# NEW YORK CHANGES
(FREE TRADE ZONE SUPPLEMENT)

## TRANSFER OF DUTIES WHEN A LIMIT OF INSURANCE IS ERODED

The following condition is added to the GENERAL CONDITIONS section:

### Transfer of Duties When a Limit of Insurance is Used Up.

**a.** If the company concludes that, based on "occurrences," claims or "suits" which have been reported to the Company and to which this insurance may apply, the Aggregate Limit or the Each Occurrence Limit is likely to be eroded in the payment of judgments or settlements, the Company will notify the first Named Insured, in writing, to that effect.

**b.** When a limit of insurance described in paragraph a. above has actually been eroded in the payment of judgments or settlements:
1. The Company will notify the first Named Insured, in writing, as soon as practicable, that:
   - Such a limit has actually been eroded; and
   - The Company's duty to defend "suits" seeking damages subject to that limit has also ended.
2. The Company will initiate, and cooperate in, the transfer of control, to any appropriate insured, of all claims and "suits" seeking damages which are subject to that limit and which are reported to the Company before that limit is eroded. That insured must cooperate in the transfer of control of said claims and "suits."

The Company agrees to take such steps, as the Company deems appropriate, to avoid a default in, or continue the defense of, such "suits" until such transfer is completed, provided the appropriate insured is cooperating in completing such transfer.

The Company will take no action whatsoever with respect to any claim or "suit" seeking damages that would have been subject to that limit, had it not been used up, if the claim or "suit" is reported to the Company after that limit of insurance has been used up.

3. The first Named Insured, and any other insured involved in a "suit" seeking damages subject to that limit, must arrange for the defense of such "suit" within such time period as agreed to between the appropriate insured and the Company. Absent any such agreement, arrangements for the defense of such "suit" must be made as soon as practicable.

**c.** The first Named Insured will reimburse the Company for expenses the Company incurred in taking those steps the company deemed appropriate in accordance with paragraph b. (2) above.

The duty of the first Named Insured to reimburse the Company will begin on:
1. The date on which the applicable limit of insurance is used up, if the Company sent notice in accordance with paragraph a. above; or
2. The date on which the Company sent notice in accordance with paragraph b. (1) above, if the Company did not send notice in accordance with paragraph a. above.

**NOTICE:** THESE POLICY FORMS AND THE APPLICABLE RATES ARE EXEMPT FROM THE FILING REQUIREMENTS OF THE NEW YORK STATE INSURANCE DEPARTMENT. HOWEVER, SUCH FORMS AND RATES MUST MEET THE MINIMUM STANDARDS OF THE NEW YORK INSURANCE LAW AND REGULATIONS.