Common Features of Professional and Management Liability Policy Forms Course Outline

1. Chapter 1 Course Overview and Introduction
2. Chapter 2 Insuring Agreements
   1. Covered Services/Covered Acts
      1. Check the Scope of “Covered Services” To Assure Coverage
         1. The Policy’s Definition of “Covered Services” Should Match the Insured's Services
         2. Declarations Pages Should Contain Broad “Covered Services” Descriptions
         3. Application Forms Should Contain Details of All Professional Services Offered
         4. Advise the Underwriter of Changes in Professional Services Provided
      2. Coverage for High-Hazard Activities
   2. Covered Persons
      1. Coverage of Past Personnel
         1. Why Cover Past Personnel?
         2. The Professional Liability Exposure of Former Personnel
      2. Coverage for Prior Acts
      3. The Lack of Coverage for Outside Activities
      4. Liability Coverage for Independent Contractor Acts
      5. Spousal Coverage
         1. Spousal Coverage Definition That Includes Domestic Partners
         2. No Coverage for a Spouse's Wrongful Act
      6. Coverage of Personal Representatives: Heirs, Executors, Trustees, and Legal Representatives
   3. Covered Organizations
      1. Coverage for Predecessor Organizations
         1. Defining Predecessor Firms as "Insured Organizations"
         2. Listing Predecessor Firms as Insureds on the Declarations Page
         3. Predecessor Firm Coverage is Not Automatic
      2. Coverage for Joint Ventures
      3. Coverage for Newly Acquired/Formed Entities
         1. Automatic Coverage
         2. Automatic Coverage Subject to Limits on the Size of the New Entity
         3. Nonautomatic Coverage
   4. Covered Territory
      1. Rationale for Territorial Restrictions
   5. Covered Damages/Covered Losses
      1. Coverage of Punitive Damages
         1. Coverage of Punitive Damages Varies by Line of Coverage
         2. Coverage of Punitive Damages Varies by Jurisdiction
         3. Most Favorable Jurisdiction Provisions
         4. When Most Favorable Jurisdiction Provisions Are Critical
         5. Two Limitations of Most Favorable Jurisdiction Provisions
      2. Return of Professional Fees Are Not "Covered Damages"
         1. Rationale for Not Covering the Return of Professional Fees
         2. Other Items That Are Not "Covered Damages"
   6. Covered Defense Costs
      1. Defense Costs are Covered Within—Not In Addition to Policy Limits
      2. Insurers' Internal Claim Handling Costs Are Not Subject to Policy Limits
      3. Rationale for Defense Cost Provisions
      4. Implications of Defense Cost Provisions
         1. Premium Implications
         2. Policy Limit Implications
         3. Insurer "Bad Faith" Implications
      5. Application of Deductibles/Retentions to Defense Costs
         1. a. "First-Dollar" Defense Costs Coverage
      6. Covered Supplementary Payments
         1. Coverage within or in Addition to Policy Limits?
   7. Defense Provisions
      1. Defense Procedures: "Duty To Defend" versus "Non-duty To Defend" Language
         1. Who Controls Defense and Selects Defense Counsel?
         2. Claims Handling Issues
         3. "All" Allegations Defense: A Key Benefit of "Duty To Defend" Forms
      2. Settlement Procedures
         1. The Difficulties of “Compromise” Settlements
         2. The Hammer Clause Settlement Procedure
         3. Is the Hammer Clause Really Unfair to the Insured?
         4. Problems with the Hammer Clause
         5. Coinsurance Hammer Clause
3. Chapter 3 Limits, Deductibles/Retentions, and Coinsurance
   1. Limits
      1. Related Claims Provisions
         1. Limits
         2. Deductibles/Retentions
         3. Application of Related Claims Provisions: An Example
      2. Exhaustion of Limits Provisions
         1. Exhaustion of Limits Applies to Amounts Paid, Not to Amounts Reserved
   2. Deductibles/Retentions
      1. Deductibles versus Retentions
      2. Anti-Stacking/Batch Clause Provisions
      3. Aggregate Deductibles/Retentions
      4. Reduced Deductible Amount Options
         1. The Rationale for Reduced Deductibles
   3. Coinsurance Provisions
      1. Purpose and Operation of Coinsurance Provisions
4. Chapter 4 Conditions
   1. Notice of Cancellation, Nonrenewal, and Premium/Coverage Change
      1. Notice of Cancellation
         1. Cancellation Due to Nonpayment of Premium
         2. Cancellation for Material Misrepresentation in the Application
         3. Cancellation by the Insured Requires No Advance Notice
