Commercial Umbrella

COMMERCIAL UMBRELLA

Program Descriptions

This program contains the rules and rates governing the writing of Commercial Umbrella Liability Policies. This insurance is designed to cover the liability needs of the Business Community for small to medium sized risks. Umbrella Liability Insurance is provided over Declared Primary Liability Insurance.

Scope of Coverage

The policy will pay, on behalf of the insured, the ultimate net loss in excess of the retained limit which the insured shall become legally obligated to pay as damages because of Bodily Injury, Property Damage, Personal Injury or Advertising Liability. Retained limit is the limit on other policies that the insured is required to carry, or the Self-Insured Retention (Deductible), for those exposures where primary coverage is not required. Ultimate net loss is the amount actually paid in settlement or satisfaction for a loss in which the insured is liable.

Rule I Binding Authority – Agents do not have binding authority for Commercial Umbrella policies. Please submit only ACORD applications on a non-binding basis.

1.1  Annual premium must accompany the application.

1.2  Automobile declarations must accompany the application.

1.3  A five-year loss history must accompany the application.

1.4  Details on losses over $10,000.00 must accompany the application.

1.5  Any incomplete application will not be considered.

1.6  Current MVR records must accompany the application.

1.7  Underlying Commercial policy must be with Mt Morris Mutual.

Rule II General Information

2.1  Policy Term – All policies are written with a 12-month policy term.

2.2  Premiums

A.  The premium will be rounded to the nearest whole dollar. A premium involving 50 cents or more will be rounded to the next higher whole dollar.

B.  Premium changes or return premium resulting from any change or cancellation will be computed on a pro-rata basis.

2.3  Cancellations – Policy cancellations can be requested with either an insured’s declaration page, signed lost policy release, or a signed request from the insured.

2.4  Changes – All changes to the policy should be requested on an Acord form or the Company’s change form.

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2.5  Assignment – Policy assignments are not available, please submit a new application.

Rule III Risks not Eligible – Insurance policies classified as, or covering, the following risks; or whose principal exposure to loss are categorized by the following, are ineligible exposures for coverage under this program:

3.1  Fiduciary Liability.

3.2  Financial Guarantee and Insolvency.

3.3  Nuclear Energy Liability.

3.4  S.E.C. (Security and Exchange Liability).

3.5  Directors and Officers Liability (Except for Churches & Condominiums).

3.6  ERISA Liability.

3.7  Boiler and Machinery.

3.8  Railroad Liability.

3.9  Hospital Professional Liability.

3.10  Environmental Impairment Liability/Pollution Liability.

3.11  Aggregate Workers’ Compensation.

3.12  War Risk.

3.13  Products Integrity, Impairment, or Products Recall.

3.14  Admiralty/Jones Act, Federal Employers Liability Act, or Longshoremen’s and Harbor Workers Act.

3.15  Airports, Dams, Reservoirs, Tunnels, Bridges.

3.16  The operation or manufacturer of Amusement Parks, Carnivals, Circuses, Fairs, Zoos, and Rides.

3.17  Asbestos manufacturing, handling, or distribution.

3.18  Association, Pool, and Syndicate Business, to include business accepted by the Company as reinsurance.

3.19  Automobile exposure relative to:

A.  Automobile driver with more than two moving violations or at-fault accidents in a three-year period or any convictions for DUI.

B.  Automobile manufacturing, including Mobile Homes, Trailers, and Snowmobiles, including critical parts, etc.

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C.  Automobile racing and racetracks.

D.  Automobile vehicle leasing or rental agencies, except customer service rentals.

E.  Automobile – Taxicabs, Buses, School Buses, or any Public Livery (school bus or public livery vans – owned by churches, eligible school risks and condo or apartment complexes are acceptable).

F.  Automobile – Transporting of Explosives, Munitions, or Chemicals, not limited to Gasoline, Liquefied Petroleum Gases, Butane, or Propane (except Gasoline, if incidental to insured’s principal operations).

G.  Truckmen/Common Carriers.

H.  Automobile Fleets consisting principally of heavy (20,001-45,000 Lbs. GVW) or extra heavy (45,001 lbs. GVW and up) Licensed Power Units.

3.20  Aviation – Aircraft or Aircraft parts, either manufacturing, handling, or assembly thereof.

3.21  Boiler or Pressure Vessels, manufacturer, service, or assembly thereof.

3.22  Chemicals, Fertilizers, Insecticides, Herbicides, Animal Feed, either manufacturing, blending, mixing, or application thereof.

3.23  CATV – (Community Antenna T.V. or Cable T.V.) except if subject to specific limitation endorsement.

3.24  Contractors engaged in/or construction of:

A.  Blasting

B.  Bridges (except road overpass type)

C.  Chimney (commercial type)

D.  Dams and reservoirs

E.  Demolition or wrecking

F.  Erection of iron and steel (over 3 stories)

G.  Excavation below ground level of abutting or adjoining structures

H.  Petroleum and/or chemical, including service type

I.  Pile Driving or shoring of existing foundation

J.  Steeples

K.  Towers

L.  Tunneling

M.  Underpinning

N.  Waste sites

O.  Railroads

3.25  Drugs, Pharmaceuticals and Vitamins, Cosmetics, Hair, and Skin Products manufacturing or importing, other than retail stores.

