Property

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Property Liability Coverage Assessment

• Presented by Helen Harper and Monica Panait
• Primex3

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Objective

• Know your exposures
• Based on your exposures know what coverages to
  request
• Typical/appropriate limits
• Statutory protection regarding coverage
• Position yourself for the best buy

3
Open Discussion

• Concerns
• Specific questions

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Risk Management Defined

• The process of protecting an organizations
  assets through exposure identification and
  analysis, controlling exposures, financing losses
  with external and internal funds, and the
  implementation and monitoring of a risk
  management program.

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Risk Identification

• The process of identifying and examining
  exposures of an organization
• Exposures property, liability, human resources,
  net income
• Methods of identification checklists, physical
  inspection, coverage review, contract review,
  policy review, loss data review, etc.

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Property Exposures

• Buildings and contents
• Mobile equipment
• Builders Risk projects
• Boiler and Machinery
• Fine Arts
• Etc.

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Property Coverage

• Special form covers risk of direct physical
  loss, subject to exclusions, terms and conditions
  provided by the coverage documents, therefore the
  burden of proof lies with the entity providing
  coverage
• Replacement Cost on buildings and contents
• Actual Cash Value (ACV) for mobile equipment
• Appraisals provided for buildings
• Know what you are required to schedule in order
  to be covered
• Flood and earthquake is an endorsement needed?

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Property Coverage - continued

• Other issues
• Your entity might be required to name another
  party as a loss payee (i.e. a mortgagee, a
  lender, etc.)
• Newly acquired property do you have automatic
  coverage?
• Off premises property
• Vacant buildings
• Deductibles what is your deductible (may help
  budgeting)

9

• Case Study Discussion

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Builders Risk

• New buildings
• Renovations
• Additions
• AIA contract is not drafted in your favor
• Determine if its beneficial to carry the
  coverage or have the contractor carry it

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Builders Risk Example

• ABC School District is building a new middle
  school. They have selected an architect,
  construction company and are getting ready to
  sign the AIA contract.
• If they sign the contract without amending it who
  is required to carry the coverage?
• Other disadvantages waivers of subrogation

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Boiler and Machinery

• Loss due to accidents to boilers, pressure
  vessels, machinery, electrical or refrigeration
  equipment
• Advantage
• inspections catch majority of maintenance issues
  before they become a problem

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Business Income Insurance

• Its called a time element coverage because the
  severity of the loss is directly related to how
  long it takes to restore the property
• 2 elements - reduction in net income
• - extra expenses

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Extra Expense

• Staying open after a loss pending repair or
  replacement of damaged property
• Renting other premises
• Extra transportation
• Overtime
• Shipping costs
• Expense incurred to minimize total loss

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Auto Coverage

• Vehicles
• Buses (if you own the fleet)
• ACV
• Losses incurred for
• Bodily Injury/Property Damage
• Physical damage to your owned vehicle

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• One of the schools in the district organizes a
  field trip, however theres no available
  transportation in the district. One of the
  teachers rents a vehicle form Enterprise and
  while there she is asked if shed like to
  purchase insurance coverage?
• She calls you for advice
• Also, should she rent a 15 passenger van that
  would accommodate everybody?

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Liability Exposures

• - premises and operations
• - employees
• - students
• - volunteers
• - special education
• - use of your facilities
• - statutory

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Liability Coverage

• - personal injury
• - property damage
• - unfair employment practices
• - employee benefit liability
• - educators legal liability

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Liability Coverage - continued

• Who is covered? Staff? Board?
• Your entity might be required to name another
  party as an additional insured (i.e. use of
  facilities, leases, etc.)
• Limits
• Deductibles
• Occurrence or claims-made
• Statutory caps (preserve the limits established
  by RSA 507 B4 I)

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• The school nurse purchases her malpractice
  policy from State Farm. The policy limits are
  1,000,000 per occurrence and 2,000,000 annual
  aggregate. Shes asking you if her limits are
  high enough? Should she purchase higher limits?
  Is she going to be reimbursed by the school?

