, Criminal Acts of an insured, Contractual, sustained by an employee, or arising out of a business.

37. Automobile Liability-Coverage • Covers Damages for Bodily Injury and Property Damage for which any insured becomes legally liable (Hired, Non-Owned Included) • Defense costs in addition to the Limits of Liability • Duty to settle or defend ends when the limits have been exhausted by payments of judgments or settlements • NO DUTY TO DEFEND if there is no coverage

38. Automobile Liability-Who Is an Insured? • You or any family member for ANY auto or trailer • Even a Borrowed Car! • Any Person using your “covered auto” • Covered Auto defined as Any Vehicle shown in Declaration Page; Newly Acquired Autos; Owned Trailers; Temporary Substitute due to Breakdown, Repair, or Servicing

39. Automobile-Vicarious Liability • Any person or organization for Vicarious Liability for any insured arising from “your covered auto” • E.g. Indian Guides, Church Group, Girl Scouts • Any person or organization for vicarious liability arising from “your family member’s” covered acts or omissions of a vehicle other than “your covered auto”, provided the vehicle is not owned by or rented to that person or organization

40. Umbrella • Additional Limits with same terms and conditions as underlying • Usually attaches at $500,000 for homeowners and $300,000 for automobile • Buy it if you have any assets you want to keep!