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Home My WebLink About18 Earthquake Insurance Agenda Item # 18 Public Utility District #m: ACTION To: Board of Directors From: Mary Chapman Date: June 04, 2008 Subject: Consideration of Increasing the District's Difference in Conditions (Earthquake) Insurance from $5,000,000 to $10,000,000 1. WHY THIS MATTER IS BEFORE THE BOARD This item considers increasing the District's Difference in Conditions (Earthquake) insurance coverage. Only the Board can authorize the purchase of insurance coverage. 2. HISTORY At the May 21, 2008 board meeting, when Keith Grand the District's insurance broker from Marsh Risk and Insurance Services presented the property and liability insurance renewal package to the Board, there was a discussion of whether the District should consider increasing its Difference in Conditions (Earthquake) insurance coverage. Mr. Grand was asked to solicit proposals from carriers to increase the Earthquake insurance coverage from $5 million to $10 million dollars. 3. NEW INFORMATION Attached are two proposals that Mr. Grand received from interested carriers: 1) Endurance American Specialty Insurance Company Company rating Al 5-meets Marsh acceptable guidelines for financial security Policy term June 1, 2008 to June 1, 2009 Total insured values: $48,572,117 Limit of liability: $5 million per occurrence in excess of $5 million (first layer); annual aggregate $5 million Deductible: 5% of Total Values at Risk, each Occurrence, $25,000 minimum Annual premium: $25,000 plus taxes and miscellaneous fees totaling $25,935.94 2) Essex Special Property Division Company rating A11-meets Marsh acceptable guidelines for financial security Policy term June 1, 2008 to June 1, 2009 Total insured values: $48,572,117 Limit of liability $5 million per occurrence in excess of $5 million (first layer); Deductible: Underlying limits of liability, plus primary deductible as presented in submission. Annual premium: $22,500 plus taxes and miscellaneous fees totaling $23,203.13 4. FISCAL IMPACT If the Board chooses to increase the Difference in Conditions (Earthquake) insurance from $5 million dollars to $10 million dollars, the increase in cost would be as follows: Endurance American Specialty Insurance Company: Additional premium $25,935.94 Essex Special Property Division Additional premium $23,203.13 5. RECOMMENDATION That the Board consider if it wants to add an additional $5 million in Difference in Conditions (Earthquake) insurance coverage over the previously approved $5 million in coverage. Mary Ch an, Tdiistrative Services Michael D. Holley, General Manager Manager ENDURANCE U.S. INSURANCE OPERATIONS 10 South Wacker,Suite 2970 Endurance Chicago,IL 60606 Voice: (312)706-1800 Fax: (312)706-1801 May 27,2008 Nancy Shelton C �' Swett& Crawford of Illinois 1 North Franklin, Suite 1400 Chicago,IL 60606 Sent via: E-Mail nancy_shelton@swett.com Re: Truckee Donner Public Utility District P.O.Box 309 Truckee,CA 96160 Nancy, our authorization is detailed below. Insurance Carrier: Endurance American Specialty Insurance Company (Formerly Traders&Pacific Insurance Company) (Endurance American Specialty Insurance Company is a Non-Admitted A XV Carrier) Policy Term: From: June 01,2008 To: June 01, 2009 (12:01 a.m.Standard Time on both dates,at the address of the Named Insured noted above) Policy Form: Endurance American Specialty Insurance Company Excess Following Form Perils: Specified Peril Earthquake Coverage(s): Real Property Including Tanks,Wells& Substations Personal Property Including Machinery &Equipment Time Element including Extra Expense Limit of Liability: $ 5,000,000 Per Occurrence in Excess of $ 5,000,000 Subject to a $ 5,000,000 Annual Aggregate Policy Premium: $ 25,000 Annual 3 Fee(s): $ 150 Modeling Fee Total Insurable Values: $48,572,117 Locations: As per schedule on file with the Company State(s)Covered: California Filing State(s): The Producer is responsible for the payment and handling of any and all applicable Surplus Lines Taxes,Fees and Filings. Endurance will not release a Binder or Policy Number until we receive,in writing from the Producer,the state(s)and premium allocations that the producer will be filing for the payment of taxes,fees, and filings. Endurance does require 100%allocation for state filing and fees. Deductibles: Peril: Earthquake Applies: Each Occurrence Amount: 5%of Total Values at Risk Min: $25,000 Time of Loss Terms and Conditions: Number Name ECP 0505 0606 Absolute Mold Exclusion ECP 0501 0606 Absolute Pollution Exclusion ECP 0502 0606 Asbestos Exclusion ECP 1302 0606 Minimum Earned Premium Clause ECP 1307 0606 Service of Suit ECP 1301 0606 Loss Adjustment Endorsement ECP 1304 0606 Statement of Values ECP 0507 0606 War Terror Nuclear Exclusion ECP 0603 0606 Electronic Data Computer Systems Exclusion ECP 1310 0606 Notice of Loss Special Conditions: 1. Cancellation term is 60 days. Term is 10 days for reasons of non payment 2. Quote is valid until June 13,2008 3. Minimum Earned Premium is 25%of the Total Premium 4. Valuation is based on: Replacement Cost as respects Real&Personal Property Actual