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Unfair Employment Practices

• Wrongful Acts relating to the rights and
  privileges of any employee resulting in
• Wrongful termination
• Wrongful discipline
• Failure to employ or promote
• Sexual harassment
• Unlawful discrimination

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Employee Benefits Liability

• Wrongful Acts of the employer in the
  administration of their Employee Benefits Program
• Or
• Improper advice or other errors and omissions in
  the administration of the employee benefit plans

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Employee Benefits Liability - continued

• Failing to enroll an employee in the health
  program the employee has a medical condition and
  no coverage
• Advice regarding the stock market

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(No Transcript)
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Educators Legal Liability Errors Omissions
(EO)

• Alleged Wrongful Acts
• Errors or omissions
• What to look for
• defense costs for Special Education hearings.

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Volunteers

• Is their liability covered?
• Is there any medical coverage available?
• Do you keep track of volunteers?
• Do they sign a release form?
• Do you background check long term volunteers? Or
  volunteers allowed to be one on one with students?

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Use of Facilities

• Use of facilities procedures are helpful
• Sign a Use of Facilities Agreement with the party
  using your facilities (involve legal counsel)
• Request a Certificate of Coverage naming the
  town/school as an Additional Insured
• If the third party does not carry insurance
  coverage consider TULIP coverage available
  through Primex, or
• at least have the third party sign a release form

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• The local book club would like to use the school
  districts facilities for a book sale. They dont
  have insurance coverage, but they offer to donate
  all the money raised for the playground at the
  elementary school that needs to be replaced.
• Will they be covered by the school district?

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PTO/PTAs

• Do they carry their own coverage?
• Do they know they need coverage?
• Are they acting as volunteers on behalf of the
  school or are they organizing their own event(s)?

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• The PTA would like to help out with the Harvest
  Festival. Are they covered under the school
  districts coverage document?
• A. Yes
• B. No
• C. It depends
• (Explain your answer)

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Surety Bonds

• 3 parties
• The surety (a pool or an insurance company)
• The obligee (i.e. the State of NH)
• The principal (The School District)
• The surety guarantees to the obligee that the
  principal will perform as promised or fulfill an
  obligation

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Surety Bond

• Things to remember
• - who needs to be bonded (treasurer, assistant
  treasurer)
• - what is the limit required
• - reporting requirements

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Crime

• - blanket bond (employee dishonesty)
• - forgery or alteration
• - counterfeit papers
• - computer fraud
• - fund transfer fraud
• Limits, deductibles.

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Other services provided

• Risk management services are they included or
  are you charged for them separately?
• Safety trainings
• Facility/playground inspections
• JLMC/Safety committee attendance and guidance
• Other consulting services

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Pool vs Commercial Insurance

• Coverage drafted specifically for public entities
  
• Easy management of coverage documents
• Preserving statutory caps
• Risk management

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Closing Thoughts

• Know your exposures
• Based on your exposures know what coverages to
  request
• Typical/appropriate limits
• Statutory protection regarding coverage
• Position yourself for the best buy

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• Thank you!

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Case study on slide 9

• A Charlotte, North Carolina man, having purchased
  a box of very rare and expensive cigars, then
  insured them against fire among other things.
  Within a month, having smoked his entire
  stockpile of these fine cigars and without yet
  having made his first premium payment on the
  insurance policy, the man filed a claim against
  the insurance company. In his claim the man
  stated that the cigars were lost "in a series of
  small fires".
• The insurance company refused to pay, citing the
  obvious reason that the man had consumed the
  cigars in normal fashion. The man sued and won!
  In delivering the ruling, the judge agreed with
  the insurance company that the claim was
  frivolous. The judge stated that - nevertheless -
  the man held a policy with the company in which
  it had warranted that the cigars were insurable
  and also guaranteed that it would insure them
  against fire, without defining what is considered
  to be "unacceptable fire," and was therefore
  obligated to pay the claim. Rather than endure a
  lengthy and costly appeal process, the insurance
  company accepted the ruling and paid 15,000 to
  the man for his loss of the rare cigars lost in
  the "fires".
• Now for the best part. After the man cashed the
  check, the insurance company had him arrested on
  24 counts of ARSON! With his own insurance claim
  and testimony from the previous case being used
  against him, the man was convicted of
  intentionally burning his insured property and
  was sentenced to 24 months in jail and a 24,000
  fine.