III IC-74 cheat sheet

Liability policies respond to the insured's legal obligation to pay damages for bodily injury or property damage caused by an occurrence; the trigger is the injury/damage event, not the act or the claim alone.

Occurrence-based CGL: the policy in force when the injury or damage occurs responds, even if the claim is filed years later; the policy period, not the claim date, is the controlling test.

Claims-made liability: coverage attaches to the policy in force when the claim is first made, provided the retroactive date precedes the wrongful act; the extended reporting period preserves cover for acts before expiry only.

Three-part CGL structure: Coverage A (bodily injury/property damage liability), Coverage B (personal and advertising injury), Coverage C (medical payments, no-fault, no negligence proof required).

CGL Coverage A insuring agreement covers sums the insured becomes legally obligated to pay as damages plus defense costs; defense is outside the limits unless the policy states defense is within limits.

Per-occurrence limit caps all damages from one occurrence regardless of claimant count; general aggregate caps total paid per policy period; products-completed operations aggregate is a separate cap for that exposure.

Fire legal liability sublimit (typically USD 50,000 or 100,000) covers damage to rented premises caused by the insured's negligence; it does not cover the insured's own property.

Personal and advertising injury covers offenses such as libel, slander, wrongful eviction, and infringement of copyright or slogan in an advertisement; it excludes knowing violation and breach of contract.

Expected or intended injury is excluded; the standard is subjective intent to cause injury or damage, not merely the intentional nature of the act.

Standard CGL exclusions: expected/intended injury; contractual liability (except insured contracts); liquor liability; workers compensation/employer's liability; pollution; aircraft/auto/watercraft; mobile equipment; damage to own product or work; impaired property.

The your-product and your-work exclusions bar damage to the insured's own product or completed work; the subcontractor exception restores coverage for damage to other property arising from a subcontractor's work on the insured's behalf.

Contractual liability exclusion has an exception for insured contracts: leases of premises, sidetrack agreements, easements, and indemnities assumed in a defined contract where liability would exist even without the contract.

Pollution exclusion bars bodily injury/property damage from pollutants; the hostile-fire exception and limited buy-back endorsements restore narrow coverage for sudden and accidental discharges.

Duty to defend is broader than the duty to indemnify; if any claim in the suit is potentially covered, the insurer must defend the entire suit, subject to a reservation of rights.

Insured's duties after loss: prompt notice of occurrence, notice of claim or suit, cooperation, and no voluntary payment; late notice can bar coverage where the insurer is prejudiced.

Additional insured status is granted by endorsement, not by the certificate of insurance; the certificate is evidence only and does not amend coverage.

Subrogation: after paying a claim, the insurer steps into the insured's shoes against the responsible third party; the insured must not impair that right, and waivers of subrogation must be arranged in advance.

Other insurance clauses: pro rata (share by limits), excess (pay only above other valid coverage), and primary/non-contributory; the CGL is typically primary for the named insured's own liability.

Professional liability (E&O) responds to negligent acts, errors, or omissions in rendering professional services; it is claims-made and excludes bodily injury/property damage typically handled by CGL.

D&O liability covers directors and officers for wrongful acts in their capacity as such; Side A covers personal assets when the company cannot indemnify, Side B reimburses corporate indemnification, Side C covers entity securities claims.

Employment practices liability covers wrongful termination, discrimination, harassment, and retaliation; it is claims-made and excludes bodily injury and wage-and-hour claims unless endorsed.

Cyber liability covers data breach response, notification costs, regulatory defense, and network interruption; it is claims-made and often requires a retroactive date and minimum security controls.

Umbrella liability sits above scheduled underlying policies and drops down to fill gaps in underlying coverage; excess liability follows the terms of the underlying policy and does not broaden coverage.

Commercial auto liability covers bodily injury/property damage from owned, hired, and non-owned autos; the CGL auto exclusion pushes auto exposures to the auto policy, and hired/non-owned auto coverage is often needed separately.

Workers compensation is statutory no-fault coverage for employee injury; employer's liability (Part Two) covers tort suits by employees and is the part that interacts with the CGL employer's liability exclusion.

Liquor liability covers injury or damage arising from serving or furnishing alcohol; the CGL liquor exclusion applies to insureds in the business of selling or serving alcohol, so a separate policy or endorsement is needed.

Retroactive date and prior-acts exclusion jointly determine which past wrongful acts a claims-made policy will cover; a retroactive date earlier than the policy inception extends cover backward.

