NEW JERSEY MUNICIPAL ENVIRONMENTAL RISK MANAGEMENT FUND

November 19, 2014

THE TEAM

These individuals contributed to the crafting of the proposed policy form

Chris Swayze, LIU Environmental

Steven Urgo, Esquire – White & Williams

Charles Casagrande, Underwriting Manager – Danskin Insurance Agency

Michael Avalone, Underwriting Manager – Conner Strong & Buckelew

Joseph Hrubash, Underwriting Manager – Conner Strong & Buckelew

Cynthia Lisa, Public Entity Manager – Danskin Insurance Agency

PURPOSE

Simplify policy form – easier to understand coverage

Contemporary marketplace policy forms – utilized LIU’s suite of environmental policy forms as models

Changed form from ‘named perils ’ to broad form coverage grant

CURRENT INSURING AGREEMENT

Includes seven named perils under Coverage A - THIRD PARTY LIABILITY: • Emergency duties• Water Service• Stormwater System and Waste Water System• Herbicide/Pesticide Application• DPW Centers, Foreclosed Properties, and Recycling

Centers• Municipally Owned and Controlled Compost Facilities• Owned Salt Storage Facilities

PROPOSED INSURING AGREEMENT

Coverage A – Third Party LiabilityTo pay on behalf of the LOCAL UNIT, CLAIM(S) for LOSS in excess of the Deductible that the LOCAL UNIT is legally obligated to pay as a result of POLLUTION

CONDITIONS: (i) on, at, under or emanating from a

COVERED LOCATION; or(ii) arising from COVERED OPERATIONS, provided that the POLLUTION CONDITIONS first commence on or after the retroactive date

listed in the Declarations. The CLAIM must first be made against the LOCAL UNIT and reported to the FUND, in writing, during the POLICY PERIOD, or the EXTENDED REPORTING PERIOD, if applicable.

PROPOSED INSURING AGREEMENT

Coverage B – On-site cleanup Costs Simplified language foreclosed property now included under ‘covered location’,

subject to scheduling and underwriting• Refer to Environmental Engineer’s bulletin from

December 2013 “The Hidden Cost of Free Property” Coverage C - Public Officials Pollution Liability

previously Public Officials Liability Coverage D - de minimis abandoned waste sites

condensed and consistent with other insuring agreements Coverage E - Defense Costs

clarifies that defense costs are strictly tied to coverage; eliminates ambiguity

DEFINITIONS

Reduced number of definitions from 38 to 26Some definitions were eliminated due to

revised insuring agreement, and included definitions relevant to covered locations and covered operations

DEFINITIONS

Covered Location(s) – means any location(s) listed in the Declarations and/or specifically scheduled in this policy by endorsement

Covered Operations – means those operations that are usual and customary to a municipality or municipal owned or operated utility authority; or independent utility authority.

EXCLUSIONS

“Pollution Conditions” replaces “Environmental Impairments” throughout

Contractual Liability contemporary wording – grants coverage that would have been covered in absence of contract

Non-pecuniary includes Injunctive ReliefWorkers Compensation Exclusion is clarified

and consistent with MEL Casualty documentEmployment Practices Liability Exclusion is

consistent with MEL Casualty document

EXCLUSIONS

Exclusion I – aka ‘Kickham’ exclusion – strengthens and clarifies notification and approval of cleanup costs

Exclusion O - Property Damage to Owned Property Exclusion

Exclusion P - Naturally Occurring Materials (i.e. Radon)Exclusion Q – added mold exclusionExclusion R – change in use and operationsExclusion BB 4 – exception to professional exclusion to

include Employed Attorneys, in addition to previously included Engineers

Exclusion BB 10 – inserted Employment Liability wordingExclusion FF – Owned Property Improvement ExclusionExclusion GG – clarifies intent of giveback for Recycling

Centers

LIMITS OF LIABILITY

Total limit of liability now referred to as Aggregate Limit of Liability

Multiple claims, losses, claimants, pollution conditions and policy periods expanded

Coverage afforded under one coverage part with the exception of Coverage E – Defense Costs

Claim covered under more than one insuring agreement – claim will not exceed the highest limit available under any one applicable coverage

EXTENDED REPORTING PERIOD

Re-named from Extended Discovery Period to Extended Reporting Period

Re-written to reflect more modern industry practices

Previously two times premium for 90 day extension; now automatic 60 days cover with option to purchase up to 36 months for not more than two times premium

CONDITIONS

Formerly Inspection and Audit Now named Inspection, Audit and Suspension of Coverage Whenever COVERED OPERATIONS are found to be in, or

exposed to, a dangerous condition, the FUND’S Environmental Engineer(s) may immediately suspend the insurance against loss from a POLLUTION CONDITION to that COVERED OPERATION. This can be done by delivering or mailing a written notice of suspension to:

a. Your last known address; or b. The address where the COVERED OPERATION is located. Once suspended in this way, your insurance can be reinstated

only by an endorsement for that COVERED OPERATION.

QUESTIONS?