# TERMS AND CONDITIONS

## I. INSURING AGREEMENT

This is an agreement made by the [Insured] and the [Underlying Insurer] to provide insurance coverage for the [Insured] under the terms and conditions set forth herein.

The [Insured] agrees to pay the [Underlying Insurer] a total premium for the insurance coverage provided, as stated in the Declarations.

The insurance afforded by this policy shall apply only after the [Insured] has paid its required premium, and the Underlying Insurance is in effect and provides Underlying Limits.

It is agreed that the policy shall be governed by the terms and conditions of this policy. The insurance afforded by this policy shall follow the underlying agreements and is subject to the same warranties, terms, definitions, conditions, and exclusions, except as to any renewal agreement, as are contained in the underlying insurance specified in Item 5 of the Declarations on the effective date of this policy.

## II. DEFINITIONS

Ultimate Net Loss, as used hereinafter, shall mean the value paid by reason of adjudication or settlement of losses for which the insured is liable after all deductions for all recoveries, salvage, and sub-ordinations (other than recoveries under the Underlying Insurance, policies of reinsurance, or policies specified in excess thereof), whether received at the time of loss or included all "Costs," as when they are provided within the limits of liability by the terms of the Underlying Insurance specified in Item 5 of the Declarations.

Costs, as used hereinafter, shall mean interest on judgments, investigation, adjustment, and legal expenses, and fees, including court costs and premiums on bonds, and shall exclude all expenses for salaried employees and counsel on retainer and all expenses of the insured.

Underlying Insurance - the policy (es) specified in Item 5 of the Declarations and any other policy(ies) providing Underlying Limits.

Underlying Insurer - the insurer specified in Item 5 of the Declarations and any other insurer(s) providing Underlying Limits.

Underlying Limits - the limits as specified in Item 3 of the Declarations.

## III. MAINTENANCE OF UNDERLYING INSURANCE

The Insured warrants that the Underlying Insurance and Underlying Limits specified in the Declarations shall be maintained in full force and effect during the currency of this policy, except for reduction of the aggregate limits solely by reason of payment of claims resulting from occurrences happening during the period of this policy.

Failure to maintain the Underlying Insurance shall constitute a breach of the terms and conditions of this policy by the Insured, and shall automatically terminate this policy without notice unless Gibraltar assents thereto by endorsement issued to form part of this policy. Premium adjustment shall be made as soon as practicable thereafter but payment or tender of unearned premium is not a condition of termination.