1. Why is commercial liability insurance often arranged in layers? What are the advantages and the disadvantages?

2. What is the difference between a following form policy and stand-alone excess liability form?

3. What is the basic difference between an excess liability and an umbrella liability form?

4. A chemical manufacturing company has coverage under a typical CGL policy providing $1,000,000 in coverage for each occurrence. The company also has a typical following form excess liability insurance with $3,000,000 in coverage for each occurrence. A $2,000,000 loss occurs that is excluded by the CGL policy.How much, if any, would the excess liability policy pay?

5. A contractor has a CGL policy that provides $100,000 per occurrence limit with a $300,000 aggregate limit. The contractor is trying to determine what type of following-form excess liability policy to purchase as follows:

• specific excess policy with a $100,000 retention and a $1,000,000 maximum limit
• aggregate excess liability policy with a $100,000 aggregate liability policy with a $100,000 aggregate retention and a $1,000,000 maximum limit

During the past year, the contractor has had the following losses:

• $25,000
• $175,000
• $90,000
• $150,000

1. How much would have been paid under the specific excess policy?
2. How much would have been paid under the aggregate excess policy?
3. Which policy would you recommend the insured have?

6. Describe the liability loss exposures of a corporation's directors and officers, with specific reference to their responsibilities and duties. What types of lawsuits may be brought against them?

7. ABC Corporation appeared to be a successful business. The stock increased significantly in value during a five year period as the company reported record earnings. However, it turned out that the earnings were falsely inflated on financial reports by the board in order to keep the stock price rising. When this was discovered, the stock price went from $51.00 per share to $.51 per share in one week.

All of the employees were terminated without receiving any notice.

Indicate whether the following would be covered under a typical D&O liability policy and/or a typical EPL policy. Explain your answer.

a. Shareholders make a claim against the directors and officers for their loss on the stock.

b. The employees make a claim that they should receive severance pay.

8 Mary is unhappy with the shoddy workmanship by ACE Company who replaced her windows and doors.She decided to get even by hacking in ACE's computer system and deleting the operating system. This action make it impossible for ACE to fulfill its contracts with current customers for several days. On what basis may ACE's customer's sue the company?