Loss Sustained as respects Time Element Subjectivities: Follow Form subject to the review and acceptance of Primary Policy Receipt of a Complete Lead or Followed policy and corresponding coverage parts We must receive a copy of the followed form within 75 days of Effective Date or we will issue our policy using our policy forms This quote may differ from the terms and conditions presented in the submission. The quote represents the terms and conditions that Endurance is willing to offer for this insured. Sincerely, Wayne Yurcisin wyurcisin@enhinsurance.com ESSEX SPECIAL PROPERTY DIVISION 4521 Highwoods Parkway,Glen Allen,VA 23060-6148 (804)273-1400 FAX(804)273-1471 MARKEL DATE: May 27, 2008 PRODUCER: Swett&Crawford of Illinois, Inc. CONFIRMATION: Quoted ATTENTION: Nancy Shelton SUBMISSION: 1593093 REGARDING: Truckee Donner Public Utility District 1. LIMITS OF LIABILITY: $5,000,000 per occurrence x/s$5,000,000 per occurrence. 2. COVERAGE: Buildings and Business personal property as declared in the Statement of Values dated 06/01/2008 and on file with this Company. 3. PERILS INSURED: Direct Physical Loss or Damage for the peril of California Earthquake only. 4. DEDUCTIBLES: Underlying limits of liability, plus primary deductibles as presented in submission. 5. POLICY FORM: Essex Excess of Loss Agreement ESP-XS01 (01/07),following form, subject to review and acceptance of Primary. Essex mandatory exclusions and endorsements apply. 6. VALUATION/COINSURANCE Replacement Cost on PD; Actual Loss Sustained on TE/NIA 7. TERM: 06/01/2008-06/01/2009 8. TOTAL INSURABLE VALUES: $48,572,117 �� v� (a '7 S. . U 9. PREMIUM WITHOUT TRIA: $22,500 —;,/, a 10. TRIA: Offer for coverage provided under TRIA 2002 is attached hereto with policyholder disclosure. Confirmation of acceptance or rejection is required upon binding. TRIA$2,250 ( vb - I a51• e� 4ekX10 � 11. PREMIUM ADJUSTMENT: P/R-Submit 12. INSPECTION FEE: Responsibility of Broker 13. ADDED COMMENTS: Minimum Earned Premium is: $5,625 We use Essex Insurance Company&Essex Forms unless noted above. A 25%minimum earned premium is applicable,unless noted above. All taxes,fees and filings(if applicable)are the responsibility of the broker. In addition to more common policy exclusionary language,our quotes and policies exclude Boiler&Machinery,all Foreign Locations&Exposures, Pollution/Contamination,Asbestos, (N) BCR,Mold, Electronic Date/Cyber Risk Losses and related computer losses,unless noted above. Occurrence Limit of Liability endorsement ESP-OCC (11/04)applies. Essex Collapse Definition ESP-COLLAPSE(11/04)applies. Essex Policy Conditions ESP-PC (08/07)applies.It Is a condition of our participation that layer pricing be concurrent. Nicole Waddill Executive Underwriter 2E5p6W5tF3c. E� ESSEX INSURANCE COMPANY MARKEL® POLICYHOLDER DISCLOSURE NOTICE OF TERRORISM INSURANCE COVERAGE You are hereby notified that under the Terrorism Risk Insurance Act, as amended, that you have a right to purchase insurance coverage for losses resulting from acts of terrorism, as defined in Section 102(1) of the Act: The term "act of terrorism" means any act that is certified by the Secretary of the Treasury—in concurrence with the Secretary of State, and the Attorney General of the United States—to be an act of terrorism; to be a violent act or an act that is dangerous to human life, property, or infrastructure; to have resulted in damage within the United States, or outside the United States in the case of certain air carriers or vessels or the premises of a United States mission; and to have been committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion. YOU SHOULD KNOW THAT WHERE COVERAGE IS PROVIDED BY THIS POLICY FOR LOSSES RESULTING FROM CERTIFIED ACTS OF TERRORISM, SUCH LOSSES MAY BE PARTIALLY REIMBURSED BY THE UNITED STATES GOVERNMENT UNDER A FORMULA ESTABLISHED BY FEDERAL LAW. HOWEVER, YOUR POLICY MAY CONTAIN OTHER EXCLUSIONS WHICH MIGHT AFFECT YOUR COVERAGE, SUCH AS AN EXCLUSION FOR NUCLEAR EVENTS. UNDER THE FORMULA, THE UNITED STATES GOVERNMENT GENERALLY REIMBURSES 85% OF COVERED TERRORISM LOSSES EXCEEDING THE STATUTORILY ESTABLISHED DEDUCTIBLE PAID BY THE INSURANCE COMPANY PROVIDING THE COVERAGE. THE PREMIUM CHARGED FOR THIS COVERAGE IS PROVIDED BELOW AND DOES NOT INCLUDE ANY CHARGES FOR THE PORTION OF LOSS THAT MAY BE COVERED BY THE FEDERAL GOVERNMENT UNDER THE ACT. YOU SHOULD ALSO KNOW THAT THE TERRORISM RISK INSURANCE ACT, AS AMENDED, CONTAINS A $100 BILLION CAP THAT LIMITS U.S. GOVERNMENT REIMBURSEMENT AS WELL AS INSURERS, LIABILITY FOR LOSSES RESULTING FROM CERTIFIED ACTS OF TERRORISM WHEN THE AMOUNT OF SUCH LOSSES IN ANY ONE CALENDAR YEAR EXCEEDS $100 BILLION. IF THE AGGREGATE INSURED LOSSES FOR ALL INSURERS EXCEED$100 BILLION, YOUR COVERAGE MAY BE REDUCED. Acceptance or Rejection of Terrorism Insurance Coverage I hereby elect to purchase terrorism coverage for a prospective premium of$ 2,250 I hereby decline to purchase terrorism coverage for certified acts of terrorism. I understand that I will have no coverage for losses resulting from certified acts of terrorism. Policyholder/Applicants Signature Print Name Date MKL TERR 4(01/08)