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MEMORANDUM OF COVERAGE
LIABILITY PROGRAM
EFFECTIVE JULY 1, 2022 - JULY 1, 2023
Issued to the City of Rancho Palos Verdes
INTEGRITY
EXCELLENCE
INNOVATION
TEAMWORK
MEMORANDUM OF COVERAGE: LIABILITY PROGRAM
July 1, 2022 – July 1, 2023
MEMORANDUM OF COVERAGE
LIABILITY PROGRAM
ADMINISTERED BY THE CALIFORNIA JOINT POWERS INSURANCE AUTHORITY
MEMBER:City of Rancho Palos Verdes
MAILING ADDRESS:30940 Hawthorne Boulevard
Rancho Palos Verdes, CA 90275-5351
PROTECTION LIMITS:Primary layer: $30,000,000
PROTECTION PERIOD:From July 1, 2022 at 12:01 a.m. Pacific Time until July 1, 2023 at
12:01 a.m. Pacific Time.
ENDORSEMENT(S):
This
Memorandum
and
any
endorsements
thereto
are
a
description
of
the
terms
and
conditions
of
the
Program
through
which
certain
specified
and
limited
self-insured
risks
of
liability
are
administered by the Authority and shared by its Members. This Memorandum is not an
insurance
policy. As provided in Section 990.8 of the California Government Code and
appellate court cases of Orange County Water District v. Association of California Water
Agencies JPIA (1997) and City
of South El Monte v. Southern California Joint Powers Insurance
Authority (1995), the pooling of self-insured claims or losses among the Members of the
Authority shall not be considered insurance nor be subject to regulation under the Insurance
Code.
California JPIA
President
MEMORANDUM OF COVERAGE: LIABILITY PROGRAM
July 1, 2022 – July 1, 2023
TABLE OF CONTENTS
I.INTRODUCTION 1
II.PROTECTION PROVIDED 1
A. Payments on Behalf of Protected Parties 1
B. Defense and Settlement 2
C. Protection Limit 3
D. Statutory Limitations 4
E. Territorial Limitation 4
F. Chief Executive Separation Payment 4
III.DEFINITIONS 5
IV.EXCLUSIONS 15
V.CONDITIONS AND RESPONSIBILITIES 24
A. Inspection and Audit 24
B. Severability of Interest 24
C. Protected Party’s Duties in the Event of Occurrence or Claim 24
D. Other Protection 25
E. Termination or Amendment 26
F. Changes to Memorandum 26
G. Subrogation and Recovery 26
H. Assignment 27
I. Joint Powers Agreement 27
J. Appeal of Disputes 27
K. Arbitration 29
L. Limitation of Liability 31
MEMORANDUM OF COVERAGE: LIABILITY PROGRAM
July 1, 2022 – July 1, 2023
l.INTRODUCTION
This Memorandum of Coverage (hereinafter Memorandum) is a description of the terms
and conditions of the Liability Program (hereinafter Program) through which certain self-
insured risks of liability are administered by the California Joint Powers Insurance
Authority (hereinafter Authority) and shared by its Members pursuant to the Joint Powers
Agreement creating the Authority under the provisions of Section 6500 et seq. of the
Government Code.
As provided in Section 990.8 of the Government Code, pooling of losses in this Program is
not insurance. The sole duty of the Authority is to administer the Program adopted by the
terms of this Memorandum and the Joint Powers Agreement. There is no transfer of risk
from the Member or any Protected Party to the Authority nor assumption of risk by the
Authority.
The provisions of the Program are subject to and subordinated to the Joint Powers
Agreement or any action taken by the Executive Committee or the Board of Directors in
connection with the Program. This Program has been adopted pursuant to action taken by
the Executive Committee, and is subject to any amendment, modification or extension by
the Executive Committee or the Board of Directors.
The terms of this Memorandum shall be construed in an evenhanded fashion in
accordance with the principles of California contract law. If the language of this
Memorandum is alleged to be ambiguous or unclear, the issue of how the protection
should apply shall be resolved in a manner most consistent with the relevant terms of this
Memorandum without regard to authorship of the language and without any presumption
of arbitrary interpretation or construction in favor of either the Protected Party or the
Authority. Any controversy or dispute arising out of or related to an interpretation or
breach of this Memorandum shall be settled in accordance with the appeals procedures as
set forth in this Memorandum.
Throughout
this
Memorandum,
words
and
phrases
that
appear
in
bold
print
are
defined
in
Section III. DEFINITIONS.
ll.PROTECTION PROVIDED
A.Payments on Behalf of Protected Parties
–
Excess
Liability
Program
–
please
see
Endorsement
Subject to all provisions of this Memorandum, the Authority will cause the Program to
pay on behalf of the Protected Party all sums that the Protected Party shall become
legally obligated to pay as Damages by reason of Tort Liability imposed by law, or the
Tort Liability of others assumed in a Protected Contract, because of:
1.Bodily Injury or Property Damage, including Automobile Liability
2.Personal Injury;
3.Public Officials Errors and Omissions;
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4.Broadcast/Publication Injury;
5.Employment Practices Injury; or
6.Employee Benefit Administration Liability
caused by an Occurrence during the Protection Period, to which this Memorandum
applies.
Coverage provided under this Memorandum is funded through Member contributions for a
pooled layer of coverage, and backed by reinsurance purchased by the Authority on behalf
of its Members for higher layers of coverage, per Government Code section 990.8(d). In the
event of failure by the reinsurer to pay or reimburse for Damages or Defense Costs within
the reinsured layer of coverage, due to insolvency, the maximum Protection Limit will be not
more than the pooled layer of coverage, provided that this limitation shall not relieve any
reinsurer of its obligations under its reinsurance agreement, and shall not relieve the
Authority of its coverage obligations if reinsurance coverage is established and is collectible.
In the event of a failure by the reinsurer to pay or reimburse for Damages or Defense Costs
within the reinsured layer of coverage, due to the application of an exclusion in the
reinsurance agreement, no coverage shall apply under this Memorandum within that layer.
B.Defense and Settlement – Excess Liability Program – please see Endorsement
The Authority, at the shared expense of its Members, and out of funds of the Program
deposited or obligated to be deposited by its Members, shall investigate, negotiate, settle, or
Defend, at the Authority’s sole discretion, any Claim which has been tendered to the
Authority and which in the sole opinion of the Authority is encompassed by this Program.
The Authority shall control selection of defense counsel. Defense Costs incurred by the
Protected Party prior to the tender of the Claim, as required by Section V. CONDITIONS
AND RESPONSIBILITIES, to the Authority are the sole obligation of the Protected Party.
The date of the tender of the Claim shall be the date written notice of said Claim is received
at the Authority’s offices (or it’s designated Claims Administrator).
The obligation of the Authority as described above shall cease to apply after the Protection
Limit has been exhausted by any combination of payments hereunder for judgments,
settlements, or Defense Costs, or if the Authority tenders the Protection Limit on behalf of
any Protected Party. For purposes of excess insurance or reinsurance, any Defense Costs
incurred prior to the tender of the Protection Limit shall be deducted from theProtection
Limit that is tendered.
With respect to any Claim or part thereof which has been tendered to the Authority and over
which the Authority assumes full or partial responsibility or charge of the settlement or
Defense, the Authority shall, if applicable, cause the Program to pay:
1.All expenses incurred by the Authority on behalf of a Protected Party;
2.Costs taxed against a Protected Party in the Claim; and
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3.Other reasonable expenses incurred by a Protected Party at the Authority’s
request to assist the Authority in the investigation or Defense of the Claim; but
this shall not include the office expenses of the Protected Party, the salaries of
Employees or officials of the Protected Party, nor expenses of any claims
administrator engaged by the Protected Party.
With respect to a Claim for which the Authority has determined that only a portion is
encompassed by this Program, the Authority shall cause the Program to fund any Defense
to the Claim against the Member and any settlement or final judgment of that Claim, subject
to the reservation by the Authority of the right to recover from the Member any amounts
paid by the Authority for such settlement or final judgment which are paid to claimants for
Claim, or portions thereof, not encompassed by the Program.
With respect to a Claim for which the Authority has determined that no portion is
encompassed by this Program, the Claim shall be referred, in its entirety, back to the
Protected Party. With respect to a Claim for which the Authority, its Employee, or an
Executive Committee member is a defendant or the claimant, special counsel shall be
ssigned to monitor the handling of the case by the Authority.
The payment of Defense Costs will reduce the Protection Limit under this Program.
