![]() ![]() No matter the financial cap of the contractor’s policy, the claim would not be covered. In Scenario 3, the contractor would be responsible for the full $700,000 assessment because the location of the accident was not covered by the scope of the policy-an inclusion gap. In Scenario 2, while the scope of the incident is covered by the policy, the $1 million limit means the contractor would be responsible for the excess $400,000. The contractor is only fully covered in Scenario 1. Scenario 3: An accident occurs off the job site that the contractor is responsible for. Scenario 2: An accident occurs on the job site that the contractor is responsible for. Scenario 1: An accident occurs on the job site that the contractor is responsible for. In which of the following scenarios would the contractor be completely covered? Any liabilities from an incident exceeding or not encompassed within these parameters become the responsibility of the policyholder- not the insurance company.įor example, consider an underlying policy which covers job-site injuries, with damages up to $1 million. First, What’s an Underlying Policy?Īn underlying policy is the initial insurance coverage established to protect against particular risks and address associated losses.Įvery policy has its own unique scope of protected risks and financial limits. However, contractors can protect themselves against these losses by employing excess and umbrella liability insurance-both of which increase limits of underlying policies, but have several important distinctions. ![]()
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