Limits structure: each occurrence limit, general aggregate, products-completed operations aggregate, personal and advertising injury limit, damage to premises rented to you limit, and medical expense limit per person.

Aggregate restoration: some policies reinstate the general aggregate for newly acquired entities or after a specified event; standard CGL does not restore aggregate for paid claims.

Rating basis for CGL is typically gross sales or payroll multiplied by a classification rate; premium is adjusted by experience mod, schedule credits/debits, and minimum premium.

Audit provision: premium is an advance deposit subject to audit at policy expiry; underreporting exposure leads to additional premium, and the audit right survives policy expiration.

Occurrence vs. claims-made comparison: occurrence favors long-tail exposure (products, construction), claims-made favors professional and management liability where claims surface years after the act.

Extended reporting period (ERP/tail) extends the reporting window for claims arising from acts before expiry; it does not extend the policy period or add new acts, and it is usually priced as a percentage of the expiring premium.

Self-insured retention (SIR) is a deductible the insured funds before the policy responds, and the insured typically controls defense within the SIR; a deductible is paid by the insurer and reimbursed by the insured.

Certificate of insurance (ACORD 25) shows policy type, limits, and additional insured status but is not a contract; coverage disputes are resolved by the policy and endorsements.

Coinsurance and agreed value provisions in property-related liability endorsements require the insured to insure to a stated percentage or face a penalty on partial losses.

Negligence elements: duty of care, breach, proximate cause, and actual damages; the plaintiff must prove all four, and comparative or contributory negligence can reduce or bar recovery depending on jurisdiction.

Strict liability applies to abnormally dangerous activities and defective products; the plaintiff need not prove negligence, only that the product was defective and caused injury.

Vicarious liability holds an employer liable for employee acts within the scope of employment; independent contractor status generally shields the principal except for non-delegable duties.

Damages categories: special (medical, lost wages), general (pain and suffering), punitive (intentional or egregious conduct), and statutory penalties; punitive damages are often excluded or sublimited.

Absolute vs. total pollution exclusion: the absolute version removes the sudden-and-accidental exception; the total version also removes the hostile-fire exception and is used in high-hazard classes.

Professional services exclusion in CGL pushes claims for negligent professional advice to the E&O policy; the exclusion is defined broadly and can overlap with products and completed operations.

Additional insured endorsements vary: CG 20 10 covers ongoing operations, CG 20 11 covers completed operations, and CG 20 33 covers both; the endorsement language controls, not the certificate.

Waiver of subrogation and primary/non-contributory endorsements are common contractual requirements; they must be added by endorsement and can affect the insurer's recovery rights.

Reservation of rights letter preserves the insurer's coverage defenses while it defends; failure to reserve can waive the right to deny coverage later.

State regulation: liability policy forms and rates are filed with or approved by the state insurance department; surplus lines carriers are not admitted and are regulated differently.

Producer duties: license by line, appointment by the insurer, continuing education, and disclosure of commissions and conflicts; unauthorized practice of law in advising on coverage is prohibited.

Fair claims settlement practices acts require prompt acknowledgment, investigation, and payment; bad-faith failure can expose the insurer to extra-contractual damages.

Utmost good faith: the insured must disclose material facts on the application; misrepresentation can void coverage, and the insurer's reliance must be material.

Insurable interest and public policy: liability insurance protects against legal liability, not against the insured's own intentional wrongdoing; punitive damages coverage varies by state.

Guaranty association protection applies to admitted insurers and typically excludes surplus lines, self-insured retentions, and large commercial insureds.

Exam focus: distinguish occurrence vs. claims-made triggers, coverage A vs. B vs. C, and aggregate vs. per-occurrence limits; know which exclusion applies to a fact pattern and which endorsement restores coverage.

Exam focus: read the insuring agreement first, then exclusions, then exceptions to exclusions; the exception restores coverage, and the burden of proving an exclusion is on the insurer.

Exam focus: defense costs are outside limits under standard CGL, so a claim can exhaust limits only through indemnity; within-limits defense endorsements change that math.

Construction defect: CGL responds to damage to other property caused by the insured's faulty work, but the your-work exclusion bars the cost of repairing the defective work itself; the subcontractor exception matters.

Products liability: the products-completed operations aggregate applies once the product leaves the insured's premises; the your-product exclusion bars damage to the product itself, not to other property it damages.

Rental premises: fire legal liability covers damage to rented premises from the insured's negligence; the insured's own property and improvements are excluded.

Contractual indemnity: an insured contract exception preserves coverage for indemnities assumed in leases and defined agreements; broad indemnities outside that definition are excluded.