C.Protection Limit
The Protection Limit shown on the Cover Page and the rules below determine the most the
Program will pay, inclusive of Defense Costs, regardless of the number of:
1.Protected Parties;
2.Claims made; or
3.Persons or organizations that sustain injuries or Damages.
The Protection Limit stated on the Cover Page is the most the Program will pay per
Member for the sum of Damages, Defense Costs and expenses as included in Section B.
Defense and Settlement under any or all or any combination of Bodily Injury, Property
Damage, Personal Injury, Public Officials Errors and Omissions, Broadcast/
Publication Injury, Employment Practices Injury, Employee Benefit Administration
Injury, or Chief Executive Separation Payment arising out of any one Occurrence.
For the purpose of determining the Protection Limit all Bodily Injury, Property Damage,
Personal Injury, Public Officials Errors and Omissions, Broadcast/Publication Injury,
Employment Practices Injury, Employee Benefit Administration Liability, or Chief
Executive Separation Payment arising out of exposure to substantially the same general
condition(s), the same act, policy, or course of conduct by a Protected Party shall be
considered as arising out of one Occurrence. All protection shall be deemed to arise from a
single Occurrence where the underlying cause is continuous or repeated exposure to the
same generally harmful conditions, such as a breach or breaches of security, malware, virus,
hacking, or similar cyber-related events. All Claims which allege Occurrences extending to
a duration of more than one Protection Period shall be treated as a single Occurrence
arising during the first Protection Period when the Occurrence begins.
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Any actual or alleged loss of use of tangible property not physically injured or destroyed shall
be deemed to occur at the time of the Occurrence that caused such loss of use. Any other
injury or damage occurring or alleged to have occurred over more than one Protection
Period shall be deemed to have occurred during the Protection Period when the
Occurrence began.
For an Additional Contribution, Tort Liability may be assumed in a Protected Contract
on behalf of a Railroad, and the Protection Limit for such assumed Tort Liability shall be
$2,000,000 per occurrence and in the aggregate. For purposes of this coverage, the
Additional Contribution shall be determined based upon the number of railroad crossings
for which a Member seeks coverage.
D.Statutory Limitations
Notwithstanding Sections II.A. Payments on Behalf of Protected Parties and II.B. Defense
and Settlement above, the defense and/or indemnity protections afforded by this agreement
to a past or present elected or appointed official or Employee of a Member are not broader
than the Member’s own duty to defend and indemnify its official or Employee under
California Government Code sections 825, et seq. and 995, et seq. All immunities, defenses,
rights, and privileges of the Member under the Government Code apply to the Program as
well, including any defense that the official or Employee acted outside the course and scope
of employment or acted with fraud, corruption or actual malice, or any defense that the action
or proceeding or type of damage sought is not the type for which the Member is obligated to
provide defense and/or indemnity. The defense and/or indemnity protections are also
subject to all the terms, conditions, and Exclusions of this Memorandum and do not apply if
not covered by this Memorandum, even if an obligation to defend and/or indemnify would
exist under the Government Code.
E.Territorial Limitation
This Memorandum applies to Claims arising out of Occurrences during the Protection
Period, anywhere in the world, that are filed in the state or federal courts of the United States
of America.
F.Chief Executive Separation Payment – Excess Liability Program – please see
Endorsement
This Program will also pay a Chief Executive Separation Payment to an eligible Chief
Executive who is separated from employment involuntarily, by the governing body of the
Member. A Chief Executive that is forced to resign in lieu of termination will also be eligible
for the Chief Executive Separation Payment. A Chief Executive that is subjected to a
Termination for Cause, as defined in this Memorandum, shall not be eligible for the Chief
Executive Separation Payment, nor will an interim or acting Chief Executive. The
Authority at its sole discretion shall determine eligibility for the Chief Executive Separation
Payment.
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Conditions of eligibility require the separated Chief Executive to place the Authority on
notice of intent to be considered for the Chief Executive Separation Payment within 60
days of the date of separation. The Chief Executive will be required to complete and
submit a Waiver to the Authority, within 60 days of the date of separation. The Chief
Executive will further be required to submit a Certification to the Authority within 60 days
following the Waiting Period. Failure to complete the Waiver or Certification shall render
the Chief Executive ineligible for the Chief Executive Separation Payment.
The Authority will compute the proper payment, and payment shall commence within 30
days following the submission of the first Certification. For a qualifying Chief Executive
who has applied for, but not yet received benefits from a public retirement system, the
Authority will require the Chief Executive to provide written proof, from the provider, of
the amount of public retirement benefit to be paid, prior to calculating and paying the Chief
Executive Separation Payment. Payments will be made in arrears where necessary.
The Chief Executive Separation Payment
shall
not
be
considered
“unemployment
insurance,” nor shall it be considered a “severance” payment.
The Chief Executive Separation Payment can only be waived by the Chief Executive if
it is specifically noted, by name, within any separation or employment agreement entered
into with the Member.
lll.DEFINITIONS – Excess Liability Program – please see Endorsement for additional
definitions
Additional Contribution means an assessment charged to a Member for the cost or
additional exposure associated with the Member’s participation in an optional liability
protection available through this Memorandum.
Administration under Employee Benefits Administration Liability means:
A.Giving counsel to employees with respect to the Employee Benefits Programs;
B.Interpreting the Employee Benefits Programs;
C.Handling of records in connection with the Employee Benefits Programs; or
D.Effecting enrollment, termination, or cancellation of employees under the Employee
Benefits Programs, provided all such acts are authorized by the Member.
Aircraft means any vehicle designed to transport people or property through the air but
does not include Small Unmanned Aircraft, as defined in 14 Code of Federal Regulations,
Section 107.3.
Airport means any locality either on land or water which is adopted for the landing and
taking off of Aircraft, including all land, water, buildings, structures, equipment or other
improvements necessary or convenient in the establishment and operation of an Airport.
Authority means the California Joint Powers Insurance Authority.
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Automobile means a land motor vehicle, trailer, or semi-trailer.
Automobile Liability means Tort Liability for Bodily Injury or Property Damage, arising
from the use of an Automobile by a person defined in the Protected Party definition,
Sections B., E. or F.
Bodily Injury means bodily injury, sickness, or disease sustained by any person, including
death resulting from any of these at any time.
Broadcast/Publication Injury means injury caused by or arising out of:
A.Any form of defamation or other tort related to disparagement or harm to the
character, reputation or feelings of any natural person or organization including but
not limited to libel, slander, product disparagement, trade libel, infliction of emotional
distress, outrage, or outrageous conduct;
B.Any form of invasion of, infringement of, or interference with rights of privacy or
publicity; including but not limited to false light, public disclosure of private facts,
intrusion, and commercial appropriation of name or likeness;
C.Infringement of copyright or trademark;
D.Plagiarism or piracy or misappropriation of ideas under implied contract;
E.Unauthorized use of names, trade names, trademarks, service marks, titles,
formats, ideas, characters, character names, characterizations, performances, plots,
musical compositions, slogans, program material, or any other similar material; or
F.Denial of access to broadcast facilities based upon application of judgment or
standards relating to the acceptability of material for public broadcast; committed in
the course of the Protected Party’s broadcast or publication activities.
Certification means a signed statement by a Chief Executive that he or she is entitled to
the Chief Executive Separation Payment because he or she is unemployed or is
employedbut receiving Compensation that is lower than he or she was earning at the time of
the Occurrence. The initial executed Certification is a form provided by the Authority and
must be received within 60 days following the Waiting Period.
Chief Executive means the governing body-appointed chief administrative officer of a
Protected Party whether called city manager, chief administrative officer, general manager
or other title designating the highest appointed official of the governmental entity.
Chief Executive Separation Payment means a payment that shall be paid once a month, in
arrears, for a time period not to exceed six months, following the Waiting Period. The
payment shall equal the amount of the Chief Executive’s salary at the time of the separation
of employment Occurrence, plus payment of the Medical Benefit, less the total amount of
Compensation being received after the separation of employment Occurrence and any
other payments made to the Chief Executive, by the member, during the payment period.
The term ‘salary’ shall be calculated in the same manner as ‘pensionable compensation’ as
defined by Government Code section 7522.34, and applicable related regulations.
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Claim means a notice, demand, or Suit against a Protected Party to recover Damages.
Claim does not include an administrative claim filed with the Equal Opportunity Employment
Commission, the California Department of Fair Employment and Housing, Public
Employment Relations Board or other similar state or federal administrative agency.
