RMIN 5540 - EXAM 3 | 158 QUESTIONS LATEST UPDATE WITH 100% VERIFIED ANSWERS ACCURATE., Exams of Business Administration

Download RMIN 5540 - EXAM 3 | 158 QUESTIONS LATEST UPDATE WITH 100% VERIFIED ANSWERS ACCURATE. and more Exams Business Administration in PDF only on Docsity! RMIN 5540 - EXAM 3 | 158 QUESTIONS LATEST UPDATE WITH 100% VERIFIED ANSWERS ACCURATE. Which is not covered by an Umbrella policy? (Insured has typical underlying policies) A. Property Damage from Completed-Operations. B. Employee injury covered by Work Comp statute C. Property Damage to another's car from Auto Liability D. Damage Awards from a third party over-action. B. Employee injury covered by WC statute Who can be a plaintiff in a DERIVATIVE D&O Suit? A. Stockholder B. Customer C. Competitor D. All of the other choices are correct. Stockholder Insured has a CGL with limits of $1M, an Umbrella with $5M x $1M and Excess of $10m. How much is the TOTAL limit? A. $10M B. $15M C. $16M D. $50M C. $16M When determining coverage of a D&O policy, where do you look FIRST? A. Side A B. Side B C. Side C D. Entity B. Side B Which clause is often known as "The Hammer Clause"? A. Duty to Defend B. Allocation of Loss C. Consent to Settle D. Severability of Interests C. Consent to Settle Which policy would NOT EVER have an Extended Reporting Period (aka) "Tail"? A. CGL B. D&O C. EPLI D. WC / EL D. WC/EL How are Defense Costs handled in a typical Professional / Management Liability Policy? A. Not Covered B. Covered in addition to the limit - Difficulty in Estimating MPL - Layering of Liability Coverages - Effect of Aggregate Limits Excess and Umbrella Simple Layering ABC Insurance Company Tower Example How much total insurance does ABC purchase? What is the total premium they pay? Total Insurance: 1m + 2m + 3m = $6m Total Premium: 100k + 120k + 150k = $370,000 Why doesn't ABC purchase all of their insurance from the same carrier? Carriers do not want to have the full burden of paying a claim if a loss occurs. It is much safer to split the risk with other carriers. Price Per Million Formula Premium/# of millions Ex: if the premium is $100,000 and the policy provides $10m in coverage, the price per million for that layer would be 100k/10 = $10,000 What is the price per million of each layer? - Layer 1 = 100k/1 = $100k - Layer 2 = 120k/2 = $60k - Layer 3 = 150k/3 = $50k Why are the lower layers more expensive? Reminder, the price per mil for each layer is: Layer 1 = $100k, Layer 2 = $60k, Layer 3 = $50k When a loss occurs, the lower levels pay first. They are most likely to be used, so they cost more. Rate Relativity - the rate of a layer in relation to the layer below it; refers to the cost of the layer in comparison to the layer below it - Formula = Price Per Mil Layer A / Price Per Mil Layer B What is the rate relativity for each layer? - Layer 2: Layer 2/Layer 1 = 60k/100k = 60% - Layer 3: Layer 3/Layer 2 = 50k/60k = 83.33% *Cannot compute the RR for Layer 1 because there is no layer below it Eroded versus Exhausted Limits - When a layer is "eroded", the limit is used, but there is still some left available to be used. - When a layer is "exhausted", the limit is completely used with nothing left in it. Terms used to describe layers • Primary Layers • Working Layers • Underlying Layers • Intermediate, Intervening or Interim Layers • Low Excess (Low in Tower) • High Excess (Top of the Tower) • Attachment Point • Quota Share CGL - Effect of Aggregate Limits Excess vs. Umbrella • Umbrella may provide broader coverage than primary policies, with an SIR • Excess normally does not. It is either Follow-Form; Stand-Alone (Self-Contained Policy); or Combo - Excess: more limit, no additional coverages than provided by underlying coverage - Umbrella: more limit & some additional coverages in the underlying coverages T/F: An umbrella liability policy is a type of excess liability policy that not only provides additional limits, but also provides coverage not available in the underlying coverage, subject to the insured's self-insured retention. Also, most umbrella policies also provide defense coverage. True Remember, excess provides additional limit but no additional coverage, while umbrella provides additional limit and some additional coverages. Excess vs Umbrella Diagram Example Following Form Excess • Aka Follow Form or FF • Follow terms and conditions of underlying. • However, most follow terms and conditions