HomeMy WebLinkAbout2009 10 07 Letter RE: Liability RevisionMemorandum
TO: MMIA MEMBERS
FROM: ALAN W. HULSE, CEO
DATE: OCTOBER 15, 2009
RE: 2009 MEMORANDUM OF LIABILITY COVERAGE REVISIONS
The MMIA recently received a coverage appeal that
alleged that certain language contained in the 2009 Memorandum of Liability Coverage changed the scope of coverage in specific areas from “occurrence” coverage to “claims made coverage”.
The rationale behind this argument lies in the following language:
12.1. Employment Practices Coverage
The Authority agrees to pay on behalf of each COVERED PARTY which has completed
the qualifications for and has obtained an ENDORSEMENT with respect to Employment Practices Coverage those sums as part of the Ultimate Net Loss up to the LIMITS OF LIABILITY as set
forth in the DECLARATIONS, which the COVERED PARTY shall become obligated to pay by reason of liability imposed by law and caused by an Occurrence for which a Claim is made during the
COVERAGE PERIOD arising out of a covered Claim for Employment Practices, under Coverage C, to which the Memorandum applies. Coverage C for Employment Practices is subject to the per
Occurrence sublimit Ultimate Net Loss and for the COVERAGE PERIOD as set forth in the DECLARATIONS. (Emphasis added)
Similar language is used to describe Employee Benefits Coverage
and Land Use Practices Coverage.
The MMIA Memorandum of Liability Coverage has traditionally provided coverage to our members on an occurrence basis. It was never the intent during
the revision process to change the scope of Coverage in the Memorandum to “claims made” coverage. Having said that, arguably the language noted above could be construed as ambiguous
and as such could change the intent of the MMIA’s scope of Coverage.
Page 2
October 15, 2009
Since it was never the intent of the MMIA Board to change the scope of coverage from “occurrence coverage” to “claims made coverage”, the MMIA Board of Directors,
at its October 7, 2009 meeting, authorized staff to revise this language to read as follows:
12.1. Employment Practices Coverage
The MMIA agrees to pay on behalf of a COVERED PARTY
which has completed the qualifications for and has obtained an ENDORSEMENT with respect to Employment Practices Coverage those sums as part of the Ultimate Net Loss up to the LIMITS
OF LIABILITY which the COVERED PARTY shall become obligated to pay by reason of liability imposed by law because of a covered Claim for Employment Practices, under Coverage C, to which
this Coverage Section applies, caused by an Occurrence during the COVERAGE PERIOD. Coverage C for Employment Practices is subject to the per Occurrence sublimit Ultimate Net Loss and
for the COVERAGE PERIOD as set forth in the DECLARATIONS.
This revision takes away any ambiguity in scope of coverage and clearly indentifies the coverage provided in the area of Employment
Practices. The same changes were made in the description of coverage under Section 13.1 Employee Benefits, and Section 14.1 Land Use Practices.
I have included a Revised Memorandum
of Liability Coverage for your records. This document can also be found on the MMIA website www.mmia.net.
Finally, if you have any questions or concerns, please do not hesitate to
contact me at 1-800-635-3089.
O:\_Liability Program\Memorandums of Coverage\2009July1\October2009RevisionMemo.doc