Compensation for purposes of computation of the Chief Executive Separation Payment
means:
A.Wages or salary earned as an employee of a new employer, subsequent to
separation,
B.Payments from a defined benefit retirement plan commencing subsequent to
separation for which benefits were earned while employed by the Member,
C.Unemployment insurance, and
D.Income earned from self-employment or from work or activities as an independent
contractor, consultant, or in a similar capacity subsequent to separation.
Compensation does not include Social Security, Medicare or disability benefits.
Dam means a structure described by California Water Code sections 6002 through 6004.
Damages means compensation in money recovered by a party for loss or detriment it has
suffered through the acts of a Protected Party. Damages does not include defense of
Claims, fines, or any punitive, exemplary or multiplied damages or non-monetary relief or
redress or injunctive relief, nor does it include attorney fees or costs awarded to the
prevailing party in a Claim or Suit, except where such attorney fees or costs are attributable
to a claim for compensatory damages covered by this Memorandum.
Defense Costs means all fees and expenses incurred in connection with the adjustment,
investigation, defense, and appeal of a Claim covered hereunder, including attorney fees,
court costs, premiums for appeal bonds, and interest on judgments accruing after the entry of
judgment, and also shall include the costs of any claims administrator or defense counsel
assigned by the Authority to respond to any Claim on behalf of the Authority. Defense
Costs shall not include the office expenses of the Protected Party, nor the salaries of
employees or officials of the Protected Party, nor expenses of any claims administrator
engaged by the Protected Party. Defense Costs also do not include any fee or expense
relating to coverage issues between the Authority and any Protected Party.
Discrimination means injury caused by or arising out of:
A.Unlawful discrimination because of race, sex, color, age, religion, or national origin,
or membership in any similar legally protected class; or
B.Violation of the discrimination prohibitions of the Americans with Disabilities Act of
1990, any rules or regulations promulgated thereunder and amendments thereto or
similar provisions of any federal, state, or local statutory law or common law.
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Employee means any person falling within the definition of “employee” under section 810.2
of the Government Code. That section provides: “Employee includes an officer…employee,
or servant, whether or not compensated, but does not include an independent contractor.”
Employee also includes any volunteer designated by the Member to perform specific
functions in the course and scope of authorized activities under the direction and control of
the Member.
Employee Benefit Administration Liability means liability for injury or damage caused by
or arising out of any negligent act, error or omission of the Protected Party in the
Administration of the Member’s Employee Benefits Programs.
Employee Benefits Program means group life insurance or self-insurance, group medical,
dental or vision-care insurance or self-insurance, pension plans, retirement plans, deferred
compensation plans, workers’ compensation, unemployment insurance, social benefits,
disability benefits, and other similar employee benefits.
Employment Practices Injury means injury arising out of the following offenses:
A.Wrongful dismissal, discharge, or termination of employment;
B.Breach of any oral or written employment contract or quasi-employment contract;
C.Employment-related coercion or misrepresentation;
D.Violation of employment discrimination laws;
E.Workplace sexual or other harassment;
F.Wrongful failure to employ or promote;
G.Wrongful discipline, negligent evaluation, or wrongful demotion;
H.Wrongful deprivation of a career opportunity; or
I.Employment-related:
1.Invasion of privacy,
2.Defamation, or
3.Wrongful infliction of emotional distress.
Fungi means any type or form of fungus, including mold or mildew and any mycotoxins,
spores, scents, or byproducts produced or released by fungi.
Hostile Fire means a fire that becomes uncontrollable and breaks out from where it is
intended to be.
Levee means a permanent embankment intentionally constructed for the purpose of
preventing overflow of a watercourse or body of water.
Medical Benefit means the cost of all benefits to which a Chief Executive is entitled under
the Comprehensive Omnibus Budget Reconciliation Act of 1986 (COBRA). The Chief
Executive may provide proof of medical coverage from an alternate provider, not to exceed
the cost of coverage through COBRA.
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Member means the entity, including all of its departments and constituent agencies, that is a
signatory to the Joint Powers Agreement creating the Authority as may be amended from
time to time, which has adopted a resolution to participate in the Program, and whose name
appears on the Cover Page of this Memorandum. Member includes any other agency for
which the Member’s governing board or council acts as the governing board, and also
includes any commissions, agencies, districts, authorities, successor agencies, boards, or
similar entities coming under the Member’s sole direction and control. Member shall include
any other agency authorized by the Authority’s Executive Committee or Board of Directors.
Memorandum means this Memorandum of Coverage – Primary Liability Program authorized
by the Joint Powers Agreement of the Authority specifying the terms and conditions of the
Program through which certain specified and limited self-insured risks of liability are
administered by the Authority and shared by its Members.
Nuclear Material means “source material,” “special nuclear material,” or “by-product
material” as those terms are given meaning in the Atomic Energy Act of 1954 or any law
amendatory thereto.
Occurrence means:
A.With respect to Bodily Injury or Property Damage, an accident, including continuous
or repeated exposure to conditions, that first occurs during the Protection Period and
that results in BBodily Injury or Property Damage neither expected nor intended
from the standpoint of the Protected Party;
B.With respect to Public Officials Errors and Omissions, actual or alleged conduct
described in the definition of Public Officials Errors and Omissions during the
Protection Period;
C.With respect to Employee Benefits Administration Liability, actual or alleged conduct
described in the definition of Employee Benefits Administration Liability during the
Protection Period;
D.With respect to Personal Injury, Broadcast/Publication Injury, and Employment
Practices Liability, an offense described in the definitions of those terms; or
E.With respect to Chief Executive Separation Payment, injury arising out of:
1.Dismissal, discharge, resignation in lieu of termination or termination of the
employment of a Chief Executive; or
2.Failure to renew an employment contract which results in termination of the
employment of a Chief Executive
for which liability on the part of a Protected Party can be settled through the
acceptance by the Chief Executive of a Chief Executive Separation Payment in
exchange for a Waiver and Certification.
F.All claims based on or arising out of Harassment or similar conduct (including
molestation or sexual abuse) by an Employee, or more than one Employee
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acting in concert, will be considered arising out of one Occurrence and shall be
deeming to have been committed at the time of the first of such acts or alleged acts,
regardless of the number of:
1.Protected Parties;
2.Claims made; or
3.persons or organizations that sustain injuries or Damages.
If a series of wrongful acts committed by one Employee, or more than one Employee
acting in concert, takes place over more than one Protection Period, the wrongful
acts will be deemed to have been committed during the first Protection Period and
only the Protection Limit for that Protection Period shall apply.
Personal Injury means injury, other than Bodily Injury, Property Damage or Public
Officials Errors and Omissions, resulting from one or more of the following offenses:
A.False arrest, detention, or imprisonment;
B.The use of force for the purpose of protecting persons or property;
C.Malicious prosecution or abuse of process;
D.Wrongful entry by any employee of the Member into a room, dwelling, or other similar
premises that a person occupies;
E.Wrongful eviction by any employee of the Member of a person from a room, dwelling,
or other similar premises that such person occupies;
F.The publication or utterance of a libel or slander, including statements that disparage
a person’s or organization’s goods, products, or services;
G.A publication or utterance that violates a person’s right of privacy;
H.Interference with an existing or prospective economic advantage, contract, or
agreement;
I.Discrimination;
J.Violation of civil rights; or
K.Infliction of emotional distress.
Pollutants/Hazardous Materials includes without limitation:
A.Any flammable or explosive substances, radioactive materials, asbestos, poly-
reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances,
or related materials which are regulated by or under any federal,state, or local
environmental law;
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B.Any material identified as hazardous in Sections 66261.10 through 66261.126 of
Title 22 of the California Code of Regulations, as amended from time to time
(collectively);
C.Any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor,
soot, fumes, acids, alkalis, chemicals, and waste. The term “waste” includes
materials to be recycled, reconditioned, or reclaimed; or
D.Fungi and bacteria of any kind, unless caused by an otherwise covered
Occurrence.
Program means the California Joint Powers Insurance Authority Primary Liability Protection
Program described by this Memorandum and the Joint Powers Agreement of the Members
creating the Authority. The Program is a fund created by the Members for the purpose of
pooling self-insured losses.
Property Damage means:
A.Physical injury to or destruction of tangible property which occurs during the
Protection Period, including the loss of use thereof at any time resulting there from;
or
B.Loss of use of tangible property that has not been physically injured or destroyed
provided such loss of use is caused by an Occurrence during the Protection
Period.