of underlying so long as they do not conflict with their own t&cs. Self-Contained Excess • Aka Stand-alone excess • Does not consider coverage provided in u/l policies. Therefore, gaps can occur. • Some policies will specifically state that they will provide excess limits over over reduced or exhausted limits for specific occurrences even if not provided in the stand-alone policy. Combination Policies • May follow form u/l with its own terms and conditions • May contain coverages broader than underlying but does not "drop down" below its attachment point. Specific & Aggregate Excess (aka Stop Loss) - Commonly used over self-insured WC plans, but can be used for any type of Liability - Requires that the insured retain a specific dollar amount Specific vs. Aggregate To avoid gaps & disputes, make coverage as consistent as possible!!! Adequacy of Excess Limits - Very difficult to determine - Many companies buy the most insurance that they can reasonably afford. However, that may not be the most appropriate cost effective option. - Some see Liability limits as a moral/morale hazard with plaintiffs seeking damages = insurance limit. - Major Brokers currently investing more in analytics in insurance purchasing. Management Liability • Directors & Officers ("D&O") • Employment Practices Liability ("EPL") D&O Suits - The Directors (Board of Directors, including Chairman of the Board, etc) & - Officers (CEOs, President, Vice Presidents, AVP...) May be held liable PERSONALLY if they manage the business / organization incorrectly and his/her/their failure creates a Financial consequence for a Stakeholder. Basics of Corporate Structure - Corporations are Owned by Stockholders - Stockholders elect a Board of Directors (BoD) - BoD control the Corporation - BoD appoint Officers - D & Os are usually stockholders/shareholders - Directors may also be Executive Officers - Ds elected by stockholders Roles of Directors - Establish corp policy & major business and financial decisions - Appoints Executive Officers Equivalent to D & O's - Not-for-profits, Partnerships, etc. may not have titles of Ds and Os but they have equivalent positions D&O Major Responsibilities - Fiduciary Duty - Duty of Care - Duty of Loyalty - Duty of Disclosure - Duty of Obedience D&O: Fiduciary Duty - to act in the best interest of another to another. - This Duty is owed to various "Stakeholders" - stockholders, BoD, and the general public. D&O: Duty of Care Must meet these standards: – Act in good faith – Discharge their responsibilities with: 1. informed judgment, and 2. a degree of care that a person in a similar position would believe to be reasonable under the circumstances Business Judgment Rule: D&Os are not personally liable for business decisions if they acted in good faith and made an informed decision D&O: Duty of Loyalty - Duty of undivided loyalty to the corporation - Duty of loyalty to the stockholders: 1. No insider trading! 2. Sec 16(b) requires D&Os to "disgorge" profits on stock if sold within 6 months D&O: Duty of Disclosure - Duty to disclose material facts to all persons who have a right to know them, including stockholders, bondholders and potential investors. - But, must NOT disclose confidential and market sensitive material to others, including family members and colleagues. - Typically, not authorized to be spokesperson. D&O: Duty of Obedience Ds&Os are required to perform in accordance with the federal and state laws, in addition to, the corporate charter Types of D&O Suits - Derivative - Nonderivative & Class Action Lawsuits - Arise when stakeholders perceive wrongdoing. - Typically financial in nature. - Events that typically precede a D&O claim: 1. dramatic decrease in stock price 2. wasteful use of funds (charities) D&O Derivative Claims - shareholder files suit on behalf of the business - What does the shareholder get out of this? The Business (which is an investment to the shareholder) is in a better financial position. Shareholder may also be reimbursed expenses incurred in filing the suit. - shareholder(s) can sue one or more of the D&O's personally (sued for personal assets) D&O Non-Derivative Claims - these claims may be brought by any stakeholder, not only shareholders - shareholder(s) file suit on behalf of themselves - What does the stakeholder(s) get out of this? $$$ - D&O's still sued for personal assets. but $ goes to share/stakeholders, not the company Steps: 1. First, the