This topic collects the casualty coverages that sit outside the CGL, auto and workers compensation policies: umbrella and excess liability, professional and management liability, cyber, pollution and other specialty liability, and surety and fidelity bonds. Each exists because a standard policy excludes or limits the exposure. It also reaches into personal liability, so expect a few homeowners Section II and dwelling liability questions here.

Umbrella and excess liability

• A commercial umbrella (ISO CU 00 01) provides excess limits over underlying policies (CGL, auto, employers liability) and also covers some losses the underlying policies do not.
• A straight excess policy adds limits over the underlying policy without broadening coverage or dropping down.
• Retained limit: for claims covered by underlying insurance, the umbrella pays above the underlying limits; for claims covered by the umbrella but not by any underlying policy, it pays above the self-insured retention (SIR) shown in the declarations.
• Drop down: when an underlying aggregate is exhausted by paid claims, the umbrella responds in its place, subject to its terms.
• Maintenance of underlying insurance: if the insured lets required underlying coverage lapse, the umbrella pays only as if the underlying insurance were in force; the insured absorbs the gap.
• Example: $1,000,000 primary auto liability under a $5,000,000 umbrella and a $3,200,000 judgment: the auto policy pays $1,000,000 and the umbrella $2,200,000.
• A personal umbrella adds limits over the insured's auto and homeowners liability and may cover some exposures they do not, subject to a retention.

Professional and management liability

• Professional liability / errors and omissions (E&O): liability from negligent acts, errors or omissions in professional services, including purely economic harm. The CGL and BOP exclude professional services. Examples: an agent who forgets to add a client's new building, leaving it uninsured, looks to insurance agents E&O; a pharmacist's dispensing error.
• Medical malpractice: professional liability for improper care or treatment by a physician, hospital or other health care provider.
• Directors and officers (D&O): claims by shareholders, government agencies, employees and others alleging that managers mismanaged the organization. Nonprofit boards buy it too. Corporate law can let a company insure its directors and officers even for liability it could not indemnify (for example Del. Code tit. 8, 145(g)).
• Employment practices liability (EPLI): protects the corporation, its directors and officers and employees against claims such as wrongful termination, discrimination, sexual harassment and retaliation. The CGL (via CG 21 47) and workers compensation employers liability exclude these claims.
• Fiduciary liability: covers plan fiduciaries for breach of duty in managing an employee benefit plan (29 U.S.C. 1109). It is different from the ERISA fidelity bond, which protects the plan against theft or dishonesty by people handling its funds (29 U.S.C. 1112).

Cyber liability

The NAIC's model definition (Model #540, section 5, optional cybersecurity insurance definition) describes cyber insurance as first- and third-party coverage for losses and loss mitigation from data privacy breaches, network intrusions, viruses, ransomware and cyber extortion.

• First-party: the insured's own breach response costs, data restoration, business interruption and cyber extortion payments (a ransomware demand).
• Third-party: liability to customers and others whose data was exposed, and related defense.
• The CGL excludes electronic data loss, which is why cyber is bought separately.

Other specialty liability

• Liquor liability (CG 00 33): for businesses that make, sell, serve or furnish alcohol, whose CGL or BOP liquor exclusion leaves dram shop exposure uninsured.
• Pollution (environmental) liability: the CGL and BOP pollution exclusions are broad, so contractors such as asbestos abatement firms and businesses with pollution exposure buy separate pollution legal liability coverage, including cleanup costs.
• Product recall (withdrawal): the cost of withdrawing a defective product, which CGL exclusion n removes.
• Aviation liability: owned aircraft are excluded from the CGL.
• Protection and indemnity (P&I): an ocean marine vessel owner's liability for injury to crew and others and damage to others' property; hull insurance covers the vessel itself.
• Garage policies: the Garage Coverage Form (CA 00 05) and Auto Dealers Coverage Form (CA 00 25) combine auto and premises-operations liability for auto dealers and service businesses; garagekeepers covers customers' cars in the insured's care.

Personal liability recap

• Homeowners Section II excludes business activities; claim expenses (including up to $250 a day of lost earnings) are paid in addition to the limit; damage to property of others pays up to $1,000 per occurrence at replacement cost regardless of fault; loss assessment pays up to $1,000; Coverage F pays expenses incurred within 3 years and never for regular household residents (residence employees excepted); Coverage E excludes bodily injury to any insured; owned sailboats 26 feet or longer and owned boats with more than 25 total outboard horsepower are excluded, subject to exceptions.
• A landlord with a dwelling policy gets premises liability through the Personal Liability Supplement (DL 24 01).

Surety bonds

A surety bond is a three-party agreement: the surety guarantees to the obligee that the principal will perform. Unlike an insurer, a surety that pays a claim may recover from the principal (or other indemnitors). The penal sum is the most the surety must pay.

• Miller Act (40 U.S.C. 3131): a contractor awarded a covered federal construction contract must furnish both a performance bond (protecting the government) and a payment bond (protecting those who supply labor and materials). The payment bond may not be less than the performance bond.
• Consent of surety is the surety's acknowledgment that its bond still applies to a modified contract (48 CFR 28.001).
• The SBA guarantees bid, performance and payment bonds for eligible small contractors.

Fidelity bonds

A fidelity bond protects an employer against loss from its employees' dishonest acts, the bonding counterpart of crime insurance's employee theft coverage. Bonds may be name schedule, position schedule or blanket. ERISA requires plan officials who handle funds to be bonded for at least 10% of funds handled, minimum $1,000, maximum $500,000 ($1,000,000 for plans holding employer securities).

Common traps

• Umbrella = excess limits plus some broader coverage above an SIR; straight excess = limits only.
• E&O is for professional mistakes; D&O is for management decisions; EPLI is for employment practices; fiduciary liability is for managing a benefit plan.
• Surety: three parties, and the surety can recover from the principal. Fidelity: protects the employer from employee dishonesty.
• Performance bonds protect the owner; payment bonds protect subcontractors and suppliers.
• P&I is liability; hull is the ship.