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Your Participant Coverage Memorandum
Recently, AMLJIA members received a copy of their 2012 Participant Coverage Memorandum. This Participant Coverage Memorandum serves as your “policy” and is the agreement between members on what is and is not covered in terms of property, casualty and workers’ compensation as well as some supplemental coverages.
The policy is written in “manuscript form.” What this means is the policy is tailored to cover a specific risk or market, in this case public entities and school districts with common exposures, and is unique to your risk. In contrast, many commercial insurance companies use standardized policy forms developed by the Insurance Services Office (IS0). It is to members’ advantage that we write our own policy. A manuscript form provides flexibility to achieve the broadest coverage available in the market for our public entity exposures.
As a pool, members group together to purchase coverage to pay for losses within the group. This first layer of coverage is referred to as the “self-insured retention” (SIR). These losses are paid for with funds from the pool. We then reinsure or purchase excess coverage for the higher limits. Although we write our own policy, to some degree our reinsurance partners dictate what coverage we are able to offer. Through negotiation, or by providing certain coverages within the pooled layer, we are able to offer broader coverage than might otherwise be available.
When you receive your policy, it is always prudent to do a cursory check to make sure your coverage is in order. A quick review of the declarations page will verify the name of the insured, the coverage period, the types of coverage and limits purchased, as well as endorsements affecting coverage to your policy. For a more detailed look at the policy, we recommend a call to your broker or the AMLJIA.
Your policy coverage is an “occurrence policy.” An occurrence policy provides coverage for claims that happen during the policy period, regardless of when the claim was reported. A variety of circumstances including statutes of limitations may determine whether or not there is coverage for a claim based on the time that has passed. However, in some instances a claim that happened years in the past, but was never reported, may be covered if there was an occurrence policy in place when the event took place.
Your policy is a contract and should be included in your records retention schedule. Hopefully, you will never have to pull it out once the policy year has ended, but in those rare occasions, you will have it readily available if it is needed.
As pool members, you also have the opportunity to suggest changes to your coverage, and your feedback is sought and welcome. Each year, prior to renewal, the AMLJIA administration brings any changes to the board of trustees for review and approval. The Board has approved the following changes to the FY2012 Memorandum:
Section II – Casualty
We added Agreement F Volunteer Medical Payments coverage with a $25,000 limit.
Section II: Definitions – We removed the definition of a “Participant” as this is defined in each individual Agreement of Section II.
Section II: Exclusions - The breach of contract exclusion has been expanded. We added an exclusion for claims arising out of taxes or the issuance of bonds.
Section VI – Policies and Procedures
We clarified the claims procedures in this section.
The summary of coverage changes is intended to help you understand the AMLJIA Participant Coverage Memorandum. It is not intended to replace, supersede or supplement the Participant Coverage Memorandum, the Association’s Bylaws or the Cooperative Participation Agreement. You should review the Participant Coverage Memorandum for a complete description of coverage. Or, simply contact your broker or the AMLJIA and we will be happy to help.
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