Study guide
10.3 Who Is an Insured and Supplementary Payments
Arkansas Property & Casualty Insurance State
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1 Standalone Coverage Map
Standalone Coverage Map
2 Introduction: Arkansas Property & Casualty Insurance Exam Overview
Arkansas Property & Casualty Exam Overview
3 National Portion: Insurance Fundamentals
1.1 Risk, Hazards, Perils, and the Law of Large Numbers 1.2 Insurable Interest, Indemnity, and Other Insurance Principles 1.3 Insurance Contract Law and Elements 1.4 Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions 1.5 Parties, Agents vs. Brokers, and Authority
4 National Portion: Property Insurance Concepts
2.1 Causes of Loss / Named-Peril vs. Open-Peril 2.2 Valuation: ACV, Replacement Cost, and Functional Value 2.3 Coinsurance and the Coinsurance Formula 2.4 Deductibles, Limits, and Loss Settlement 2.5 Common Property Policy Conditions and Clauses
5 National Portion: Dwelling Policies (DP)
3.1 Dwelling Policy Forms DP-1, DP-2, DP-3 3.2 Dwelling Coverages A-E and Other Coverages 3.3 Dwelling Perils, Conditions, and Endorsements 3.4 Mobile Home and Specialized Dwelling Coverage
6 National Portion: Homeowners Policies - Forms & Section I
4.1 Homeowners Forms HO-2 through HO-8 and Eligibility 4.2 Section I Coverages A-D and Additional Coverages 4.3 Section I Perils Insured Against and Exclusions 4.4 Replacement Cost vs. ACV and Loss Settlement in Homeowners
7 National Portion: Homeowners Policies - Section II & Endorsements
5.1 Section II Coverages E (Liability) and F (Medical Payments) 5.2 Homeowners Conditions and Duties After Loss 5.3 Common Homeowners Endorsements (scheduled property, water backup, ordinance or law)
8 National Portion: Personal Auto Policy - Liability & Injury
6.1 Personal Auto Policy Structure and Eligibility 6.2 Part A Liability and Supplementary Payments 6.3 Part B Medical Payments 6.4 Part C Uninsured/Underinsured Motorists
9 National Portion: Personal Auto Policy - Physical Damage & Duties
7.1 Part D: Coverage for Damage to Your Auto 7.2 Exclusions and Part E: Duties After an Accident 7.3 Part F: General Provisions, Endorsements, and No-Fault Concepts
10 National Portion: Liability Insurance Concepts
8.1 Negligence, Torts, and Legal Liability 8.2 Defenses, Damages, and Vicarious Liability 8.3 Occurrence vs. Claims-Made Triggers 8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury
11 National Portion: Commercial Property Insurance
9.1 Commercial Package Policy Structure and Common Policy Conditions 9.2 Building and Personal Property Coverage Form (BPP) 9.3 Causes of Loss Forms (Basic, Broad, Special) 9.4 Business Income and Extra Expense 9.5 Commercial Property Endorsements and the BOP
12 National Portion: Commercial General Liability - Coverages
10.1 CGL Coverage A: Bodily Injury and Property Damage Liability 10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments 10.3 Who Is an Insured and Supplementary Payments
13 National Portion: Commercial General Liability - Limits, Triggers & Exclusions
11.1 CGL Limits of Insurance and Aggregates 11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates 11.3 Key CGL Exclusions and Endorsements
14 National Portion: Commercial Auto Insurance
12.1 Business Auto Coverage Form and Covered Auto Symbols 12.2 Commercial Auto Liability and Physical Damage 12.3 Motor Carrier / Trucking and MCS-90 12.4 Garage Coverage Form and Garagekeepers 12.5 Commercial Auto Endorsements
15 National Portion: Workers Compensation
13.1 Workers Compensation Statutory Background and Benefits 13.2 Part One (Workers Comp) and Part Two (Employers Liability) 13.3 Premium Basis, Experience Modification, and Classification 13.4 Other States, USL&H, and Federal Acts 13.5 Workers Comp Exclusions and Endorsements
16 National Portion: Other Commercial Lines - BOP, Crime & Marine
14.1 Businessowners Policy (BOP) in Depth 14.2 Crime and Fidelity Coverage 14.3 Inland Marine and Nationwide Marine Definition 14.4 Ocean Marine Coverages (Hull, Cargo, Freight, P&I)