         4. The Effect of State Amendatory Endorsements on Cancellation Provisions
         5. Broadening Standard Cancellation Notice Provisions
      2. Notice of Nonrenewal
         1. Why Notice of Nonrenewal Cannot Always be Provided
      3. Notice of Premium/Coverage Change
   2. Subrogation Provisions
      1. Subrogation Waivers Prior to a Loss
      2. Subrogation Waivers are Never Permitted after a Loss
      3. Waiver of Subrogation Against Insureds
   3. Other Insurance Provisions
      1. Purposes of Other Insurance Provisions
      2. Excess Other Insurance Clauses
      3. Potential Other Insurance Provision Conflicts
   4. Notice of Claim Provisions
      1. "Notice" to Agent or Broker Does Not Constitute "Notice"
   5. Miscellaneous Conditions
      1. Prohibition of Voluntary Payments and Settlements
         1. “Goodwill” Insurance versus Legal Liability Insurance
      2. Cooperation Clause
      3. Legal Action Against the Insurer
      4. Mandatory Arbitration Provision
         1. A Criticism of Arbitration: Insurers Benefit from “Continuing Relationships”
      5. Nontransferability Provisions
         1. Additional Insureds Are Rare in Professional Liability Coverage
      6. Severability Provisions
         1. Protection of "Innocent Insureds"
         2. No Increase in Policy Limits
      7. Continuation of Coverage in Bankruptcy
5. Chapter 5 Exclusions
   1. Variations between the Scope of the Same Exclusion
   2. The Duty To Defend Is Broader than the Duty To Indemnify
   3. Uninsurable Exposure Exclusions
      1. Notary Claims
      2. Trademark or Copyright Infringement
      3. Claims from Prior Policy Periods, Claims Reported to Previous Insurers, Claims from Known Incidents
      4. Antitrust Violations
         1. Exceptions to the Anti-Trust Exclusion
      5. Return of Professional Fees
         1. No Exclusion for Cost of Remedial Services
      6. Illegal Personal Profit
         1. The Importance of "In Fact" Wording
      7. Nonpecuniary Relief
         1. Actual Monetary Damages Are Covered
         2. Coverage for Defense of Nonpecuniary Actions
      8. Bankruptcy of Insured
         1. Coverage for Nonbankruptcy-Related Claims Applies
      9. Intentional/Criminal/Fraudulent/Willful/Dishonest Acts
         1. Coverage for Defense of Claims Alleging Intentional Acts
         2. Coverage for Defense of Innocent Insureds
         3. Are These Two Coverage Exceptions Really Necessary?
      10. Losses from Professional Guarantees
          1. Guarantees Excluded but Negligence Is Covered
      11. Losses from Accounting and Commingling Practices
   4. Removable/Modifiable Exclusions
      1. Failure To Maintain Insurance Exclusion
         1. Removing the Exclusion
         2. Exclusions for Insurance-Related Operations
      2. Contractual Liability Exclusion
         1. Exception for Liability in the Absence of a Contract
         2. Problematic Situations: Acceptance of Liability for the Negligence of Others
         3. Modifying the Exclusion
      3. Insured versus Insured Exclusion
         1. Exception for Performance of Professional Services
      4. Prior and Pending Litigation
   5. Exclusions To Coordinate with Other Insurance
      1. Employment Practices
      2. Bodily Injury/Property Damage
         1. BI/PD Exclusions Do Not Appear in Certain PL Policy Forms
         2. "Arising Out of, Related to, in any Way Involving" versus "For" Wording of BI/PD Exclusion
      3. Personal Injury
         1. Personal Injury Coverage within PL Forms for Certain Professions
      4. Related/Affiliated Entities
         1. Exclusion of Claims Against Related Entities
         2. Exclusion of Claims by Related Entities
         3. Related/Affiliated Entity Exclusions: The Ownership Threshold
      5. Claims from the Delivery of Related Professional Services
      6. Workers Compensation
      7. ERISA Responsibilities
      8. Services Not on Behalf of the Named Insured Organization
         1. Outside Directorships
         2. Exclusion of “Moonlighting Activities”
      9. Motor Vehicles, Aircraft, Watercraft
      10. Pollution
      11. Nuclear Energy
      12. Exclusions for Specialized Exposures
   6. Concluding Thoughts Regarding PL and EL Exclusionary Language
6. Chapter 6 Coordinating EL and PL Policies with CGL Coverage
   1. A Potential Coverage Gap
   2. Consolidating Coverage with One Insurer
   3. CGL Professional Liability Coverage Endorsements
   4. Eliminating BI/PD Coverage Gaps