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Case 2:04-cv-00662-DGC Document 196-7 Filed 06/O1/2007 Page 1 014
Nelson e Coverage issue - Ketnoer 1S denying coverage antil indernnity payments exceed
l_ S7 rniliion
RepVv`est Policies:
RG Policy — General Liaointy
Limit S25C,OOO All Costs (Indemnity 'Iael erode limit
1. Commercial Liability Coyerage Eorrn Section; Supplementaryrt Payments — Page 6
ofli
This section a breakdown of tne type of that are under
this Lnsuresice pol;cy. At the end of mis section it quite clemly states; These
payments will reduce the limit ofinsurance,
2, Endorsement i4; Limits ofkisurence
The Limit oflnsurance stated herein is the Company 's total limit ofliaoiligz for
all damages including legal fees, court costs, interest and other allocated loss
_ expenses arising out ofthe same occurrence regardless ofthe number of claims
or claimants The term damages, wherever used, shall include, out is not limited
to, General, Special and Statutory Damages and shall include Punitive and
Exemplag Damages, fnes and penalties except where prohibited oy law. The
inclusion ofmore than one insured under thepolicy shall not operate to increase
the Company ’s limit o;'liao;"lijv...
RX Policy e Excess Liability
Limit SSSCQOC All Costs (Indemnity llael erode limit RX policy is oyer the RG
3. Schedule ofCnderlying insxence
Shows itat the underlying insurance is RG
A Endorsement :3: Following Eortn
"Tt is hereby agreed that this policy jollows jcrrn of the scheduled
policies and does not extend, add, or otherwzse moafv coverages provided in the
underlyingpolicies. " This follows exactly me coverage provided under the RG.
5. Endorsement 5; Page lg 2"“ Pxagrann: Retrospective Prernircrn Determination
"This endorsement applies only to the limitsprovzded oy thepolicy in the amount
of ST50,000 each occurrence in excess of the underlying S250,0GO each
occurrence is to include both loss and all expenses for deknding contested
clatms, but not amounts paid for the defense of clazms to aajiusters or
investigators acting in the regular course arp claim atéiutment. " This
endorsement snows the of the insurer (Rep\’»`est) tnat the RX and ase
eroded cy defense. endorsement does not soec;flcally deilne ;t as "Lirnit of`
for the policy. The defining wording "Eollowing endorsement
wn;cZ: snows that it follows wit}: the conditions cltltze underlying
RL` l>1)llQ}‘—llITTlUT€ll& Liability
Limit So,CC}ll,IZ(FC Defense lzie Does Not erode the limit
6. Scliedcle ollnderlying lnspzrance
Slictzs the tcnderlying inscrance the RG the
-
Exweir No...L£2<..
\L tx- esi?
ABSAZ 0002
‘2Q//z
Case 2:04-cv-00662-DGC Document 196-7 Filed 06/O1/2007 Page 2 of4 l g,
Kernpers Policy — Cotrgnereiel Excess Lieoll1tyPolicy
_ â€, Denial from the Commercial Excess Lzeoility in Fahey does not "drop A _
dovvr1" on the October L7 letter {rst oegegreph 9 ol 9 L cawr,2/\â€:L»»-u»uya Upol
6, Subject to subparagraphs E 4 and 5 this paragraph B. LI]/[IIS OE
LIABILITY.
at Ifthe l:m:t of ltaozlity of the "Llnderlying Insurance" have oeen
reduced by payments off “"L0ss" jor 'Insured Events" which take
place during our [Policy Period then this pol;cy drop down to
cecome excess of the reduced unaenying limits of
l;ao1.'i;y provided all Llnderlying Insurance; apples zo the "Loss"
and also drops down
Section IVY Definitions
I. "Designated Underlying Policy" the insurance policy or
policies indicated in the Schedule oflfnderlying Insurance (including
any renewal or replacement thereof,
4. 'L0ss" those sums actually paid in the settlement or
satisfaction qfa clazm which the “Insured" ts legalty ooligated to pay
as damages became of or damage afer making proper__
Xdeductions for all recoveries and salvage. l
I payments ifsuch payments are included t
t within the ltmits of ttao;lity· of any respective "Linderlying â€
l Insurance, 'L oy the terms ofthatpolicy "L0ss" may be established cy
" adiuaication, aroitratton to which “'Insured‘†must suomit or does
not submit with our consent, or compromise settlement tc which we
have previously agreed writing,
Policy provisions ln the Repvvlest policies have ell responded eporoprieiely.