17 National Portion: Other Commercial Lines - Specialty & Professional
15.1 Farm and Agricultural Coverage 15.2 Commercial Umbrella and Excess Liability 15.3 Professional Liability and Errors & Omissions 15.4 Directors & Officers and Employment Practices Liability
18 National Portion: Other Commercial Lines - Surety, Flood & Specialty
16.1 Surety and Fidelity Bonds 16.2 National Flood Insurance Program (NFIP) 16.3 Cyber, Aviation, and Other Specialty Lines
19 National Portion: Insurance Regulation & Market Conduct
17.1 State Regulation, Licensing, and the McCarran-Ferguson Act 17.2 Rates, Forms, Solvency, and Guaranty Associations 17.3 Producer Authority, Fiduciary Duty, and Company Operations
20 National Portion: Ethics & Unfair Trade Practices
18.1 Unfair Trade Practices and Unfair Claims Settlement 18.2 Producer Ethics, Errors & Omissions Exposure, and Fiduciary Conduct 18.3 Privacy, Fraud, and Consumer Protection
21 Chapter 1: Arkansas P&C Insurance Regulation & Licensing
1.1 Arkansas Insurance Department 1.2 Arkansas P&C Producer Licensing Requirements 1.3 Arkansas Producer Responsibilities
22 Chapter 2: Arkansas Property Insurance
2.1 Arkansas Homeowners Insurance 2.2 Arkansas Commercial Property Insurance
23 Chapter 3: Arkansas Casualty & Auto Insurance
3.1 Arkansas Auto Insurance Requirements 3.2 Arkansas Liability Insurance 3.3 Arkansas Workers' Compensation Insurance
24 Chapter 4: Arkansas Ethics & Professional Conduct
4.1 Ethical Practices and Consumer Protection
10.3 Who Is an Insured and Supplementary Payments
Key Takeaways Explain This Topic AI
Who Is an Insured depends on the named insured's business form: sole proprietors include the spouse; partnerships include partners and spouses; LLCs include members and managers; corporations include officers, directors, and stockholders; trusts include trustees.
Employees and volunteer workers are insureds within the scope of duties but are not covered for injury to fellow employees, the named insured, or care-custody property.
Newly acquired/formed organizations (not partnerships, JVs, or LLCs) are automatically insureds for up to 90 days or end of policy period, with no pre-acquisition products-completed ops coverage.
Separation of insureds applies the policy to each insured separately, but all insureds still share the single set of limits.
Supplementary Payments (defense costs, $250 bail bonds, $250/day lost earnings, court costs, pre/post-judgment interest) are paid in addition to the limits; the CGL is NOT a defense-within-limits form.
Last updated: June 2026
Section II - Who Is an Insured
The CGL's 'Who Is an Insured' provision (Section II) determines exactly which persons and entities receive coverage, and the answer depends on the named insured's form of business shown in the Declarations. This is heavily tested because coverage for an individual employee, spouse, or new entity is not automatic - it follows the named insured's legal structure.
- Named insured type Who else is an insured
- Individual (sole proprietor) The named insured and the spouse , but only for the conduct of the business
- Partnership / joint venture The partners/members and their spouses , only for business conduct
- LLC The members (re: business conduct) and managers (re: their duties)
Corporation / other org Executive officers and directors (re: their duties) and stockholders (re: liability as stockholders)
Trust The trustees , but only re: trust duties
Employees, volunteers, and newly acquired entities
Beyond the owners, the CGL automatically makes certain others insureds:
Employees and volunteer workers are insureds for acts within the scope of employment or duties. BUT they are NOT covered for (a) bodily injury to a fellow employee or volunteer, (b) bodily injury to the named insured, partners, or members, or (c) property damage to property owned, occupied, used by, or in the care of the employee/volunteer.