Entity indemnifies the D&Os. ($) 2. The insurance company reimburses the entity. (insurance policy) D&O Coverage A - When the entity can’t or won’t indemnify the D&Os, Side A is triggered. - The insurance company indemnifies the D&O's directly D&O Coverage C - Entity Coverage - The plaintiff may sue the individual Directors & Officers, as well as, the Entity itself. - Side C: ENTITY Coverage pays for the suit directly against the Corporate Entity D&O Coverage C - Insuring Agreements – Specifically names the Corporate Entity as an insured. – Shares limits Sides A&B. – Can be considered a corp asset. Policy should include language, such as who is paid first.. Coverage A/B/C Insuring Agreements - Coverage /Side A: Indemnifies Ds&Os for covered claims when such indemnification is not required by law, permitted by law or is financially prohibited (bancrupcy). - Coverage / Side B: Indemnifies the corporate entity for amounts paid to the Ds&Os (aka Corp Reimbursement or Indemnification coverage.) - and sometimes Coverage/ Side C: Entity Coverage - Covers the ENTITY when the ENTITY is named in the suit "Claim" Claims-Made Policies typically include: – Written Demand for Money or Monetary Relief – Civil Proceeding (serving a complaint) – Formal administrative or regulatory proceeding – Criminal not usually included. If they are, limited to defense. "Loss" - All damages that the Ds&Os become legally obligated to pay, subject to exclusions. - Defense costs are within the policy limits. - Excludes taxes, criminal or civil fines & penalties, punitive or exemplary damage or multiplied portion of any damages - Punitives are most-favorable-jurisdiction "Wrongful Act" Any error, misstatement, misleading statement, act, omission, neglect, or breach of duty actually or alleged committed or attempted by the directors and officers, individually or collectively, in their respective capacities as such, or any matter claimed against them solely by reason of their status as directors and officers. Claims-Made Policies - The policy in effect when the claim is first made is the policy that applies to all related claims out of the wrongful Act. - Extended Reporting Periods, usually: - 30 to 60 day automatic tail (included with original premium) - Option to add 1 to 5 years of tail (additional premium) - Usually bilateral - Possible to have a separate limit for tail Claims-Made Provisions - Retroactive Dates - Prior Acts Coverage (at policy inception): Warrant that non of the Ds or Os know of any circumstances that might give rise to a claim - Reporting of Known Wrongful Acts (at policy expiration) - Aka laundry listing Persons & Organizations Insured - Side A: D's, O's, similar positions (past, present and future) - Side B: The entity described in dec and usually the subsidiaries. New entities may be covered. May have to pay additional premium if new entity > 10% - Spouses of Ds &Os D&O Exclusions - Losses better covered under other policies - Covered or reported under prior policies - Failure to insure - Insured v Insured (with exceptions) - Difficult to Insure - Securities Acts (this is often purchased back for publicly traded companies) - Fraudulent or Dishonest Acts may have some Defense coverage. Duty to Defend & Allocation of Loss - Control usually resides with the Insured. Must obtain consent of Insurer if wish to be reimbursed. - Timing of Payments - Covered/Non-covered Allegations Policy Provisions - Consent to Settle Claims (Hammer Clause & Modified Hammer Clause) - Severability of Interests - Deductibles & Coinsurance - Higher for Side B than for Side A - Duty to report claims - Arbitration (Binding & Non) Consent to Settle Claims – Hammer Clause – Modified Hammer Clause - Employment at Will: you can be hired/fired/quit for any reason (as long as not illegal) - Implied Contract ("just cause") - Constructive Discharge: objectively change someone's job to the point where it is like they are fired - Often includes allegations of Discrimination but not always. EPL: Sexual Harassment - Quid Pro Quo: "something for something" - Hostile Work Environment: 1. Protected Class: gender, race, religion 2. Unwelcome Harassment based on a protected characteristic 3. Affected term or condition of employment 4. Er knew or should have known and failed to take action Now, hostile work environment can be on basis of race or disability. EPL: Retaliation Punishing those who file EPL claims, WC