3.26  Explosives, Ammunition, Magnesium, Fuses, Fireworks, Celluloid, or Pyroxylin, including the manufacturing, handling, storage, and/or distribution.

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3.27  Fumigating or Exterminating.

3.28  Grain Elevator and Storage Operations.

3.29  Liquor Liability on risks classified as nightclubs or taverns. Eligible accounts: package stores, distributors and restaurants whose liquor receipts are less than 30% of annual receipts.

3.30  Installation, manufacturer, or servicing of any vertical or above the ground contrivance for the movement of people, such as, but not limited to: Elevators, Escalators, Trains or Trams, Ski Lifts, or Tows.

3.31  Installation or manufacturer of Sprinklers, Fire Alarms, Burglar Alarms, or any other such safety devices other than smoke detectors.

3.32  Legal Liability – for personal goods of others when a known exposure exists, unless liability for personal property in the Insured’s care, custody or control is excluded. Examples of such exposure would be:

A.  Bailees

B.  Exhibition

C.  Motor Truck Cargo

D.  Terminals

E.  Warehouses

F.  Hotels

3.33  Liquefied Petroleum Gas – distribution, handling, manufacturing, or storage of, except for small propane tank exchange exposure, which is eligible.

3.34  Logging and Lumbering.

3.35  Marine Operation, including stevedoring and subaqueous work and/or repair of navigation of vessels and barges, including operation of docks, quays, wharves, or dry-docks.

3.36  Municipalities.

3.37  Oil and Gas, petroleum and petrochemical refining, exploration and drilling and/or distribution or sale of any volatile products (except fuel oil dealers with incidental gasoline and service stations).

3.38  Oil Lease Operators, Drillers, or Exploration.

3.39  Police, Fire, or Emergency Vehicles.

3.40  Power Equipment rented to others.

3.41  Professional Errors and Omissions Liability – all except for, the following and then subject to a Following Form Provision:

A.  Barber Shops

B.  Beauty Shops

C.  Cemeteries

D. Druggists

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E. Hearing Aid Stores

F. Morticians

G.  Opticians

H.  Optometrists

I Veterinarians (pet type only)

J. Pastoral Professional (written only with a sexual molestation

exclusion included)

L. Printers

3.42  Publishing, Advertising Operations (unless Personal Injury and E & O are excluded).

3.43  Riggers Liability.

3.44  Risks in the business or the manufacturing or assembly of:

A.  Automobiles

B.  Cranes

C.  Industrial and Farm Machinery

D.  Ladders

E.  Medical Products

F.  Scaffolding

G.  Toys

H.  Snowmobiles

I.  Valves

J.  Athletic Devices

K.  Boats, Ships, or Critical Parts

L.  Wire Rope and Rope

M.  Industrial Pumps

3.45  Schools and Colleges with more than 1,500 students.

3.46  Security Guards or Detective Agencies.

3.47  Tire (all types) Manufacturing or Recapping.

3.48  Tobacco Manufacturers or processors.

3.49  Underground Mining or Tunnel Operations.

3.50  Utilities.

Rule IV Required Underlying Limits – Mt. Morris Mutual must write the Commercial Liability. In those instances where companies are not able to write a

particular underlying auto exposure, it can be placed with a company having a

Best’s Rating of “B+” or better. The following liability limits, or greater, need to be in

effect at the time of application.

If the coverages referenced below are reduced, cancelled, discontinued, or nonexistent, the insured’s minimum retained limit will be equal to the amount of liability coverage that the required underlying coverage would have provided.

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The following limits are absolute minimums. Higher limits may be required on certain risks. Sublimits offered on primary underlying policies will not cause the Umbrella Policy to drop down below the following required underlying liability limits:

4.1  General Liability including Personal Injury, Products and Contractual written as part of a:

A.  Comprehensive General Liability Policy – “Old Occurrence”.

B.  Comprehensive General Liability Policy – “New Simplified”.

C.  Business Owners Policy, CPP Policy.

D.  Special Multi-Peril Section II Policy with Comprehensive General Liability.

Then the following minimum underlying limits are required:

“Old Occurrence Policy”

$500,000/$500,000/$100,000 Split Limits or

$500,000 Combined Single Limit.

“New Simplified Occurrence Policy”

$500,000 each occurrence;

$500,000 General Aggregate;

$500,000 Products Aggregate.

4.2  Automobile and Garage Liability:

A.  Private Passenger autos and light trucks (10,000 pounds GVW or less) and medium trucks (10,001 to 20,000 pounds GVW) eligible livery vans, 15 passenger maximum.

Then the following minimum underlying limits are required:

$500,000/$500,000/$100,000 Split Limits or

$500,000 Combined Single Limit.