Real estate managers acting for the named insured (a person or organization) are insureds.
A person/organization having temporary custody of a deceased insured's property is an insured re: that property.
Newly acquired or formed organizations (other than partnerships, JVs, or LLCs) are automatically insureds for up to 90 days or the end of the policy period, whichever is earlier - and there is no products-completed operations coverage for work done before acquisition. This 90-day window is a classic exam number.
Separation of insureds
Under the separation of insureds condition, except for the limits of insurance and the duties-in-event-of-occurrence condition, the coverage applies as if each insured were the only insured and separately to each insured against whom a claim is made. This is why one insured can sometimes have coverage even when another insured's conduct is excluded. It does not, however, increase the limits - all insureds still share the single set of limits shown in the Declarations.
Supplementary Payments - Coverages A and B
Supplementary Payments are amounts the insurer pays in addition to the applicable limit of insurance when it defends or investigates a claim. Because they are outside the limits, they do not erode the policy limits available to pay a judgment. The standard CG 00 01 list:
All expenses the insurer incurs (investigation, defense costs - the duty to defend is in addition to limits)
Up to $250 for the cost of bail bonds required because of accidents or traffic-law violations arising out of a covered vehicle's use (the insurer is not obligated to furnish the bond)
The cost of bonds to release attachments , but only for bond amounts within the applicable limit
Reasonable expenses incurred by the insured at the insurer's request to assist the investigation/defense, including up to $250 a day for lost earnings
- All court costs taxed against the insured (not pre/post-judgment attorney fees as costs)
- Pre-judgment interest awarded against the insured on the part of the judgment the insurer pays
All post-judgment interest that accrues after entry of the judgment and before the insurer pays/offers/deposits its share
Defense costs outside the limits - worked example
The single most-tested feature: in the standard CGL, defense costs are paid in addition to the limits and the insurer's duty to defend ends when the applicable limit is exhausted by payment of judgments or settlements.
Example: A covered claim with a $1,000,000 each-occurrence limit settles for the full $1,000,000 . The insurer also spent $180,000 defending the case and paid $12,000 in post-judgment interest .
Indemnity paid (counts against limit): $1,000,000 - fully exhausts the each-occurrence limit.
Defense costs of $180,000 are a Supplementary Payment - paid in addition , so the insurer's total outlay is $1,180,000 plus interest.
Post-judgment interest of $12,000 is also a Supplementary Payment, in addition to limits: total outlay $1,192,000 .
Contrast with a defense-within-limits ('eroding' or 'wasting') provision found on many professional liability and claims-made forms, where defense costs reduce the limit available to pay damages - the CGL is the opposite.
Duty to defend vs. duty to indemnify
The CGL imposes two distinct obligations, and exam questions test the difference. The duty to defend is broader than the duty to indemnify: the insurer must defend any suit seeking covered damages even if the allegations are groundless, false, or fraudulent , and even if some counts are not covered. The duty arises from the allegations in the complaint compared to the policy, not from the ultimate facts.
The duty to indemnify is the obligation to actually pay damages, and it applies only to amounts within coverage and within the limits. Because the duty to defend is triggered by potential coverage, an insurer may have to defend a suit it ultimately does not have to pay.
Key timing rule: the insurer's right and duty to defend end when the applicable limit of insurance has been exhausted by payment of judgments or settlements under Coverage A or B. Once limits are exhausted, supplementary defense payments stop. This is why higher limits buy not just more indemnity but a longer-lasting defense obligation - a frequently tested practical point that distinguishes the CGL from wasting-limit professional forms.