Claims or whistleblowers. Other EPL Claims - Mass Lay-offs; (Disparate Impact) - Overtime; Exempt/nonexempt An exempt employee is not entitled to overtime wages, whereas an employer must pay overtime wages to nonexempt employees. There have been class-action lawsuits on behalf of employees who allege they did not receive OT compensation, and most of these claims have to with being improperly categorized as exempt/non-exempt. EPLI - Insurance that covers an organization, its directors and officers, and its employees against claims alleging damages because of wrongful employment practices such as sexual harassment, wrongful termination, and unlawful discrimination. - Some standard forms, but most forms are proprietary from insurance companies EPLI History - Relatively new coverage - Previously not excluded by CGL. Now, it is a standard endorsement to the CGL policy. Nearly always added. - Can be combined with D&O, especially for smaller companies. EPLI Insuring Agreement - Broad Form Wrongful Acts: no specific listing of offenses or with some examples of offenses followed by "or similar acts" or like wording. To ensure the definition is as broad as the Named Perils Definition, these policies include a list of other offenses that are covered, such as retaliation, invasion of privacy, and other torts related to the employment relationship. - Named Perils Definition of Wrongful Acts: Wrongful refusal to employ; Wrongful termination (active or constructive), Wrongful demotion, reassignment, discipline..; Wrongful negative evaluation; workplace harassment; unwelcome sexual advances; Employment discrimination of any kind.... Definition of Employee - Can vary, but usually includes Full time, part time, seasonal and temporary - Independent contractors may be covered. EPLI Exclusions - Prior Reported Claims - Deliberate fraud or intentional violations of statutes, rules or regulations. (usually must pay defense until this is proven). Also ERISA, COBRA, OSHA, ADA etc. - Liability assume under contract or agreement unless liability existed anyway - BI/PD other than emotional distress, mental anguish, humiliation - WC EPLI Defense usually defense is within the limit EPLI Persons & Organizations Insured - Entity - Ds, Os, Employees (incl past employees) D&O/EPL Combo Advantages: - Lower Costs - Fewer Conflicts of Coverage Disadvantages - Not as broad for EPL - Shared limits - Excludes employees who are not Ds and Os EPLI Added Coverages & Services Third-Party Discrimination Claims - Generally covers harassment & discrimination - If endorsed, generally increases premium 10 to 15% or more... Workplace Violence Coverage. May cover counseling, Bus Interruption, Death and Dismemberment Third-Party Discrimination Claims This coverage focuses on the loss exposure posed by discrimination claims made by third parties, as opposed to employees or applicants for employment. This type of coverage can either be its own policy or added to the EPL by endorsement. Example: In 1993, six black Secret Service agents ordered food at a Maryland Denny's. Compared with the service of their food orders for their white colleagues, they waited so long for their service that they filed a class-action racial bias lawsuit for service denial, which settled for more than $54 million. Customers, suppliers, independent contractors, or any other non-employee who interacts with the firm can make these types of claims. 10m + 15m + 25m + 50m + 75m = $175m $175M + Primary Limits (which vary). For example: The sponsorship liability limit is $5M. Therefore, total available is $180M, whereas the Land's End GL policy is only $2M in limits. Therefore, the total limit are $177M in total. (Note that the excess and umbrella limits are shared for all of the underlying policies. Therefore, if they pay out for losses, the aggregate limits of umbrella and excess layers may be eroded.) Describe what's happening in the 3rd Excess Layer? Carrier / Limit / Premium AIG (Lead Umbrella)/ $10M x P/ $100,000 1. Ace / $15M x $10M / $90,000 2. Argo Re / $25M x $25M / $120,000 3a. Catlin A / $15 po $50M x $50M/ $54,000 3b. AWAC / $35 po $50M x $50M / $126,000 4. Liberty Mutual / $75M x $100M / $210,000 This is a quota share layer. The full layer is $50M. It is shared 70% with AWAC and 30% with Catlin. They earn the same price per million. The total layer premium is $180,000, which is 75% of the 2nd Excess Layer. Any losses would share the