Therefor, Lie ofdie Kemper polcy would ggccnsiitcte it to "drop dovv1n"
but to respond in e course of an "oceurrenee," Please note ide Kemper
policy deixxzlcn of "Loss" ~ "L0ss" detense and supplementary enoense
payments is? such payments are included within the limits of liaozlig of any
respectzve Underlying Insurance cy the terms eftna:pol;cy;
• Kemper Desigated Underlying hsurence is &e Rep\\'es: RK
• Rep\\'es: Desigeied Underlying lnsurence is jze Rep\\'es: RG end KK
"CO.`»d.\dEI€ CIAL EXCESS EOLLOWYNG ITORJ/I /Coverage Part By
B. Allpreprmted terms and conditions ofjorrn CE 7] O0 {Ed 04 97] are deleted
to the extent that they are ZKCG7ZSlSZ€HZ with the terms and conditions Qtr the
Republic Western Insurance Company. Insurance Company policy number
RL'99. " y
Reo`~\`est RZ Policv is an oolicy and does not recpire "E<>ll;>vv E·`;trr:" dce to _
the fee; 1het ic is ex "L`rr.ereLle E’oL1ey" nc: an °‘Excess Lie`:iQ;:y ?;>l;cy" J
ARSAZ 0003
. QZ?
g Case 2.04-cv-00662-DGC Document 196-7 Filed 06/O1/2007 Page3 of4 /7 l/2
__ DFFKIUONS ·e Glossary oflnsurance and Risk Management {Seventh Edition)
A policy designed to provide protection against catastrophic
losses. lt generally is written over various primary l1&lDlllZ}' policies, as the business
auto policy, commercial general liabihty policy, and aircrai? liability policies,
md employers liability coverage The umbrella policy serves three purposes; it provides
excess lirnits when limits ofuinderlylng liability policies are exhausted the payment of
clams, it drops down and picks up where the underlying policy ieayes of when the
aggregate limit of me underlying policy in question lS exhausted the payrnent of
claims, and it provades protection not covered by the underlying
pclicles, subject to tne assumption, by lnsured, of a selflinsured retention.
insurance that subject to all oline terms
and conditions of one policy beneath it. ln one event of a coni;ct, it ls the underlying
policy provisions that take precedence. May excess liab;lity pohcies state dnat dney are
follow forrn except with respect to certain terms and conditions. Wnen mls is the case,
ine excess liability policy is not truly on a follow
nxcess iciaoilrty rcnev; A poncy pronxoe ltmlts in o; an underlying
it . ’T"l~. ‘ :,JJ';·v *;,`.,,,l * * 9 ‘- A l,,,,‘-,*,, *‘,t.
ltaoility QCllC}#. ine underly;ng llabllny pollcy can be, and orten is, an alllolella policy.
An excess liability policy no broader dean the underlying llablllty policy, its sole
to provide additional limits of` tnsurance
Follow Fog; When umbrella policy proyls;cn follows tne underlying policy as to
how the provision applies. Follow {crrn also an l;abll;ty policy that
follows underlying policies for most policy Y)Z'C\`lSl()1iS. oolicy stand alone
for certain exclusions, conditions, etc , while back to tne underlying coverage For
niost provisions. Thl5 type of policy ibrrn is typically used of scheduled
underlying insmance and usually contains a recuirernent the insured maintain
scheduled underlying insurance
Drop Down Provision; A clause in urnbrella pol;c;es proyldlng that umbrella will
"droo—down" over reduced or exhausted underlying policy aggregate limits. Some
umbrellas maintain their own coverage when they drop down, others those
of the primary policy.
ARS/XZ 0004
C 2:4-v- 2-DGC D mm1 -7 Fil 12 7 Pg4f4
asc 0 c 0066 ocu e t 96 ed06/0 / 00 a e 0 /6, j
Case 2:04-cv-00662-DGC
Document 196-7
Filed 06/01/2007
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