Protected Contract means a written agreement that satisfies all of the following:
A.The agreement pertains to the Member’s operations and by the contract terms the
Member assumes the Tort Liability of another to pay damages because of Bodily
Injury or Property Damage to a third person or organization;
B.The agreement is entered into prior to the Bodily Injury or Property Damage for
which a Claim is made; and
C.The agreement, including its value, is reported by the Member and approved by the
Authority through issuance of an evidence of coverage letter prior to the Bodily
Injury or Property Damage and the value is added to the Member’s annual payroll
for use in any retrospective deposit or annual contribution computation.
A Protected Contract may cover an architect, engineer, or surveyor for his or her role as a
Public Official, except for the application of Sections B.1. and B.2. below. Protected
Contract may apply to contract public works directors, building officials, planning directors,
city managers, Chief Executives, city attorneys, city prosecutors, redevelopment directors,
or other contracted Public Officials for occurrences arising out of their official duties, but this
coverage applies only to the named contract Public Official and does not extend to other
individuals within the contractor’s firm.
A Protected Contract does not include any part of any contract or agreement:
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A.That indemnifies any person or organization for injury or damages caused by or
arising out of the ownership, operation, maintenance or use of any Aircraft, Airport
or Watercraft;
B.That indemnifies an architect, engineer, or surveyor. This exclusion does not apply in
the instance where an individual is under an exclusive contract as a contract Public
Official solely for the benefit of the Member (i.e., no work is performed by the person
for any other person or entity), for injury or damage arising out of:
1.Preparing, approving, or failing to prepare or approve maps, drawings,
opinions, reports, surveys, change orders, designs or specifications; or
2.Giving or failing to give directions or instructions, if that is the primary cause
of the injury or damage;
C.Under which the Protected Party, if an architect, engineer, or surveyor, assumes
liability for injury or damage arising out of the Protected Party’s rendering or failing to
render professional services, including those listed in Section B. above and
supervisory, inspection, or engineering services; or
D.That indemnifies any person or organization for damages by fire, explosion, or water
damage to premises rented or loaned to the Member.
Limited Protected Contract means a written agreement, contract or permit in which:
A.The Member assumes the Tort Liability of another to pay damages because of
Bodily Injury or Property Damage to a third party in one of the following:
1.Easements or License Agreements;
2.Leases of Real or Personal Property;
3.Encroachment Permits;
4.Special Events Sponsored by the Member; or
5.Use of Facilities, Equipment, real or personal property by the Member;
B.The Member assumes the Tort Liability of another to pay damages because of
Bodily Injury or Property Damage to a third party for an activity not named in
Section A. directly above, and upon its review of the agreement, Authority staff has
determined at its sole discretion that any risks assumed in the agreement do not
significantly increase the Member's risk exposure, and an Evidence of Coverage
letter has been issued by the Authority; or
C.The Member is obligated to provide evidence of coverage for a third party to
participate in a funding program administered by another government or evidence of
coverage required by bond indentures entered into by the Member if Authority staff
has determined in its sole discretion that any risks assumed in the agreement do not
significantly increase the Member's risk exposure, and an Evidence of Coverage
letter has been issued by the Authority;
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and which is entered into prior to the Bodily Injury or Property Damage for which a Claim
is made.
A Limited Protected Contract does not include any part of any contract or agreement that
indemnifies any person or organization for injury or damages caused by the sole negligence
of such person or organization, or that cannot be included in a Protected Contract.
A Limited Protected Contract also does not include any part of a contract or agreement
that indemnifies the owner or operator of a Railroad.
Protected Party means:
A.The Member named on the Cover Page;
B.Persons who are, or were, elected or appointed officials or Employees of the
Member, whether or not compensated, while acting within the scope of their duties or
employment as such, including while acting on outside committees, commissions, or
boards at the direction of the Member, except that the protection so provided does
not apply to Bodily Injury to another official or employee of the Member in the course
of and arising out of his or her duties to or employment by the same Member, nor
does it apply to other individuals within the contract appointed official’s firm or
organization, but only to the named appointed official.
C.Any nonprofit California corporation or unincorporated association under written
contract, approved by the Member’s governing board or council, to perform specified
functions under the Member’s direction and control. The corporation or
unincorporated association is a Protected Party only for Occurrences arising out of
the functions described in the contract. For the purposes of this Section C., direction
and control means the Authority of the Member to be involved in decision making and
to overturn decisions;
D.Any person or entity identified as an additional Protected Party in a letter certifying
such additional Protected Party status issued by the Authority, for Bodily Injury or
Property Damage during the time period identified in the letter; if a particular activity
is identified in the letter, the person or entity is a Protected Party only for
Occurrences arising out of the described activity. Additional Protected Party status
will apply only where required by the terms of a written agreement;
E.Any person while using an Automobile owned, hired, or leased by a Member, and
any person or organization legally responsible for the use thereof, provided the use is
with the express permission of the Member, and only for Bodily Injuryand Property
Damage. This protection does not apply to:
1.Any person or organization, or any agent or employee thereof, other than
the member, engaged in selling, repairing, servicing, delivering, testing,
road testing, parking or storing, Automobiles, with respect to any
Occurrence arising out of any such occupation or activity;
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2.With respect to any hired automobile, to the owner or a lessee thereof, other
than the Member, or to any agent or employee of such owner or lessee; or
3.Any person or organization, or to any agent or employee thereof, engaged
in a business of operating buses or other Automobiles for the transport of
members of the public unless that business is owned by the Member and
operated by its employees.
4.This Memorandum does not provide Underinsured or Uninsured Motorist
coverage.
F.The Authority, its officers and employees while acting in the course and scope of
their duties or employment.
No person or entity is a Protected Party with respect to the conduct of any current or past
partnership, joint venture or joint powers authority (including any separate entity created
pursuant to a joint powers agreement). However, for any person who is an official or
Employee of a Member, who participates in the activities of a partnership, joint venture, or
joint powers authority and is acting for or on behalf of the Member at the time of the
Occurrence, protection is afforded by this Memorandum. Such coverage shall be in excess
of, and shall not contribute with, any collectible insurance, self-insurance or other coverage
provided to the other joint powers authority, agency or entity.
Protection Period means the time period shown on the Cover Page of this Memorandum.
Public Officials Errors and Omissions means any act, error, omission, misstatement,
misleading statement, neglect, or breach of duty by any Protected Party in the discharge of
that individual’s duties for the Member; or any matter claimed against any Protected Party
solely by reason of the individual being or having been an employee of the Member. Public
Officials Errors and Omissions does not include Bodily Injury, Property Damage,
Personal Injury, Broadcast/Publication Injury, or Employment Practices Injury.
Radioactive Contamination Injury means Bodily Injury or Property Damage caused by or
arising from ionizing radiations or contamination by radioactive material.
Railroad means a commercial railway as described by the California Public Utilities Code,
Section 229. Railroad includes street railroad as described by the California Public Utilities
Code, Section 231. Railroad does not include amusement railroad rides that do not cross
public streets.
Suit means a civil proceeding in which a Protected Party is named as a defendant or
defendant, or an arbitration proceeding or alternative-dispute resolution proceeding to which
a Protected Party submits with the Authority’s written consent.
Termination for Cause means dismissal, discharge, termination of employment, or failure to
renew a contract for the reasons stated in California Government Code section 7522.72(a)
relating to conviction for conduct arising out of or in the performance of official duties, in
pursuit of office or employment, or in connection with obtaining salary, disability retirement,
service retirement or other benefits. This also includes dismissal, discharge, termination of
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employment, or failure to renew a contract of the employment of a Chief Executive
because the Chief Executive has been convicted of robbery, bribery, extortion,
embezzlement, fraud, grand larceny, burglary, arson, a felony violation of a state or federal
law regulating a controlled substance (felony drug conviction), murder, rape, kidnapping,
perjury, assault with intent to kill, or any felony involving abuse or misuse of the Chief
Executive’s position to obtain illegal personal gain.
In the event that charges for any of the offenses referred to in this paragraph are brought
and pending at the time of termination, the Authority will be authorized to defer
determination of eligibility for Chief Executive Separation Payment until the outcome of
criminal proceedings.
Tort Liability means civil liability that would be imposed by law in the absence of any
agreement or contract.
Waiting Period means a period of time after the termination of employment Occurrence
equal to the greater of (1) six months or (2) the number of months of salary received by the
Chief Executive as a severance payment from the Member, regardless of whether the
severance payment is made in lump sum or in multiple payments.
