10/26/2017
Insurance Limits and Deductibles – What’s In Your Policies?
MASBO Fall Conference November 3, 2017
Kerry Leider Risk Management Consultant, Property and Casualty Marsh & McLennan Agency 7225 Northland Drive North │ Suite 300 │ Minneapolis, MN 55428
John Siffert Risk Management Consultant, Property and Casualty Marsh & McLennan Agency 7225 Northland Drive North │ Suite 300 │ Minneapolis, MN 55428
Changes in the District School Board Dynamics
Transportation Vehicles Human Resources
Property Value Instructional & Academic
Emerging Risks Administrators & Staff Market Conditions
Annual Renewal Assessment
2017- 2018: INSURANCE PROPOSAL Package Coverage – Carrier’s Proposal
COVERAGE LIMITS - DEDUCTIBLE
PROPERTY Blanket Buildings, Personal Property and In Open $48,593,703 Deductible $5,000 Blanket Business Income & Extra Expense $125,000 $1,000,000 Earthquake $100,000 Flood $100,000 Building Ordinance Policy Limit - Undamaged Portion $250,000 - Demolition $250,000 - Increase Cost of Const.
INLAND MARINE Musical Instruments $187,000 Band Uniforms $50,000 Scheduled Equipment $48,719 Commercial Articles-Audio Visual $159,000 Athletic Equipment $50,000 Fine Arts $50,000 Dwellings Under Construction $100,000 Computers (EDP) $1,090,000 Data Compromise $100,000
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2017- 2018: INSURANCE PROPOSAL Package Coverage – Carrier’s Proposal
COVERAGE LIMITS - DEDUCTIBLES
GENERAL LIABILITY Each Occurrence $1,000,000 Aggregate $2,000,000 Fire Damage Liability $300,000 Medical Payment (excludes students) $15,000 Employee Benefit Liability $1M/$3M Sexual Misconduct $1,000,000 Innocent Party Response $300,000 Violent Event Response $25,000 - Each Person Limit Loss $300,000 - Each Violent Event Limit $300,000 - Aggregate Limit
CRIME Employee Dishonesty $100,000 Forgery or Alterations $100,000 Money & Securities $50,000 Computer Fraud $100,000 Deductible $500
2017- 2018: INSURANCE PROPOSAL Package Coverage – Carrier’s Proposal
COVERAGE LIMITS - DEDUCTIBLEs
SCHOOL LEADERS LEGAL Limit of Liability $1,000,000 - Per Claim $1,000,000 - Aggregate Non-Monetary Relief Defense $100,000 Deductible per claim $5,000
AUTOMOBILE Comprehensive Ded. $500 Collision Ded. $1,000
UMBRELLA Limit of Liability $1,000,000 Self-Insured Retention $0
YOUR Public Schools 2017 to 2018 STATEMENT OF VALUES & LOCATION SCHEDULE
LOC. # OCCUPANCY ADDRESS BUILDING BUSINESS PROPERTY IN BUSINESS INC. & PERSONAL OPEN EXTRA EXP. PROPERTY
001-001 HS/MID School 100 North Ave , ANY Town, MN 50000 $ 48,000,90 $ 5,099,000 $ 125,000 0 001-002 Property in the Open $ 180,000
001-003 Grounds Storage - North $ 50,000 $ 19,000
001-004 Grounds Storage - South $ 50,000 $ 15,000
001-005 Consession/Rest Room BLDG $ 66,100 $ 5,000 001-006 Athletic Storage - Track Shed $ 18,000 $ 12,000
001-007 Football Storage - Ticket Booth $ 39,000 $ 19,000
002-001 Bus Garage 1110 South Ave , ANY Town, MN 50000 $ 475,000 $ 109,000
002-002 Bus Cold Storage $ 350,000 $ 12,000
002-003 ALC $ - $ 51,900
003-001 Elementry School 170 West Road, ANY Town, MN 50000 $ 149,000 $ 31,000
003-002 Property in the Open $ 10,900
003-003 Special Ed. Self Help Ctr. $ 50,900 $ 3,900 003-004 Property in the Open $ 1,500
004-001 Football Press Box Touchdown Street NW, ANY Town, MN $ 90,000 $ 50000 004-002 Property in the Open $ 555,000
TOTAL $49,338,900 $5,376,800 $747,400 125000
Blanket Total * $55,463,100
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Annual Review and Assessment
• Maintain List of new and changing • Maintain accurate property values • Replacement Values • Account for inflation • Construction market conditions • Gaps in coverage • Who provides you this information • Appraisal
Ask your agent for suggestions and ideas.
Annual Review and Assessment
• Consider Premium Basis
• Property Values • Building Contents • Enrollment by grade • Teachers • Total of employees by classification • Foreign Trip • Special curriculum (Rifle or Archery Range) • Special Education Practices and Programs • Auto / Drivers • Carrier Specific Supplemental Requests
Annual Review and Assessment
• Appraisals • Values at replacement cost • Updated every 2-3 years
• Value of departmental equipment • Musical • Technology
• Are your foundations covered • Appraisal exclusions?
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Annual Review and Assessment
• Maintain database of typical carrier required information.
• Work with your agent to obtain copies of carrier required supplemental information
• Standard Rating data ( Loss Runs) • Type of Construction • Location of Fire Department & Water
Anatomy of Liability Insurance • 4 - Basic Liability Policies • Educators Legal Liability (School Leaders) • General Liability • Umbrella/Excess Liability • Commercial Auto Liability
Anatomy of Liability Insurance • Common Policy Sections • Coverages • Exclusions • Supplementary Payments • Who is Insured • Limits • Conditions • Definitions
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Anatomy of Liability Insurance • Common / Usual Exclusions • Intentional Injury • Contractual • Work Comp. • Employers Liability • Pollution • War • Terrorism
Anatomy of Liability Insurance • Supplementary Payments
• Cost of defending an indemnitee will not reduce the policy limit. (Defense outside of policy limits?)