Cyber event: CGL typically excludes data breach and network interruption; cyber liability responds, and the CGL property damage definition may not include electronic data.

Auto exposure: the CGL auto exclusion applies to owned and non-owned autos; hired and non-owned auto liability must be added to the commercial auto policy or endorsed.

Employment claim: EPLI responds to harassment and discrimination claims; the CGL personal and advertising injury coverage does not cover employment practices.

Professional claim: E&O responds to negligent advice; the CGL professional services exclusion bars the same claim, so the two policies are complementary, not overlapping.

Umbrella gap: an umbrella follows underlying terms and drops down only when underlying coverage is exhausted or absent; it does not fill a gap created by an exclusion in the underlying policy unless the umbrella is broader.

Standard CGL limits: each occurrence (e.g., USD 1,000,000), general aggregate (e.g., USD 2,000,000), products-completed operations aggregate (e.g., USD 2,000,000), personal and advertising injury (e.g., USD 1,000,000), damage to premises rented to you (e.g., USD 100,000), medical expense (e.g., USD 5,000 per person).

CG 00 01 is the standard occurrence CGL form; CG 00 02 is the claims-made version; the difference is the trigger and the retroactive date.

CG 20 10 (additional insured - ongoing operations), CG 20 11 (additional insured - completed operations), CG 20 33 (additional insured - owners, lessees, contractors), CG 24 04 (waiver of subrogation).

CG 21 39 is the absolute pollution exclusion endorsement; CG 21 49 is the total pollution exclusion; both remove the standard pollution exceptions.

Claims-made ERP options: 12-month, 24-month, or 36-month tail; the ERP premium is a percentage of the expiring premium and is often 100% to 200% for a 12-month tail.

Occurrence trigger vs. claims-made trigger: occurrence policies respond to injury during the policy period; claims-made policies respond to claims first made during the policy period and reported within the policy period or ERP.

Deductible vs. SIR: a deductible is subtracted from the loss payment by the insurer; an SIR is funded by the insured before the policy responds and often carries defense obligations.

Aggregate limits: the general aggregate applies to all covered claims except products-completed operations; the products-completed operations aggregate applies only to that exposure.

Insured vs. additional insured vs. named insured: the named insured has full rights; additional insureds have limited rights and usually no notice or cancellation rights unless endorsed.

Trap: assuming the certificate of insurance grants coverage; only the policy and endorsement do, and the certificate is informational.

Trap: confusing occurrence date with claim date; occurrence policies use the injury date, claims-made policies use the claim date plus retroactive date.

Trap: treating defense costs as inside limits; standard CGL pays defense outside the limits, so limits are not reduced by defense.

Trap: assuming an umbrella broadens coverage; an umbrella follows underlying terms and only drops down for exhausted or missing underlying coverage.

Trap: applying the CGL to auto or professional claims; the auto and professional services exclusions push those to the auto and E&O policies.

Trap: ignoring the subcontractor exception; it restores coverage for damage to other property caused by a subcontractor's work, which is a common exam fact pattern.

Trap: assuming punitive damages are covered; they are often excluded or sublimited and depend on state law and public policy.

Trap: assuming late notice always bars coverage; most jurisdictions require the insurer to show prejudice, and the policy condition governs.

Trap: confusing general aggregate with per-occurrence; the aggregate caps the total for the policy period, while the per-occurrence caps one event.

Application: gather exposure data (sales, payroll, subcontractors, products, auto, professional services) to select forms, limits, and endorsements; misrepresentation on the application can void coverage.

Quoting: compare occurrence vs. claims-made, limits structure, deductibles/SIRs, and endorsements; the lowest premium may not match the contractual insurance requirements.

Binding: coverage binds when the insurer or authorized producer confirms; a binder is temporary evidence and must be followed by the policy.

Endorsements: additional insured, waiver of subrogation, primary/non-contributory, and pollution buy-back are the most common contractual requirements; confirm the endorsement number and wording.

Renewal: review loss runs, exposure changes, and retroactive dates; a claims-made renewal must preserve the retroactive date or coverage for prior acts is lost.

Cancellation: pro rata for insurer cancellation, short rate for insured cancellation in many policies; notice requirements are set by state law and the policy.

Claims: report promptly, cooperate, and avoid voluntary payments; the insurer controls defense and settlement, and the insured must not settle independently.

Audit: premium is adjusted at expiry based on actual exposure; underreporting leads to additional premium and possible coverage disputes.

Recordkeeping: retain policies, endorsements, certificates, and loss runs for the statute of limitations period; claims-made policies require proof of prior acts and retroactive dates.