Waiver means a full and complete relinquishment by a Chief Executive of any and all
rights to sue a Protected Party for any Benefit, compensation, injury, or damages, known
or unknown, past, present or future, arising out of the employment of, termination of the
employment of, or failure to employ the Chief Executive. The Waiver is a form provided
by the Authority and must be signed and returned to the Authority within 60 days
following the termination of employment. Waiver does not mean any waiver and release
agreementsigned by the Chief Executive directly with the member, during the separation
process.
Watercraft means a vessel, 26 feet or more in length, designed to transport persons or
property in, on, or through water.
Weapon means a firearm, explosive, knife, or other implement or device that is considered
dangerous and is in the possession of an Employee.
lV.EXCLUSIONS – Excess Liability Program – please see Endorsement for additional
definitions
This Memorandum, including any obligation to defend or to pay Defense Costs, does not
apply to:
A.Any Claim, liability, alleged liability, loss, cost, or expense caused by or arising
out of the ownership, maintenance, use or operation of any Watercraft, Aircraft,
or Airport or any air show events sponsored or controlled by the Protected
Party or conducted on property owned by the Protected Party. Protection does
apply to use of an Aircraft or Watercraft, if the Aircraft or Watercraft is not
owned in whole or in part by the Member and the Member exercises no part in
the servicing or maintenance of the Aircraft or Watercraft. However, this limited
protection does not apply to:
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1.Loss, loss of use of, or damage to the Aircraft or Watercraft;
2.Use of any Aircraft or Watercraft for hire or reward; or
3.Public Officials Errors and Omissions coverage.
B.Any Claim, obligation or alleged obligation for which a Protected Party or any
insurance company as his/her/its insurer may be held liable under any workers’
compensation, unemployment compensation or disability benefits law, or under any
similar law.
C.Any Claim, liability, alleged liability, loss, cost, or expense for Bodily Injury to:
1.An employee of the Protected Party arising out of and in the course of
employment by the Protected Party; or
2.The spouse, child, parent, brother, or sister of that employee as a
consequence of Section 1. above.
“Employee” for purposes of this Exclusion C. shall mean a person deemed to be an
employee under Labor Code Sections 3352 and 3600, et seq.
This Exclusion C. applies whether the Protected Party may be liable as an employer
or in any other capacity, and to any obligation to share damages with or repay
someone else who must pay damages because of the injury. However, this Exclusion
C. does not apply to liability assumed in a Protected Contract or Limited Protected
Contract.
D.Injury to or destruction of:
1.Property owned by the Protected Party;
2.Property rented to or leased to the Protected Party where it has assumed
liability under any contract for damage to or destruction of such property
unless the Protected Party would have been liable in the absence of such
assumption of liability; or
3.Property in the care, custody, or control of any Protected Party.
E.Any Claim, liability, alleged liability, loss, cost, or expense caused by, arising out of or
in any way connected with the operation of the principles of eminent domain,
condemnation proceedings, or inverse condemnation, by whatever name called,
whether such liability accrues directly against the Protected Party or by virtue of any
agreement entered into by or on behalf of the Protected Party. This Exclusion E.
shall not apply to liability, loss, cost or expense arising from Protected damage
caused by earth movement, subsidence of land, flooding not caused by the failure of
a Dam or Levee, sewer backup, falling trees, fire or construction activities even
though a legal theory upon which a claimant seeks recovery is the principle of inverse
condemnation. This Exclusion E. shall not apply when the Claim alleges damages
arising out of temporary physical measures taken by the Member for public safety
reasons in an effort to prevent or reduce a loss.
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F.Any Claim, liability, alleged liability, loss, cost, or expense arising out of the actual,
alleged or threatened discharge, dispersal, seepage, migration, release, escape, or
any other forms of exposure to or the presence of Pollutants/Hazardous Materials
including any Claim, liability, alleged liability, loss, cost or expense directly or indirectly
caused by or arising out of any:
1.Request, demand, or order that any Protected Party or others test for,
monitor, clean up, remove, contain, treat, detoxify, or neutralize, or in any
way respond to, or assess the effects of Pollutants/Hazardous Materials;
2.Claim by or on behalf of a governmental authority or any other entity or
person for costs of or damages because of testing for, monitoring, cleaning
up, removing, containing, treating, detoxifying, or neutralizing, or in any way
responding to, or assessing the effects of Pollutants/Hazardous Materials;
or
3.Actions or steps taken to mitigate damages or to relocate persons, property
or business as a result of Pollutants/Hazardous Materials.
4.Claim or Suit brought under the Clean Water Act, including state or federal
enforcement actions under 33 U.S. Code sections 1319, et seq.; citizen
Claim or Suit brought under sections 1365, et seq.; or state enforcement
actions brought under the California Water Code sections 13385, et seq.; or
a Claim or Suit brought under any similar law relating to discharge permit
violations.
EXCEPTION TO EXCLUSION, PROTECTION FOR CERTAIN ACCIDENTAL
POLLUTION INJURIES. However, this Exclusion F. does not apply to Bodily Injury
or Property Damage arising out of or caused by any actual, alleged or threatened
discharge, dispersal, seepage, migration, release or escape of Pollutants/Hazardous
Materials if all of the following:
1.It was directly caused by Hostile Fire, explosion, lightning, windstorm,
vandalism or malicious mischief or collision, overturning or upset of a motor
vehicle or railroad vehicle;
2.It was accidental and was neither expected nor intended by the Protected
Party;
3.It was instantaneous and was demonstrable as having commenced at a
specific time and date during the term of this Memorandum;
4.Its commencement became known to the Protected Party within seven
days;
5.Its commencement was reported in writing to the Authority within twenty
days of becoming known to the Protected Party; and
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6.Reasonable efforts were expended by the Protected Party to correct or
terminate the discharge, dispersal, seepage, migration, release, or escape
of Pollutants/Hazardous Materials.
Nothing contained in this EXCEPTION TO EXCLUSION, PROTECTION FOR
CERTAIN ACCIDENTAL POLLUTION INJURIES shall operate to provide any
protection or obligation to defend or pay Defense Costs with respect to:
1.Any site or location used by others on the Protected Party’s behalf for the
handling, storage, disposal, dumping, processing, or treatment of waste
material. This Exclusion F. applies whether or not the action by others was
known to the Protected Party;
2.Any clean-up costs mandated by the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA) and any similar laws
or statutes;
3.Clean up, removal, containment, treatment, detoxification or neutralization
of Pollutants/Hazardous Materials situated on premises the Protected
Party currently owns, rents or occupies; or
4.Any Claim, liability, alleged liability, loss, cost, or expense based upon or
arising out of Personal Injury or Public Officials Errors and Omissions.
G.Any Claim, liability, alleged liability, loss, cost, or expense directly or indirectly based
on or arising out of the hazardous properties of Nuclear Material. However, this
Exclusion G. does not apply to Radioactive Contamination Injury.
H.Any Claim, liability, alleged liability, loss, cost, or expense directly or indirectly caused
by any complete or partial failure, interruption or surge in the member's supply of
water, electrical power, gas or fuel, unless such failure, interruption or surge results
from sudden and accidental physical destruction of tangible property which is used in
the generation or transmission of the supply.
I.Any Claim, liability, alleged liability, loss, cost, or expense arising out of the partial or
complete structural failure of a Dam or Levee.
J.Any Claim, liability, alleged liability, loss, cost, or expense caused by, or arising out
of, or in connection with the operation of any hospital, clinic (including a mobile clinic),
or established health-care facility owned or operated by the Protected Party, but
protection does apply to liability arising out of the rendering of emergency medical aid
by paramedics, emergency medical technicians, or other Protected Parties who are
not acting in the course of their employment by a hospital, clinic, or established
health-care facility. Protection also applies forliability arising out of the operation of
any hospital, clinic (including a mobile clinic)or established health care facility, owned
and operated by the Protected Party for animal care and control purposes.
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K.Any Claim, liability, alleged liability, loss, cost, or expense caused by or arising out of
or in connection with the ownership, maintenance, use, or operation by the Protected
Party of any Railroad. However, this Exclusion K shall not apply to Member
maintenance of its own property, such as streets, sidewalks or open areas, located at,
near, or crossing Railroad property.
L.Any Claim, liability, alleged liability, loss, cost, or expense caused by, based upon or
arising out of the Employee Retirement Income Security Act of 1974, Public Law
93-406, or any amendment or addition thereto, or any statute or common law rule
which imposes fiduciary duties and responsibilities with respect to employee benefits
or retirement plans; however, this Exclusion L. does not apply to liability protected
under Employee Benefit Administration Liability.
