ERRORS AND OMISSIONS INSURANCE COVERAGE FORM

Transcription

1 ERRORS AND OMISSIONS INSURANCE COVERAGE FORM NOTICE: This is a Claims Made and Reported Coverage Form. Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered. Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Common Policy The words "we", "us" and "our" refer to the company providing this insurance. Other words and phrases that appear in quotation marks have special meaning. Refer to Section II DEFINITIONS. In consideration of the payment of the premium and reliance upon the statements made and information furnished to us as part of the "application", and subject to all the provisions of this policy, we agree to provide the insurance described in this Coverage Form and its applicable endorsements. SECTION I INSURING AGREEMENTS 1. Errors and Omissions Liability We will pay on behalf of the "insured" all "loss" that the "insured" becomes legally obligated to pay because of "claims" arising out of "wrongful acts". This insurance applies to "wrongful acts" arising solely out of professional services rendered for others as stated in Item 1. of the Coverage Part For this insurance to apply, all of the following conditions must be met: a. The "wrongful act" occurred subsequent to the Retroactive Date stated in Item 4. of the Coverage Part Declarations; b. The "insured" had no knowledge prior to the effective date of this policy of the "wrongful act" or circumstance likely to give rise to a "claim"; and c. The "claim" is first made against the "insured" and reported to us during the policy period or within the Automatic Extended Reporting Period, if applicable. 2. Defense a. We have the right and duty to defend the "insured" against any "claim" to which this insurance applies, even if the allegations of the "claim" are groundless, false or fraudulent. However, we will have no duty to defend the "insured" against any "claim" to which this insurance does not apply. b. "Defense costs" are included within the Limits of Insurance stated in Item 2. of the Coverage Part Declarations and reduce the available Limits of Insurance. c. We will not pay "defense costs": 1) Incurred prior to the date we are notified of the "claim"; or 2) To which we have not consented. d. Our right and duty to defend or to pay "loss" ends when we have used up the applicable Limits of Insurance stated in Item 2. of the Coverage Part Declarations, through payment of "loss" including "defense costs". 3. Coverage Extensions a. Personal Injury This insurance also applies to "personal injury" resulting from a "wrongful act" arising solely out of professional services rendered for others as stated in Item 1. of the Coverage Part b. Computer Services Coverage This insurance also applies to "wrongful acts" arising out of "information technology services" performed solely in conjunction with the professional services as stated in Item 1. of the Coverage Part c. Supplementary Payments We will reimburse the "insured" for reasonable expenses incurred, including loss of wages, if the "insured" is required by us to attend arbitration proceedings or trial in the defense of a covered "claim". The reimbursement is limited to $250 per day for each "insured" who attends such proceedings, subject to a maximum of $5,000. No deductible applies to this coverage. These payments are in addition to the Limits of Insurance stated in Item 2. of the Coverage Part d. Worldwide Provision This insurance applies to professional services as stated in Item 1. of the Coverage Part Declarations, rendered for others anywhere in the world, provided the "claim" is made against an "insured" in the United States of America (including its territories and possessions), Puerto Rico or Canada. e. "Disciplinary Proceedings" We will defend an "insured" against any "disciplinary proceedings". Page 1 of 6 EO 01 (07/11)

2 "Defense costs" provided for "disciplinary proceedings" are limited to $10,000. We are not obligated to provide a defense for any "disciplinary proceeding" once the $10,000 limit has been exhausted. We will not have any obligation to indemnify an "insured" for any award or judgment or other relief rendered in any "disciplinary proceeding". As a condition precedent to this "disciplinary proceeding" coverage: (1) the "insured" must have no knowledge prior to the effective date of this policy of "wrongful acts" or circumstances likely to give rise to a "disciplinary proceeding"; and (2) notice of the "disciplinary proceeding" is first made against an "insured" and reported to us within 30 days of the "insured s" receipt of the notice and during the policy period. No deductible applies to this provision. SECTION II DEFINITIONS 1. "Application" means: a. An "application", whether it is ours or another s, and any material submitted for this coverage; and b. Any "application" and materials submitted for all previous policies issued by us providing you continuous coverage until the effective date of this policy. 