• OTHERS
Anatomy of Liability Insurance
• Who is Insured • Your District • Your Board members, Administrators, employees, volunteers • Property Managers ? • Permissive users of an auto (commercial auto policy)
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Anatomy of Liability Insurance • Conditions Section • Outlines the responsibilities of both the insured and insurer • Reporting of claims • If more that one policy applies • Law suits filed against the insurer • Audits • Cancellation Provisions, Ect.
Anatomy of Liability Insurance • Liability Insurance – Provides protection for: • Civil Torts • Unintentional Injury to third parties • Resulting from negligence • Contractual liability • Negligence is not required for Medical Payments coverage.
Educators Legal Liability
• Usually written claims made basis • What is covered • School Board, Directors & officers • Employment Practices • Educators Errors and omissions • Media Liability
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Educators Legal Liability • Directors and Officers • Losses caused by financial mismanagement • Improprieties associated with fund raising • Negligent management of endowment funds • Antitrust claims
• Employment practices • Wrongful termination • Failure to hire • Failure to promote • Denial of tenure • Discrimination
Educators Legal Liability • Educators errors & omissions • Failure to educate • Negligent career or academic counseling • Wrongful dismissal on academic/disciplinary • Discrimination in financial aid grants • Sexual Harassment • Non-monetary Defense • Media • Infringement of Copyright • Infringement of trademark • Plagiarism • Libel
Umbrella/Excess Liability Connecting it all together
• Purpose – Provides coverage for catastrophic events
• Umbrella – to extend limits of primary liability policies.
• Excess – Replace primary coverage once the primary limits have been exhausted.
• Unique to Umbrella – to afford broader coverage (for some risks) than primary policies provide subject to a retention amount (second deductible).
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Umbrella/Excess Liability Connecting it all together
• But – MN has Tort Caps so why UL/Excess
• Tort caps do not apply to claims brought outside of the MN court system.
• Do school representatives travel outside the state?
• Is it possible you might hire a contractor from out of state?
• Cases brought under Federal Law?
Ways to Cut Cost ?
Ways to Cut Costs
. Property Valuation . Property Deductibles . Inland Marine . Crime . Liability . Automobile . School Leaders Legal Liability . Good Insurance Companies . Good Insurance Agent
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Ways to Cut Costs
. Property Valuation . Co-insurance –taking on more risk . 80% . 90% . 100% . Agreed Amount
Ways to Cut Costs
. Property Deductibles . Taking on Part of Loss • $2,500 • $5,000 • $10,000 • $50,000 Flood/Earthquake
Ways to Cut Costs
. Inland Marine . Why place risk under here . Limit Exposure . Mobility of asset . Change in deductible $250 $500 $1,000
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Ways to Cut Costs
. Crime . Drivers of risk . Employee Dishonesty . Forgery . Money & Securities . Taking on more risk . Casinos $250 and $500 deductible
Ways to Cut Costs
. Liability . Statutory Caps . $1.5M per occurrence Out of State Claims? . Deductible . Limit Exposure Certificate of Insurance • Equal to State Cap or more
Ways to Cut Costs
. Automobile . Change in deductible $250 $500 $1,000 Glass Coverage ?
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Ways to Cut Costs
. School Leaders Legal Liability . Limited by State Statute . Non-monetary defense . Timely reporting . Application of Deductible . Defense in addition to Liability Limit
Ways to Cut Costs
. Umbrella . Excess Liability over other lines . Satisfy Statutory Compliance . Deductible / Retention? . Effects of multiple companies And their financial strength
Ways to Cut Costs
. Good Insurance Companies . Fast Service and Responsive . Stable and Solid Rated . Loss prevention program . Promotes a culture of safety
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Ways to Cut Costs
. Good Insurance Agent . Represents your interest - Trusted . Appointed with all the School Carriers . Seeks full market competition . Strong knowledge of school Culture Environment Challenges . Consistent High Level of Service
Emerging Risks
• Drone Liability • Builders Risk • Cyber/Security • International/Travel and accident • TULIP –Building lease or use by others • Opioids Separate limits or sub limits
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Questions & Considerations
John Siffert, CSRM Risk Management Consultant, Property and Casualty Marsh & McLennan Agency 7225 Northland Drive North │ Suite 300 │ Minneapolis, MN 55428 PHONE: 763-548-8816 email: [email protected]
Kerry Leider, CSRM Risk Management Consultant, Property and Casualty Marsh & McLennan Agency 1502 London Road│ Suite 210 │ Duluth, MN 55812 PHONE: 218-343-2894 email: [email protected]
•This document and any recommendations, analysis or advice provided by representatives of Marsh & McLennan Agency during its presentation are intended solely for the participants of this workshop . Any statements concerning accounting, financial, or legal matters are based solely on our experience as insurance agents or brokers , risk consultants and general subject advisors, and are not to be relied upon as accounting , financial or legal advice for which you should consult your own professional advisors in these areas as circumstances surrounding this subject matter varies. The information contained herein is based on sources we believe reliable, but we make no representation or warrantee as to its accuracy and Marsh & McLennan Agency have no obligation to update these materials, or any liability to you or any other party with regard to these published or presented materials and information. •Copyright 2017 Marsh & McLennan Agency LLC
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