M.Any Claim, liability, or alleged liability for punitive or exemplary damages, fines,
penalties or other damages imposed primarily for the sake of example and by way of
punishing the Protected Party, including liability of a Member to defend or pay
damages where the governing body thereof has elected to provide a defense or pay
damages for a Claim, action or judgment for punitive or exemplary damages.
N.Any Claim, liability, alleged liability, loss, cost, or expense caused by the intentional
conduct of a Protected Party with willful and conscious disregard of the rights or
safety of other or with malice. However, where the Protected Party did not authorize,
ratify, participate in, consent to or have knowledge of such conduct by its past or
present Employee, elected or appointed official or volunteer and the claim against the
Protected Party is based solely on its vicarious liability arising from its relationship
with such Employee, elected or appointed official or volunteer, this Exclusion N. does
not apply to that Protected Party.
O.Any Claim, liability, alleged liability, loss, cost, or expense caused by or arising out of
any violation of state or federal antitrust or restraint-of-trade laws.
P.Any Claim, liability, alleged liability, loss, cost, or expense arising out of
1.The adoption or administrative application of any ordinance, resolution or
regulation;
2.The approval or disapproval of any land-use entitlement including but not
limited to general plan amendments, zoning amendments, permits, tract
maps, development agreements, owner-participation agreements, or
disposition-and-development agreements;
3.The approval or disapproval of any rent control ordinance, outdoor
advertising ordinance, or adult bookstore ordinance; or
4.The approval or disapproval of the operation of any cannabis dispensary,
business, cultivator, or manufacturer; or any ordinances governing that
activity and any and all enforcement efforts.
5.The decision by a Member with respect to obtaining water, electrical power,
gas or fuel, or other utilities, including decisions relating to the
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quality thereof; or allocating such water, electrical power, gas or fuel, or other
utilities, among the users thereof.
6.The decision by a Member with respect to approval or disapproval of district
or at-large elections.
This Exclusion P. shall not apply to the physical enforcement of an ordinance,
resolution or regulation, such as Tort Liability arising from an Occurrence in the act
of delivering a fine, citation, warning, notice or inspection.
Q.Any Claim, liability, alleged liability, loss, cost, or expense including Tort Liability:
1.Arising out of or as a consequence of an actual or alleged breach of any
contract or agreement;
2.For any amount actually or allegedly due under the terms of any contract or
agreement; or
3.Arising out of or as a consequence of the failure, refusal, or inability of a
Protected Party or anyone acting on behalf of a Protected Party to enter
into or renew any contract or agreement.
However, this Exclusion Q. shall not apply to Tort Liability imposed by law for
Damages caused by, arising out of, or as a consequence of failure or delay by a
Protected Party or anyone acting on behalf of a Protected Party to fully perform any
duties or obligations under any contract or agreement.
As used in this Exclusion Q., the term “contract or agreement” shall include but not be
limited to a Protected Contract or Limited Protected Contract.
R.Any Claim, liability, alleged liability, loss, cost, or expense for declaratory, injunctive,
equitable or other relief, writs of mandate or prohibition or other prerogative writs, or
other relief not seeking Damages. This includes any expense or cost incurred by a
Protected Party arising from the cost of reasonable accommodation of any disabled
person, including any Employee.
S.Any Claim, liability, alleged liability, loss, cost, or expense for Personal Injury or
Broadcast/Publication Injury directly or indirectly caused by or arising out of any:
1.Oral or written publication of material, if done by or at the direction of the
Protected Party with knowledge of its falsity;
2.Oral or written publication of material whose first publication took place
before the beginning of the Protection Period; or
3.Act, omission, or offense committed by a Protected Party with actual malice.
T.Any Claim, liability, alleged liability, loss, cost or expense for which the Protected
Party is obligated to pay damages by reason of liability assumed in a contract or
agreement. This Exclusion T. does not apply to liability for Bodily Injury or Property
Damage:
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1.Assumed in a contract or agreement that is a Protected Contract or Limited
Protected Contract; or
2.That the Protected Party would have independent of a written contract or
agreement.
U.Any Claim by a Member against a Protected Party, except that this Section U. shall
not apply to a Claim brought against the Authority.
V.Any Claim by a Member against another Member; or by any present or former
member(s) of any legislative body of the Member against any present or former
member(s) of any legislative body of the Member.
W.Any Claim by a Protected Party against the Member for expenses incurred in
responding to any administrative proceeding brought by the Member against that
Protected Party.
X.Any Claim, liability, alleged liability, loss, cost, or expense based upon or arising out
of:
1.Loss of, loss of use of, injury to, destruction of, diminution of value of,
disappearance of, or costs of recovery of any money or securities, or any
financial loss or default;
2.Refunds of taxes, fees, or assessments;
3.The issuance, management of proceeds or repayment of bonds, notes or
other debt instruments by any Member or any agent acting on behalf of such
Member; or
4.The purchase, transfer, or sale of any securities by any Memberor agent
acting on behalf of such Member.
Y.Any Claim, liability, alleged liability, loss, cost, or expense for Public Officials Errors
and Omissions Liability based upon or arising out of:
1.Liability of any Protected Party arising out of estimates of probable costs or
cost estimates being exceeded or for faulty preparation of bid specifications
or plans including liability for mechanic's lien claims, notice claims, change
order claims, site differential claims, or similar claims for the value of services
or materials provided; this Exclusion X. extends to such claims, however
denominated, including claims of breach of oral or written contract, third party
beneficiary claims, quantum meruit claims, and/or open account claims;
2.Any Protection Period obtaining remuneration or financial gain to which the
Protection Period is or was not legally entitled;
3.Liability assumed by a Protected Party in a contract or agreement, but this
Exclusion X. does not apply to liability for Damages that the Protected Party
would have independent of the contract or agreement; or
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4.Willful violation of penal code or ordinance committed by or with the
knowledge or consent of any Protected Party.
Z.Under Employment Practices Injury, any Claim, liability, alleged liability, loss, cost,
or expense that:
1.Constitutes benefits due or to become due or the equivalent value of such
benefits, including but not limited to perquisites, fringe benefits, payments in
connection with an employee benefits plan, service, disability or industrial
disability retirement benefits, severance pay or any other payment other
than salary or wages to or for the benefit of an Employee arising out of the
employment relationship;
2.Is representative of back salary either unpaid in whole or part or paid at an
improper rate to an Employee by the Member;
3.Is based upon, arises from, or is in consequence of the employment
reinstatement of the claimant by the Member or the continued employment
of the claimant;
4.Is based upon, arises from, or is a consequence of an Occurrence that
began prior to this Memorandum's Protection Period;
5.Constitutes front pay, future damages or other future economic relief or the
equivalent thereof, if the Member is ordered to reinstate the Employee
pursuant to a judgment or other final adjudication, but fails to do so;
6.Is in the form of paid administrative leave; or
7.Is based upon, arises from or is in consequence of an actual or alleged
violation of the responsibilities, obligations or duties imposed by the
Employee Retirement Income Security Act of 1974, the Fair Labor
Standards Act, the National Labor Relations Act, the Worker Adjustment and
Retraining Notification Act, the Consolidated Omnibus Budget Reconciliation
Act of 1985, the Occupational Safety and Health Act, rules or regulations
promulgated there under and amendments thereto or similar provisions of
any federal, state, or local statutory law or common law.
However, with respect to the Exclusion Y., Sections 1. through 7. immediately above,
no fact pertaining to or knowledge possessed by any Protected Party shall be
imputed to any other Protected Party to determine if protection is available under
this Memorandum.
AA.Any Claim, liability, alleged liability, loss, cost, or expense for Employee Benefit
Administration Liability based upon or arising out of:
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1.Any dishonest, fraudulent, criminal or malicious act, libel, slander,
discrimination, or humiliation;
2.Failure of performance of contract by an insurer;
3.Failure of any investment plan to perform as represented by a Protected
Party;
4.Advice given by a Protected Party to an Employee to participate or not
participate in subscription plans; or
5.The inability of any Employee Benefits Program to meet its obligations due
to insolvency or inadequacy of funding.
6.A determination by the Member or its staff that an individual is an
independent contractor rather than an Employee, or an Employee rather
than an independent contractor, and any consequent decision whether to
enroll the person in an Employee Benefits Program and/or whether to
withhold payroll taxes for or on account of that person.