2. "Claim" means: A written demand for monetary relief received by an "insured" seeking to hold an "insured" responsible for a "wrongful act", including but not limited to, the service of suit or the institution of arbitration or mediation proceedings against an A "claim" is considered first made when an "insured" or its legal representative or agent first receives written notice of a "claim". More than one "claim" arising out of the same "wrongful act" or "interrelated wrongful acts", will be deemed a single "claim" first made on the date the earliest of the "claims" was made. 3. "Defense costs" means reasonable and necessary fees, costs and expenses, resulting from the defense and appeal of any "claim" against the "insured", but excluding salaries and bonuses of the "insured s" officers or employees. "Defense costs" include premiums for any appeal bond, attachment bond or similar bond, in an amount up to the Limits of Insurance stated in Item 2. of the Coverage Part 4. "Disciplinary proceeding" means any proceeding by a state licensing board, self-regulatory body or governmental agency with authority to regulate the professional services stated in Item 1. of the Coverage Part Declarations performed by an 5. "Information technology services" means: a. Electronic media operations; b. Data processing; c. The design or formulation of electronic data processing programs or systems; d. Consulting and training in the use of software; e. The ordering and installation of software; f. The performance of feasibility studies and recommendations regarding computer technology objectives and needs of others; or g. Electronic activities performed for others in the ordinary course of the "insured s" business. 6. "Insured" means you and any person acting within the scope of his or her duties as a past or present partner, principal, officer, director or employee of yours. "Insured" also includes the estate, heirs, executors, administrators, assigns and legal representatives of any "insured" in the event of the "insured s" death, incapacity, insolvency or bankruptcy, but only to the extent that the "insured" would otherwise be provided coverage under this Coverage Form. "Insured" also includes independent contractors who are natural persons, but only with respect to professional services performed on your behalf as stated in Item 1. of the Coverage Part For "claims" arising out of the "wrongful acts" of an "insured", the spouse or domestic partner is also an 7. "Interrelated wrongful acts" means "wrongful acts" that have in common any fact, circumstance, situation, event or transaction. 8. "Loss" includes damages and settlements that an "insured" is legally obligated to pay as a result of a "claim" for a "wrongful act". "Loss" also includes: a. "Defense costs"; b. Pre-judgment and post-judgment interest awarded by a court; and c. Punitive or exemplary damages and the multiplied portion of any multiple damage award, to the extent the damages are insurable under applicable law. However, "loss" does not include fines, penalties, taxes, damages owed based on an express obligation by written or oral agreement, disgorgement of profits by an "insured"; cost of an "insured s" correction; fees, commissions, expenses or costs paid to or charged by an "insured", the cost to comply with any injunctive or other non-monetary or declaratory relief, including specific performance, or any agreement to provide such relief or amounts owed under any contract or agreement. Page 2 of 6 EO 01 (07/11)

3 9. "Organic pathogen" means any organic irritant or contaminant including, but not limited to, mold, fungus, bacteria or virus, or any of their by-products such as mycotoxin, mildew or biogenic aerosol. 10. "Personal injury" is an injury, other than bodily injury, arising out of one or more of the following offenses: a. False arrest, detention or imprisonment; b. Malicious prosecution; c. Wrongful entry into, wrongful eviction from or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor; d. Oral or written publication in any manner or material that slanders or libels a person or organization or disparages a person s or organization s goods, products or services; or e. Oral or written publication in any manner or material that violates a person s right of privacy. 11. "Wrongful act" means any actual or alleged negligent acts or errors or omissions, arising solely out of the "insured s" professional services rendered for others as stated in Item 1. of the Coverage Part SECTION III EXCLUSIONS This insurance does not apply to any "loss", in connection with, arising out of, or in any way involving: 1. Bodily Injury or Property Damage Bodily injury, sickness, humiliation, mental anguish, emotional distress, disease or death of a person or misappropriation, damage to or destruction of any tangible property including any loss of use or slander of title. 2. Bankruptcy Bankruptcy or insolvency of the 3. Fraud Fraudulent, dishonest or criminal acts. However, this exclusion does not apply to "defense costs" incurred until the conduct is established to be fraudulent, dishonest or criminal. 4. Contractual Liability Liability under any contract or agreement, except liability that would exist even in the absence of the contract or agreement. 