same percentage. What is the attachment point of the 4th Excess Layer and what does that mean? Carrier / Limit / Premium AIG (Lead Umbrella)/ $10M x P/ $100,000 1. Ace / $15M x $10M / $90,000 2. Argo Re / $25M x $25M / $120,000 3a. Catlin A / $15 po $50M x $50M/ $54,000 3b. AWAC / $35 po $50M x $50M / $126,000 4. Liberty Mutual / $75M x $100M / $210,000 $100,000,000. It means that this policy will not pay until a claim (or series of claims) reaches $100M. The primary policies are all written on an Occurrence Basis. What is the trigger for the Umbrella and Excess Policies? Carrier / Limit / Premium AIG (Lead Umbrella)/ $10M x P/ $100,000 1. Ace / $15M x $10M / $90,000 2. Argo Re / $25M x $25M / $120,000 3a. Catlin A / $15 po $50M x $50M/ $54,000 3b. AWAC / $35 po $50M x $50M / $126,000 4. Liberty Mutual / $75M x $100M / $210,000 It is important that the tower is as consistent as possible. Therefore, the entire tower should be written with the same trigger as the primaries - in this case, Occurrence The General Liability Policy written by ACE has standard CGL wording for Coverage Territory, while the Lead Umbrella has a Worldwide Coverage Territory. All Excess Layers are Follow Form of the Lead Umbrella, with drop down. A Products Liability claim of $60M is filed in Spain for a product that was purchased in the UK. How would the tower respond? Carrier / Limit / Premium AIG (Lead Umbrella)/ $10M x P/ $100,000 1. Ace / $15M x $10M / $90,000 2. Argo Re / $25M x $25M / $120,000 3a. Catlin A / $15 po $50M x $50M/ $54,000 3b. AWAC / $35 po $50M x $50M / $126,000 4. Liberty Mutual / $75M x $100M / $210,000 This claim would NOT be covered by a standard unendorsed CGL policy. The lead umbrella would cover this claim excess of $25,000 self-insured-retention(standard). Insured would pay first $25,000 AIG would pay next $10M (note full limit sits excess of SIR, while a deductible is part of the limit) ACE would pay next $15M Argo RE would pay next $25M AWAC & Carlin would split next $10M. Well actually, they would split the next $9,975,000 (count up the underlying payments) AWAC pays 70% or $6,982,500 Catlin pays 30% or $2,992,500 In single policy year, the DQS has the following claims. Assume all policies are Follow Form Occurrence with drop down, following the Lead Umbrella policy. How would each of the following claims be paid? 7a A products loss of $12M, impacting the OSH GL policy, which has limits of $1M per Occurrence $2M in Aggregate and a $50,000 deductible: Carrier / Limit / Premium AIG (Lead Umbrella)/ $10M x P/ $100,000 1. Ace / $15M x $10M / $90,000 2. Argo Re / $25M x $25M / $120,000 3a. Catlin A / $15 po $50M x $50M/ $54,000 3b. AWAC / $35 po $50M x $50M / $126,000 4. Liberty Mutual / $75M x $100M / $210,000 - DQS pays $50,000 deductible - OSH pays $950,000. (The per occurrence limit is $1M, less the deductible, which forms part of the limit) - AIG pays $10M (full limit excess of the underlying) - ACE pays $1M In the same year, a second large loss occurs ($23M). This one first impacts the General Liability policy covered by the Primary policy ACE. This policy has a deductible of $100,000. How is the loss paid? Carrier / Limit / Premium AIG (Lead Umbrella)/ $10M x P/ $100,000 C. covered pro-rata D. not covered A. in addition to the limit Employee is at fault in accident driving company car, which damages are covered under Company's BACF Liability section? A. Injuries to employees who were passengers in company car B. Damage to company car C. Injuries to driver of other car D. All of the other responses are correct C. Injuries to driver of other car Company does not own any autos. They do rent autos. Which coverage symbol should Company use for Liability? A. 1 B. 9 C. Hire Autos Only D. Specifically Described Autos B. 9 EE earned $2,000 per week. After WC injury, earned $1,000 per week. How much would WC pay? A. $0 B. $666.67 C. $1,000 D. $1,333.34 B. $666.67 2000-1000 = 10001000(2/3) = 666.67 Employee of Kia is injured when his own Kia car malfunctioned. He sued Kia, which Kia policy would respond? A. Workers Comp, Part 1 B. Employers Liability C. CGL D. Auto B. Employers Liability Remember, under no circumstances would a CGL policy cover an employee suing their own company. This is an example of a dual-capacity case because an ee is suing their er, but not as the ee. Which of the following statements about Products Liability is TRUE? A. A retailer may be held