CGL and commercial auto: the CGL auto exclusion sends auto liability to the auto policy; hired and non-owned auto liability is often added to the auto policy, not the CGL.

CGL and workers compensation: the CGL employer's liability exclusion bars suits by employees; workers compensation Part Two (employer's liability) responds instead.

CGL and E&O: the professional services exclusion sends professional claims to E&O; the two policies are complementary and should be coordinated on retroactive dates.

CGL and cyber: the CGL excludes data breach and electronic data; cyber liability responds, and the two policies should be coordinated on notification and defense costs.

CGL and D&O: D&O covers wrongful acts by directors and officers; the CGL does not cover management liability, and the two policies are separate.

CGL and EPLI: EPLI covers employment practices; the CGL personal and advertising injury coverage does not cover discrimination or harassment claims.

CGL and umbrella/excess: the umbrella follows the underlying CGL terms and drops down for exhausted limits; it does not broaden coverage unless the umbrella is broader.

CGL and environmental: the pollution exclusion bars most pollution claims; environmental liability policies or pollution buy-back endorsements respond instead.

CGL and builders risk: builders risk covers the project during construction; the CGL covers third-party liability, and the two policies should be coordinated on completed operations.

Bodily injury: physical injury, sickness, or disease sustained by a person, including death; mental anguish may be included if arising from bodily injury.

Property damage: physical injury to tangible property, including loss of use; electronic data is not tangible property under most CGL forms.

Occurrence: an accident, including continuous or repeated exposure to substantially the same general harmful conditions; intentional acts are not occurrences.

Personal and advertising injury: injury from libel, slander, wrongful eviction, invasion of privacy, and infringement of copyright or slogan in an advertisement.

Products-completed operations hazard: bodily injury or property damage occurring away from the insured's premises and arising from the insured's product or completed work.

Your work: work or operations performed by the insured or on its behalf, including materials and equipment; the subcontractor exception restores coverage for damage to other property.

Impaired property: tangible property that cannot be used because it incorporates the insured's defective product or work; the impaired property exclusion bars coverage for the loss of use.

SIR vs. deductible math: with a USD 25,000 SIR and a USD 100,000 loss, the insured pays 25,000 and the insurer pays 75,000; with a deductible, the insurer pays 100,000 and is reimbursed 25,000.

Aggregate math: with a USD 2,000,000 general aggregate and two USD 1,000,000 occurrences, the aggregate is exhausted; a third occurrence has no coverage unless the aggregate is restored.

Licensing: producers must hold a license for the lines they sell and be appointed by the insurer; selling without a license is unlawful and voids commissions.

Fiduciary duty: premiums collected are held in trust; commingling with personal funds is prohibited and can lead to license revocation.

Disclosure: producers must disclose commissions, conflicts of interest, and any ownership interest in the insurer or agency.

Unfair trade practices: misrepresentation of policy terms, twisting, rebating, and false advertising are prohibited and subject to state penalties.

Privacy: state and federal laws require safeguarding nonpublic personal information; data breaches must be reported under applicable law.

Errors and omissions: producers should carry their own E&O coverage; a coverage mistake can expose the agency to a claim for the uninsured gap.

Documentation: record the client's instructions, coverage recommendations, and declinations; contemporaneous records are the best defense in an E&O claim.

Advertising: do not claim official affiliation with the exam, regulator, or insurer; describe coverage accurately and avoid guarantees of claim outcomes.

Continuing education: maintain CE credits and license renewals; lapses can invalidate appointments and commissions.

Identify the trigger: occurrence date vs. claim date vs. retroactive date; the policy in force at the trigger responds.

Identify the coverage part: A (bodily injury/property damage), B (personal and advertising injury), C (medical payments).

Identify the limit: per occurrence, general aggregate, products-completed operations aggregate, or sublimit.

Identify the exclusion and its exception: expected/intended, contractual, pollution, auto, professional, your-work, your-product.

Identify the endorsement: additional insured, waiver of subrogation, primary/non-contributory, pollution buy-back, ERP.

Identify the defense obligation: outside limits in standard CGL; inside limits if endorsed; reservation of rights preserves defenses.

Identify the gap: auto, professional, cyber, employment, pollution, and management liability each need a separate policy or endorsement.

Identify the contract requirement: certificate, additional insured wording, waiver of subrogation, and primary/non-contributory status must match the contract.

Identify the numbers: limits, deductibles/SIRs, aggregate erosion, and premium audit adjustments.