5. Advertising Injury Advertising, marketing, broadcasting or telecasting activities conducted by or on behalf of the 6. Pending and Prior Litigation Any litigation pending as of or prior to the effective date of this Coverage Form. However, if this Coverage Form is a renewal of a Coverage Form or Coverage Forms previously issued by us, and if the coverage provided by us was continuous from the effective date of the first Coverage Form to the effective date of this Coverage Form, the reference in this exclusion to effective date will mean the effective date of the first Coverage Form under which we first provided continuous coverage to you. 7. Prior Knowledge A "wrongful act" or circumstance that an "insured": a. Had knowledge of prior to the effective date of the policy; and b. Had a reasonable belief could result in a "claim". 8. Copyright, Patent or Trademark Infringement Infringement of a copyright, patent or trademark. 9. Discrimination Discrimination or harassment by an "insured" on any basis including, but not limited to, gender, race, color, religion, age, disability, pregnancy, national origin, marital status, sexual orientation, genetic condition or other protected class. 10. Employment Practices Liability Any employment action by an "insured" including, but not limited to: (1) retaliation; (2) wrongful termination, including, but not limited to, breach of an employment agreement; (3) violation of the Uniformed Services and Reemployment Rights Act; (4) violation of the Family Medical Leave Act of 1993; or (5) violation of any federal, state or local law having the same or substantially similar purpose as the Acts in (3) and (4). 11. Pollution The actual, alleged or threatened discharge, dispersal, release or escape of pollutants, or any direction or request to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize pollutants. Pollutants include, but are not limited to, any solid, liquid, gaseous or thermal irritant or contaminant including "organic pathogens", smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. 12. Asbestos a. The specification of any product, material or process containing asbestos; or b. Failure to detect the existence of or determine the amount of asbestos in any product, material or process; or c. Failure to warn of the existence of asbestos in any product, material or process; or d. Failure to recommend the removal of asbestos in any product, material or process; or e. Any other alleged failure to properly act in response to the presence of asbestos in any product, material or process; or Page 3 of 6 EO 01 (07/11)

4 f. Professional services rendered in the abatement, replacement or removal of any product, material or process containing asbestos. 13. Nuclear, Biological and Chemical Materials a. Use, release or escape of nuclear materials, or any resulting nuclear reaction or radiation or radioactive contamination; or b. Dispersal or application of pathogenic or poisonous biological or chemical materials. 14. Unauthorized Access Security or system attack, unauthorized access to, unauthorized use of, tampering with or introduction of malicious code, into firmware, data, software, system or networks. 15. Insured vs. Insured Any "claim" made by or on behalf of any "insured" against any other 16. Failure To Maintain Insurance Failure of an "insured" to effect or maintain insurance or advise of the need to maintain insurance, suretyship or bond. 17. Securities Liability Violation of the: (1) Federal Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940 or any other federal law with respect to the regulation of securities; (2) any state securities or blue sky law; or (3) any provision of the common law imposing liability in connection with the offer, sale or purchase of securities. 18. ERISA Violation of the Employee Retirement Income Security Act of 1974 or any amendments to the Act or its regulations or similar provisions of any federal, state or local law or common law. 19. Labor Relations Acts Violation of the Fair Labor Standards Act, the National Labor Relations Act, the Worker Adjustment and Retraining Act, the Certified Omnibus Budget Reconciliation Act of 1985, the Occupational Safety and Health Act, any workers compensation, unemployment insurance, social security, or disability benefits law, other similar provisions of any federal, state or local law or common law or any rules or any regulations promulgated under any of the foregoing. 20. Unfair Business Practices Violation of any law, rule or regulation relating to antitrust, restraint of trade, unfair business practices or interference with another s business, contractual or economic relationships or interest. 21. RICO Violation of the Racketeer Influenced and Corrupt Organizations Act or any amendments to the Act or its regulations or any similar federal, state or local law or regulation. 