liable based on strict liability in tort, even if there is no negligence under common law. B. The manufacturer can only be found liable if found negligent under common law. C. If a product is defective, the injured party can only win a suit against the manufacturer of the product. The injured party can only win against the Distributors and/or retailers is they amended the product. D. The distributor can be found liable under common law governing warranties. A. A retailer may be held liable based on strict liability in tort, even if there is no negligence under common law. Which of these is an example of liability imposed by statute? A. Workers Comp B. Health Ins C. Product liability D. Auto Accident A. Workers Comp For a tort to be excluded by the CGL because it is considered "intentional" it must be... A. Committed by a person who does know their actions will cause harm B. Committed by a person who intends to do the act itself C. Committed by a person who foresees their act will cause harm D. Committed by a person who does not foresee anything by their actions C. Committed by a person who foresees their act will cause harm T/F: In products liability, the manufacturer, supplier, distributor, and retailer can all be held liable. True The categories for torts include all of the following except for... A. Negligence B. Intentional C. Strict Liability Torts D. Non-Intentional Torts D. Non-Intentional Torts The doctrine of exclusive remedy means A. worker comp benefits are the only way an insured EE can be compensated B. one employee can receive benefits per workers comp claim C. If an EE receives workers comp benefits, they cannot sure their ER in tort C. If an EE receives workers comp benefits, they cannot sure their ER in tort Seeing price increases at the store, a customer passed out. He has not sued, but insured want to pay doctor bills. A. covered under B B. excluded C. covered under A D. Covered under C Plastics, Inc is privately held and owned by ten shareholders. Six of the shareholders run the company while the others are only passive investors. The passive investors become angry when they discover that the directors and officers have spent the company's money lavishly on new corporate headquarters, as well as, the purchase of two paintings costing $1.5M each. Two of the passive shareholders sue the offending officers. This suit is brought on behalf of Plastic's Inc. With regard to this scenario, which statement is TRUE? A. This is as Derivative Suit. B. This suit would only be covered under an Occupation-Specific D&O Policy C. This is a Class-Action Suit. D. This is a Non-Derivative Suit. A. This is as Derivative Suit. Music, Inc has a D&O policy with an aggregate limit of $1,000,000 with Chubb. The policy includes a Hammer Clause. One of the directors, Ozzy, is sued for a covered loss. The plaintiff, Britney, and the insurance company, Chubb both agree to a settlement of $500,000. At the time of the settlement offer, Chubb had paid $50,000 in defense costs. Ozzy does not want to settle. He chooses to continue to fight this in court, racking up another $10,000 in defense costs. Ozzy ultimately loses in court and is ordered to pay $800,000 to Britney. How much would Chubb pay, in total, for Defense and Damages. (Ignore Deductibles)? A. $0 B. $560,000 C. $550,000 D. $860,000 C. $550,000 Chubb would pay the original agreed settlement amount ($500,000) and the total of the defense costs paid at the time of this settlement ($50,000). ABC Company has a CGL policy and an umbrella policy, which each provide coverage on an occurrence basis and has the following limits: CGL: $1 million each occurrence, $2 million general aggregate, Umbrella Policy: $5 million each occurrence limit, $5 million aggregate limit (Ignore Primary Deductible) During the policy period, ABC suffers the following covered losses: 1st Loss: $900,000 2nd Loss: $1.3 million 3rd Loss: $500,000 How much will be paid by the umbrella policy for the 3rd loss? A. $0 B. $150,000 C. $300,000 D. $400,000 E. $500,000 D. $400,000 The CGL would cover the entire first loss, which leaves $1.1m in the general aggregate. Because the CGL has a $1m per occurrence limit, it only covers, $1m of the second loss, so the umbrella policy picks up the remaining $300,000. At the time of the third loss, there is only $100,000 remaining in the CGL general aggregate, so the CGL pays $100k, and the umbrella picks up the remaining $400,000. When is an impairment in aggregate limit endorsement in an Umbrella policy necessary? A. when an insured has a reasonable belief that they will incur multiple losses that will impact the aggregate. B. when an insured has a claims-made policy that will expire before they can report all claims. C. when the underlying and excess policies are not concurrent (Ie: they do not have the same inception /expiration dates) D. when an insured would like to reinstate a limit that has been exhausted by the actual payment of claims. C. when the underlying and excess policies are not concurrent (Ie: they do not have the same inception /expiration dates) How would an Umbrella policy respond when a plaintiff wins a lawsuit against the Insured for a covered claim that includes a damage award for Medical Expenses and Pain & Suffering ? (Assume the underlying policies include CGL and Auto) A. Medical Expenses covered. Pain & Suffering are excluded. B. Medical Expenses are capped by sublimit in CGL Coverage C and Pain & Suffering are Excluded. C. Medical Expenses covered. Pain & Suffering silent and subject to most favorable jurisdiction D. Both Medical Expenses and Pain & Suffering are covered. D. Both Medical Expenses and Pain & Suffering are covered. Jim is a director of Arch Supplies. Jim is sued in a non-derivative suit., which alleges that he Breached the Duties of Discolure and Care, as well as, committed several illegal SEC violations. Because of the criminal allegations, Arch Supplies cannot defend Jim or reimburse him. Assuming Arch Supplies has a D&O policy with Side A, B & C and appropriate limits, how would this claim be handled? A. Paid under Side A coverage. Typically, the insurance company will hold all payments until final adjudication. Then, the insurance company will pay only that portion that is covered by the policy. B. Paid under Side A coverage. While typically not required to do so, many insurance companies will reimburse defense costs periodically. If found guilty of acts that are not covered by the policy, Jim would have to reimburse the insurance company for that portion of the claim that is not covered. C. Paid under Side B. Since there are criminal allegations. There is no duty to defend. The claim will only be reimbursed if found not guilty of the criminal charges. D. Paid under Side B. Since this is a non-derivative suit, the corporate entity would incur all defense costs. B. The Corporate Entity C. Current Employees D. All of the other choices are Insureds A. Future Directors From the textbook: "The insureds under Coverage A are the individual directors and officers, generally defined to include any person who were, now are, or shall become duly elected or appointed directors and officers of the insured corporation." Which is FALSE with regard to Deductibles / Coinsurance in a D&O Policy? A. Side B deductibles are significantly higher than A. B. Insureds may have a %age coinsurance in addition to deductible C. Side A may have PER INSURED deductibles and an aggregate deductible D. All of the other answer choices are TRUE D. All of the other answer choices are TRUE Which is NOT a required element for a Sexual Harassment claim? A. Harassment affected a term or condition of employment. B. EE subjected to unwelcome harassment based on a protected characteristic C. Certified by Equal Employment Opportunity Comm (EEOC) D. EmployER knew or should have known about the harassment C. Certified by Equal Employment Opportunity Comm (EEOC) Which is NOT an advantage of stand-alone EPLI and D&O policies (as opposed to D&O/ EPL Combination)? A. Broader EPL Coverage B. Broader D&O Coverage C. "Employees" covered for EPLI claims. D. Fewer Disputes about whether claim is covered by respective policies B. Broader D&O Coverage This question was worded in a way that was very confusing, but just know that when it comes to having a D&O/EPL Combo policy (versus having separate policies) there are some advantages and disadvantages, including: Advantages: - Lower Costs - Fewer Conflicts of Coverage Disadvantages - Not as broad for EPL - Shared limits - Excludes employees who are not Ds and Os Jan, the CEO, causes an accident while driving company car. She is injured. Hurts other driver. Which policies pay? A. Auto B. Workers Comp C. D&O D. CGL Auto and Workers Comp The Workers Comp policy will pay for Jan's injuries, and the Auto policy will pay for the other driver.