BB.Any Claim, liability, alleged liability, loss, cost or expense falling within the Protection
Provided terms of the insurance coverage for Cyber Liability provided by the insurer
selected by the Authority, "Privacy Regulatory Claims Coverage" or "Security
Breach Response Coverage."
CC.Any Claim, liability, alleged liability, loss, cost or expense arising from or related to
any uninsured motorist or underinsured motorist law and to any sums the Member
may be legally entitled to, to recover as Damages from the owner or operator of an
uninsured or underinsured Automobile because of Bodily Injury or Property
Damage caused by an Occurrence and arising out of the ownership, maintenance
or use of such Automobile. Use includes operations and loading or unloading.
DD.Any Claim, liability, alleged liability, loss, cost or expense caused by, or arising out
of:
1.Inhaling, ingesting or physical exposure to asbestos or goods or products
containing asbestos;
2.The use of asbestos in construction or manufacturing any good, product or
structure;
3.The removal of asbestos from any good, product or structure;
4.The manufacture, sale, transportation, storage or disposal of asbestos or
goods or products containing asbestos; or
5.Investigation or defense of any loss, injury or Damage at any cost, fine or
penalty or for any expense of Claim related to any of the above.
EE.Any Claim, liability, alleged liability, loss, cost or expense arising out of or involving
willful violation of a penal statute or ordinance committed by the
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Protected Party or with the Protected Party’s consent or knowledge. This
Exclusion DD. shall not apply until it has been judicially established in fact that the
Protected Party did commit such criminal act or willful violation.
FF.Any Claim, liability, alleged liability, loss, cost or expense arising out of the
ownership, operation, maintenance, or control of any permanent landfill site or
facility. Landfill includes any site for permanent storage accumulation, burial,
compost, sludge, or any other process for reducing or disposing of waste.
GG.Any Claim, liability, alleged liability, cost, or expense arising out of the use or
presence of a Weapon in the workplace, except when authorized by the Member
and by an Employee who is POST (Peace Officers Standards and Training)
certified at the time of the Occurrence and subject to continuing POST oversight
and certification. “Workplace” means anywhere that the Protected Party is fulfilling
their duties for the Member, within the course and scope of their employment.
V.CONDITIONS AND RESPONSIBILITIES – Excess Liability Program – please see
Endorsement for additional definitions
A.Inspection and Audit
The Authority shall be permitted but not obligated to inspect the Protected Party’s
property and operations at any time. Neither the Authority’s right to make inspections nor
the making thereof nor any report hereon shall constitute an undertaking, on behalf of or
for the benefit of the Protected Party or others, to determine or warrant that such property
or operations are safe or healthful, or are in compliance with any law, rule or regulations.
The Authority may examine and audit the Protected Party’s books and records at any
time during the Protection Period and extensions thereof and within three years after the
final termination of this Program, as far as they relate to the subject matter of this
Memorandum.
B.Severability of Interest
The term Protected Party is used severally and not collectively, and the protection
afforded applies to each Protected Party against whom a Claim is made as if a separate
Memorandum were issued to it, but the inclusion herein of more than one Protected
Party shall not operate to increase the per Member Protection Limit.
C.Protected Party’s Duties in the Event of Occurrence or Claim
1.In the event of any Occurrence, written notice containing particulars
sufficient to identify the Protected Party and also reasonably obtainable
information with respect to the time, place, and circumstances thereof, and
the names and addresses of the injured and of available witnesses, shall be
given by or for the Protected Party to the Authority's Claims Administrator
as soon as practicable.
2.If a Claim is made against a Protected Party, the Protected Party shall
immediately forward to the Authority's Claims Administrator every
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demand, notice, summons or other process received by the Protected Party
or the Protected Party’s representative.
3.The Authority's Claims Administrator will review the Claim, undertake
whatever investigation is indicated, and take appropriate action, depending
on the circumstances. A Claim may be returned to claimant as "insufficient,"
if it does not contain minimum and essential information about the incident or
the identity of the claimant. A Claim may also be returned as "late," if the
prescribed time for filing has been exceeded. The Claims Administrator may
request that the Member reject the Claim, or take no action until further
notice, or such actions may be taken by the Claims Administrator if claims
handling authority has been delegated to the Authority by the Member.
4.The Protected Party shall cooperate with the Authority and, upon the
Authority's request, assist in making settlements, in the conduct of Claims,
attending hearings and trials, securing and giving evidence, obtaining the
attendance of witnesses and in enforcing any right of contribution or
indemnity against any person or organization who may be liable to the
Protected Party because of injury or damage with respect to which
protection, including any Defense obligation, is afforded under this
Memorandum; and the Protected Party shall not, except at the Protected
Party’s own cost, voluntarily make any payment, assume any obligation or
incur any expense. No Claim shall be settled without the prior written
consent of the Authority, and the Authority shall not be required to contribute
to any settlement to which it has not consented. The Protected Party shall
not take any action whatsoever, subsequent to an Occurrence or Claim that
could increase the liability exposure of, or jeopardize the program or
Authority in any way. Failure to adhere to the duties set forth in this section
can result in denial or recission of coverage on behalf of the Protected Party
or Member, where the Executive Committee of the Authority determines
that such failure prejudices the defense of a claim.
D.Other Protection
If collectible insurance or any other coverage or protection with any insurer, any permissibly
self-insured general employer, joint powers insurance authority or any other source is
available to the Protected Party covering a loss also protected hereunder (whether on a
primary, excess or contingent basis), the protection hereunder (including any Defense
obligation) shall be in excess of, and shall not contribute with, such insurance or other
coverage or protection, provided that this clause does not apply with respect to any
insurance purchased by a Protected Party specifically to be in excess of this Memorandum.
Under no circumstances shall the protection afforded by this Program be considered
primary, pro rata, concurrent or co-existent with such insurance, coverage, or other
protection, unless agreed to by the Member through a written agreement approved by the
Authority through the issuance of an evidence of coverage letter prior to a loss.
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Protection Provided under this Memorandum of a Claim, liability, alleged liability, loss, cost
or expense also falling within the coverage terms of the insurance coverage for Cyber
Liability provided by the insurer selected by the Authority, "Privacy Liability (including
employee liability)", "Security Liability", and/or "Multimedia Liability", shall be on an excess
and non-contributory basis except that if coverage exists under this Memorandum, it shall
apply to the Retention amount in the insurance coverage for Cyber Liability provided by the
insurer selected by the Authority.
E.Termination or Amendment
This Memorandum may be terminated or amended at any time in accordance with the Joint
Powers Agreement and Bylaws of the Authority. The Executive Committee may adopt
exclusions of coverage, copayments, member retained limits or deductibles for actions or
omissions of a Member that are deemed to be a risk to the program. Such exclusions,
copayments, member retained limits or deductibles may be imposed immediately upon
adoption by the Executive Committee or as a consequence of a Member’s failure to adhere
to an approved Performance Improvement Plan as defined in the Healthy Member Protocol.
The member will be given an opportunity to formally appeal the intended action before the
Executive Committee if such a request is made within 14 days from the date the Notice of
Intent is issued. The Executive Committee will hear any appeal from the member and then
take action to either enforce the Notice of Intent or provide additional direction to the Chief
Executive Officer.
F.Changes to Memorandum
Notice to any agent or knowledge possessed by any agent of the Authority or by any other
person shall not effect a waiver of or a change in any part of this Memorandum, nor shall the
terms of this Memorandum be waived or changed, except by a written addendum issued by
the Authority to form a part of this Memorandum.
G.Subrogation and Recovery
The Authority shall reserve the right to subrogate for any payments made hereunder and to
assume the Protected Party’s recovery rights. The Protected Party shall do nothing after
loss to prejudice such rights and shall do everything necessary to secure such rights. The
Protected Party may waive subrogation rights, but only through written agreement executed
before the Occurrence giving rise to the loss. The Authority shall have standing to seek
subrogation recovery in its own name or in the name of the Protected Party, and the
Protected Party shall cooperate with and assist the Authority in pursuing such recovery,
including assigning its right to recover subrogated amounts, and if necessary executing a
written agreement to effect such assignment. Any amount so recovered shall be apportioned
as follows:
1.The Authority shall be reimbursed to the extent of all payment under this
Memorandum. Any remaining balance shall be applied to reimburse the
Protected Party;
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2.The expenses of such recovery proceedings shall be apportioned in the ratio
of respective recoveries. If there is no recovery in proceedings conducted
solely by the Authority, the Authority shall bear the expenses thereof.