22. Fee and Other Compensation Disputes Return of fees, commissions, premiums or other compensation charged by the 23. Other Capacity The "insured's" services and/or capacity as: a. A partner, principal, officer, director, manager, employee or trustee of a business enterprise not named in the Common Policy Declarations; b. A partner, principal, officer, director, manager, employee or trustee of a charitable organization, pension, welfare or profit-sharing plan or mutual or investment trust; c. A fiduciary under the Employment Retirement Income Security Act of 1974 and its amendments or any regulation or order issued pursuant thereto or any other employee benefit plan; or d. A public official or an employee of a governmental body, subdivision or agency. 24. Financial Interest The performance or failure to perform services in any transaction which involves any entity that: a. Is owned by, controlled by or in which an "insured" has any financial interest; b. Owns, controls, or has any financial interest in an "insured" covered by this policy; c. Is affiliated with an "insured" through any common ownership, control or financial interest. 25. Theft Conversion, robbery, theft or similar related offense. 26. Guarantees Express or implied warranties or guarantees by an 27. Licensed Services Services performed by a licensed or certified architect, engineer, lawyer, physician, Certified Public Accountant or accountant. 28. Illegal Profit The gaining in fact of any profit or advantage to which the "insured" is not legally entitled. SECTION IV LIMITS OF INSURANCE 1. The Limits of Insurance shown in the Coverage Part Declarations and the rules below determine the most we will pay regardless of the number of: a. "Insureds"; b. "Claims" made; or c. Persons or organizations making "claims". Page 4 of 6 EO 01 (07/11)

5 2. The Aggregate Limit is the most we will pay for all "loss". 3. Subject to the Aggregate Limit, the Each Claim Limit is the most we will pay for all "loss" for any one "claim". 4. Where a deductible appears on the Coverage Part Declarations, it applies as follows: a. Subject to the Limits of Insurance provisions stated above, we will be obligated to pay only "loss" in excess of the deductible specified in Item 3. of the Coverage Part Declarations; b. The deductible applies separately to each "claim"; c. The Deductible Aggregate shown in Item 3. of the Coverage Part Declarations is the most you will pay during the policy period in deductible payments; d. Payment of the deductible is a condition precedent to payment of "loss" by us; if we, at our sole discretion, elect to pay any part or all of the deductible, you must repay the amount to us upon written demand; and e. We will reduce your deductible by fifty percent (50%) for any "claim" that is resolved at mediation prior to the initiation of a lawsuit. The Limits of Insurance for this Coverage Part will apply separately to each consecutive annual period starting with the beginning of the policy period shown in the Common Policy However, if (1) this Coverage Part is issued for a period of more than 12 months but less than 24 months; or (2) the policy period is extended after issuance for an additional period of less than 12 months; then the time periods exceeding the standard 12 month policy period described in (1) and (2) will be deemed part of the last preceding period for the purpose of determining the Limits of Insurance. Any Extended Reporting Period, if applicable, will be deemed part of the last policy period for the purpose of determining the Limits of Insurance. SECTION V CONDITIONS A. CLAIMS CONDITIONS 1. "Insured's" Duties When There is a "Claim" As a condition precedent to the right of coverage provided by this Coverage Form, the "insured" must do the following: a. Provide written notice as soon as practicable, but in no event later than 60 days after the expiration of the policy to: Western World Insurance Group 400 Parson's Pond Drive Franklin Lakes, NJ Attn: Claims Department Written notice must include every demand, notice, summons or other process received directly by the "insured" or the "insured's" representatives. b. Cooperate with us. We may require that the "insured" submit to examination under oath, produce and make available all records, documents and other materials, and attend hearings, depositions and trials. The "insured" must assist us in effecting settlement, securing and providing evidence and obtaining the attendance of witnesses. c. Not admit liability, settle any "claims" or assume any obligations without our prior written consent. 2. Reporting of a Possible "Claim" If during the policy period any "insured" first becomes aware of a "wrongful act" that could result in a "claim" and gives written notice to us during the policy period of: a. The potential claimant's name and address; and b. A chronological description of the events that are involved; and c. An explanation of the type of "claim" that is anticipated; then any "claim" arising out of the "wrongful act" which is subsequently made against the "insured" will be deemed to have been made at the time we received the written notice from the 3. Settlement We shall have the right to settle any "claim" in a manner we deem reasonable and necessary without obtaining the "insured s" consent. 