Property & Liability Coverage Assessment

1. Property & Liability Coverage Assessment Presented by Helen Harper and Monica Panait Primex3

2. 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

4. Risk Management Defined The process of protecting an organization’s 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.

5. 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.

6. Property Exposures • Buildings and contents • Mobile equipment • Builder’s Risk projects • Boiler and Machinery • Fine Arts • Etc.

7. 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?

8. 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

10. Builder’s Risk • New buildings • Renovations • Additions • AIA contract is not drafted in your favor • Determine if it’s beneficial to carry the coverage or have the contractor carry it

11. Builder’s 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

12. 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

13. Business Income Insurance It’s 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

14. 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

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

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

17. Liability Exposures - premises and operations - employees - students - volunteers - special education - use of your facilities - statutory

18. Liability Coverage - personal injury - property damage - unfair employment practices - employee benefit liability - educators’ legal liability

19. 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 – B:4 I)

20. 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. She’s asking you if her limits are high enough? Should she purchase higher limits? Is she going to be reimbursed by the school?

21. 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

22. EmployeeBenefits 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

23. EmployeeBenefits 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

25. Educators’ Legal LiabilityErrors & Omissions (E&O) • Alleged “Wrongful Acts” • Errors or omissions What to look for : defense costs for Special Education hearings.

26. 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?

27. 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

28. The local book club would like to use the school district’s facilities for a book sale. They don’t 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?

29. 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)?

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

31. Surety Bond Things to remember: - who needs to be bonded (treasurer, assistant treasurer) - what is the limit required - reporting requirements

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

33. 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

34. Pool vs Commercial Insurance Coverage drafted specifically for public entities Easy management of coverage documents Preserving statutory caps Risk management

35. 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

36. Thank you!

37. 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.