B.  Heavy trucks (20,001 to 45,000 pounds GVW) and extra heavy trucks (45,001 and greater). All eligible bus units, and livery vans greater than 15 passenger capacity.

Then the following minimum underlying limits are required:

$1,000,000/$1,000,000/$100,000 Split Limits or

$1,000,000 Combined Single Limit.

C.  Non-owned Auto must be written at the same minimum underlying limits as required on owned vehicles.

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D.  Employers Liability.

Then the following minimum underlying limits are required:

$100,000 each Accident/Bodily Injury by Disease;

$500,000 Policy Limit/Bodily Injury by Disease;

$100,000 each Employee.

E.  Directors & Officers (Church & Condo only).

Then the following minimum underlying limits are required:

$1,000,000 occurrence;

$1,000,000 aggregate.

F.  Employee Benefits Liability (Claim made – no retro date prior to inception – no supplemental Extended Reporting Period).

Then the following minimum underlying limits are required:

$500,000 occurrence;

$500,000 aggregate.

G.  Liquor Legal Liability (on eligible risks only).

Then the following minimum underlying limits are required:

$500,000 occurrence;

$500,000 aggregate.

H.  Other Liability Exposures, refer to Mt. Morris Mutual.

Rule V Increased Limits of Liability – The program is for a basic policy limit of $1,000,000. Increased limits up to a total policy limit of $5,000,000 are available. These limits contemplate that the basic Self-Insured Retention (Deductible) shall be $10,000 of the ultimate net loss.

Rule VI Exclusions

6.1 Workers’ Compensation, Unemployment Compensation, or Disability Benefits.

6.2  Personal Injury – employee suing employee unless underlying affords coverage.

6.3  Watercraft over 50 feet away from owned premises.

6.4  Property Damage to goods or products manufactured, sold, or handled by the insured.

6.5  Products recall.

6.6  War.

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6.7  Commercial, Personal and Farm Umbrella policies must have an Absolute Pollution Exclusion unless prohibited by state statute.

Rule VII Conditions

7.1  First dollar defense is provided for defense coverage in those areas which are uninsured in the primary policies, but which are covered under the broader coverages of the Umbrella Liability.

7.2  Maintenance of Underlying – each policy described in the declarations shall be maintained in full effect during the prevalence of the Umbrella Liability.

Rule VIII Rating

8.1  Minimum Premiums;

First $1,000,000.

A.  Risks with one maximum owned automobile $500

exposure (PPT/LT/MED) and receipts of under

$500,000 ($5,000,000 on office exposures).

B.  Risks with up to three PPT/LT/MED vehicles $600

and/or receipts of more than $500,000 but less

than $1,000,000 ($5,000,000 on office exposures).

C.  All other commercial risks exceeding the above. $850

Auto fleets exceeding three PPT/LT/MED

vehicles and HVY/XHVY vehicles, and/or

receipts greater than $1,000,000 ($5,000,000

on office exposures).

8.2  Each additional million in excess of $1,000,000 $400 per additional

million for $2 million

& $3 million.

8.3 Contact Home Office for quotes on $4,000,000 or $5,000,000

Rule IX Motel and Hotel Rating

9.1  Underwriting Guidelines

A.  100 rooms maximum.

B.  Not greater than four stories in height.

9.2  Rating for First $1,000,000

A. Rate per room with no pool exposure. $30

B. Rate per room with pool exposure. $35

9.3  Each additional $1,000,000 up to $5,000,000 is billed at 50% of the premium

charged for the initial $1,000,000.

9.4  Above rating is subject to minimum premiums in Rule VIII.

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Rule X Directors and Officer Liability Rating

10.1 Underwriting Guidelines

A.  Church and Condominium risks only.

B.  $1,000,000 underlying limit.

10.2 Rating

A. Minimum premium (or actual premium if greater than minimum), plus $100 surcharge for D & O per million.

Rule XI Habitational: Apartment/Condominium Rating

11.1 Underwriting Guidelines

A.  No greater than five (5) stories in height

B.  Pool must be fenced/gated. Diving board would render account ineligible.

C.  Age/construction/height/presence of smoke detectors, must be documented. Properties older than 75 years should have mechanicals updated.

11.2 Rating

A.  Rate per unit: $10 to $30 per.

Rating judgment based on: # of stories/age/height/pool exposure/

urban vs. rural location.

Rule XII Premium Modifications – Premiums may be modified (if justified) by a schedule credit not to exceed 25%.

Rule XIII Maximum Risk Size Limitation – Risks with receipts of more than $15,000,000

and/or developing a first $1,000,000 umbrella premium of more than $10,000 are

ineligible for this program and shall be referred to the open market.

Rule XIV Rating Factors

14.1 Premiums shall be determined by applying the following difference in limit (D.I.L.) factors to the primary modified premiums for the first $1,000,000 of umbrella premium subject to minimum premiums in Rule VIII.

14.2 For each additional million, the premium is 50% of the first million or $400,

whichever is greater. This applies to premiums calculated for two million

and three million ONLY.

14.3  Contact Home office for quotes on $4 million and $5 million.

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