4. Action Against Us No action may be brought by an "insured" against us to recover for any "loss" allegedly covered by this Coverage Form, unless the "insured": a. Has fully complied with all the terms of this Coverage Form; and b. Provides 60 days notice to us of intent to bring the action so that we and the "insured" can jointly determine whether the dispute can be resolved through mediation. No person or organization has a right under this Coverage Form to join us as a party or otherwise bring us into a suit asking for damages from an Nothing in this section constitutes or should be understood to constitute a waiver of our right to take action against the "insured" at any time following tender of the "claim" to us in any court of competent jurisdiction in the United States. Page 5 of 6 EO 01 (07/11)

6 B. GENERAL CONDITIONS 1. Extended Reporting Period a. If this Coverage Form is cancelled or not renewed, you have the right to purchase an Extended Reporting Period. The Extended Reporting Period applies only to "claims" for a "wrongful act" committed prior to the termination of this coverage and otherwise insured by this Coverage Form. However, you must notify us in writing of your decision to purchase the Extended Reporting Period and the premium must be paid within 30 days of the termination date of this coverage. The right to purchase an Extended Reporting Period does not apply if the cancellation was for non-payment of premium or noncompliance with the terms of this Coverage Form. b. Premium for the Extended Reporting Period will be computed according to the percentages shown on Item 6. of the Coverage Part Declarations and based on the annual premium amount of this Coverage Part. c. The Extended Reporting Period cannot be cancelled or renewed. d. The additional premium for the Extended Reporting Period is fully earned at the inception of the Extended Reporting Period. e. Coverage for a "claim" or circumstances which ultimately lead to a "claim" first received and reported during the Extended Reporting Period is excess over any other valid and collectible insurance providing coverage for that "claim". f. The Extended Reporting Period does not reinstate or increase the Limits of Insurance available under this Coverage Form. g. The Extended Reporting Period begins on the effective date of cancellation or non-renewal of the Coverage Form. 2. Automatic Extended Reporting Period The following applies if the Coverage Form is cancelled or non-renewed: If a "wrongful act" is committed by the "insured" prior to the effective date of cancellation or nonrenewal, and a "claim" is made against the "insured" within 60 days of the cancellation or non-renewal date, the "insured" has 60 days from the cancellation or non-renewal date to give us written notification of the "claim". If you have obtained another professional liability or errors and omissions policy or any other valid insurance is in force, this Automatic Extended Reporting Period is not applicable. This Condition does not apply to any cancellation resulting from non-payment of premium or noncompliance with the terms and conditions of this Coverage Form. 3. Transfer of Rights of Recovery Against Others to Us If the "insured" has rights to recover all or part of any payment we have made under this Coverage Form, those rights are transferred to us. The "insured" must do everything necessary to secure our rights, and must do nothing to impair them. 4. Other Insurance This insurance is excess over any other valid and collectible insurance, unless the other insurance is specifically written to be in excess of this Coverage Form. 5. Terms of this Coverage Form Conformed to Statute Terms of this Coverage Form which are in conflict with the statutes of the state in which this policy is issued are hereby amended to conform to those statutes. 6. Transactions a. If after the effective date of this Coverage Form: (1) You merge into or consolidate with another entity such that you are not the surviving entity; or (2) Another entity, person or group of entities and/or persons acting in concert acquires more than 50 percent of your assets; or (3) Another entity, person or group of entities and/or persons acting in concert acquires the right to elect or select a majority of your directors, trustees or managers; or (4) You sell all or substantially all of your assets; this Coverage Form will continue in effect until the expiration date for any "wrongful act", occurring before the transaction. There is no coverage under this Coverage Form for "wrongful acts" occurring on or after the transaction. b. You must give us written notice of the transaction as soon as practicable, but not later than 30 days after the effective date of the transaction. The entire premium for this coverage is fully earned on the transaction date. In the event of a transaction, you have the right to an offer of coverage from us for an Extended Reporting Period to report any "wrongful acts" that occurred prior to the effective date of the transaction. Page 6 of 6 EO 01 (07/11)