H.Assignment
Assignment of interest under this Memorandum shall not bind the Authority until its consent
is endorsed hereon; if, however, the Member shall be adjudged bankrupt or insolvent, such
protection and Defense obligations as are afforded by this Memorandum shall apply (a) to
Member’s legal representative, as the Member, but only while acting within the scope of
said representative’s duties as such, and (b) with respect to the property of the Member, to
the person having proper temporary custody thereof, as a Protected Party, but only until the
appointment and qualification of a legal representative.
The Member shall not assign, transfer, or pledge all or any portion of the Member’s rights or
interests under this Memorandum, and the Authority shall not be liable to any person or
entity claiming any such rights by virtue of any reported assignment, transfer, or pledge
thereof. The Authority’s denial of a defense shall not relieve the Member from complying
with the provisions of this paragraph. Further, any such assignment, transfer, or pledge shall
relieve the Authority of all duties, obligations and coverage provided under this
Memorandum to the Member with respect to the Claim in which the rights were assigned,
transferred, or pledged.
I.Joint Powers Agreement
The provisions of this Memorandum are subject to and subordinate to the terms and
provisions of the Joint Powers Agreement creating the Authority, and in the event of any
conflict between the terms and provisions of said Joint Powers Agreement and this
Memorandum, the terms and provisions of the Joint Powers Agreement shall control.
J.Appeal of Disputes
No party is entitled to appeal or arbitrate claims under this Memorandum other than the
Member. Specifically, Employees are not intended to be third party beneficiaries of this
agreement and shall have no right to bring an action against the Authority for a declaration
of rights to protection under this Memorandum. The sole remedy of any Employee shall be
the Employee’s right to defense or indemnity against the employing Member under the
provisions of the California Government Code.
Any disputes concerning coverage, protection, Defense obligations, or procedures of the
Program, as interpreted by the Authority’s staff, shall be appealed to the Authority’s
Executive Committee in accordance with the following procedures.
1.A written notice that a Claim is not covered by the Memorandum will
normally be provided to the Member by the Claims Administrator. A Member
may request any determination of a lack of coverage made by the Claims
Administrator to be reviewed by the Chief Executive Officer.
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Such a request shall be in writing and must be made within 90 days of the date
of the written notice from the Claims Administrator.
2.Upon request, the Chief Executive Officer shall review a determination of a
lack of coverage made by the Claims Administrator or Authority staff and shall
send to the Member a written determination of coverage.
3.If a Member disagrees with the coverage determination by the Chief Executive
Officer, the Member may appeal the decision to the Appeals Committee. The
Appeals Committee consists of the Executive Committee and the chairs of the
Managers and Finance Officers Committees. Appeals must be in writing within
90 days of the date of the Chief Executive Officers written decision. The
appeal request must state why the Member disagrees with the denial, and the
Member should present any information that may have a bearing on the
ultimate determination of coverage.
4.The appeal request shall be presented by Authority staff to the Appeals
Committee, on a regularly scheduled Executive Committee meeting day,
allowing time for sufficient review and agenda deadlines. Staff shall notify the
Member in advance of the meeting at which its appeal will be presented.
5.If the Member would like to personally address the Appeals Committee, the
Member or the Member's representative may attend the meeting and speak to
the issue.
6.The Appeals Committee may refer the appeal to the Coverage Committee and
consider the recommendation of the Coverage Committee during its
deliberation on the appeal. The Appeals Committee's decision is final.
Authority staff will notify the Member of the Appeals Committee's decision in
writing.
7.Following a final determination regarding a Claim, consideration of the
decision may be reopened at the request of the Member if circumstances
change as follows: (1) a new and distinct Claim arising out of the prior
Occurrence is presented to the Member, or (2) new and distinct causes of
action are added to the Claim. If the new Claim or causes of action are
reasonably thought by the Member to be covered, the Appeals Committee will
reconsider the issue, in accordance with the procedure in this Section J.
Appeal of Disputes, upon request. Any request for such reconsideration must
be in writing within 90 days of the notice to the Member of the new Claim or
cause of action.
If a Member disputes a coverage issue relating to the application or scope of an exclusion,
then, during the course of the administrative and arbitration proceedings provided herein,
only upon the request of the Member, the Authority shall defend the Claim against the
Member and have the right to control any settlement of that Claim, subject to the right of the
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Authority to recover from the Member any amounts paid out by the Authority for such
defense or settlement which are finally determined by the Appeals Committee, or as a result
of the Binding Arbitration Process, not to be owed by the Authority under the Program. If
the Member does not elect to request such a defense, Defense Costs incurred during the
coverage appeal shall be at the sole cost and expense of the Member.
K.Arbitration
If the Member has followed the coverage appeals procedure outlined in Section V.J. Appeal
of Disputes and disagrees with the final determination of the Appeals Committee, the
Member may request consideration of the coverage issue through the Authority’s Binding
Arbitration Process.
The Arbitration Process shall be as follows:
1.Following a decision by the Appeals Committee, the appealing Member shall
notify the Chief Executive Officer in writing, within 30 days of the Appeals
Committee's final decision, that it wishes to participate in Binding Arbitration
and shall submit a non-refundable $1,000 arbitration appeal fee. The written
notice shall specify the grounds for the arbitration.
2.Following payment of the arbitration appeals fee, the name of each Member,
other than the appealing Member and the Members represented on the
Appeals Committee, shall be placed in an unmarked envelope. Each
envelope shall be placed in a box and eleven envelopes shall be drawn by
the Chief Executive Officer. A representative of the appealing Member may
be present at the drawing.
3.The Chief Executives of the eleven Members shall be the pool of potential
arbitrators. The eleven Members and the names of their Chief Executives
shall be given in writing to the appealing Member.
4.The appealing Member shall have the right to strike two or less names from
the pool for any reason which shall not be disclosed. The Authority shall
have the right to strike two or less names from the pool for any reason which
shall not be disclosed. The appealing Member and the Authority must strike
names within five business days of the drawing. The right of either party to
strike names shall lapse at 5:00 PM on the fifth day following the drawing.
Notice of names stricken by either party shall be given in writing to the other
party prior to 5:00 PM on the fifth day following the drawing.
5.The remaining Chief Executives shall be contacted by the Chief Executive
Officer to determine their willingness to serve on the arbitration panel. If more
than five are willing to serve, each name shall be placed in an unmarked
envelope, put in a box, and the Chief Executive Officer shall draw five
envelopes from the box. The individuals whose names are drawn shall be the
arbitration panel and they shall be disclosed in writing to the appealing
Member.
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6.If only five are willing to serve, they shall be the arbitration panel.
7.If fewer than five are willing to serve, the name of each member not drawn in
the previous selection drawing shall be placed in an unmarked envelope, put
in a box, and four envelopes shall be drawn for each arbitration panel position
needed to have a five-member panel. A representative of the appealing
Member may be present at the drawing. The names drawn shall be disclosed
to the appealing Member who may reject, for any reason which shall not be
disclosed, one name for each four names drawn. The Authority may also
reject one name for each four names drawn and shall not disclose the reason.
Names rejected by the appealing Member and the Authority must be rejected
within 48-hours of the drawing. The right to reject names shall lapse 48-hours
following the drawing.
8.The Chief Executives of the Members remaining shall be contacted by the
Chief Executive Officer to determine their willingness to serve on the
arbitration panel. The names of those willing to serve shall be placed in
unmarked envelopes, put in a box, and the number necessary to fill out the
arbitration panel shall be drawn by the Chief Executive Officer and disclosed in
writing to the appealing Member. A representative of the appealing Member
may be present at the drawing.
9.This process shall be repeated until five members are obtained for the
arbitration panel.
10.The arbitration panel members shall be compensated at the rate of $125 per
half-day or portion thereof. If a panel member is required to stay away from
home overnight, lodging shall be paid by the Authority. Necessary meals
shall be provided for all panel members. Mileage costs shall be reimbursed by
the Authority at its standard rate.
11.The cost of the arbitration panel shall be borne by the Authority. The cost of
presentation by the appealing Member, including preparation, exhibits,
attorneys, and all other costs of the Member shall be paid by the Member.
12.The arbitration panel may request legal counsel that shall be selected by the
Chief Executive Officer and paid for by the Authority. Legal counsel shall not
be the counsel for the Authority that has advised the staff and Executive
Committee. However, counsel for the Authority may participate in or make
the presentation to the arbitration panel on behalf of the Authority, as
requested by the Chief Executive Officer.
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13.The parties to the arbitration shall not be governed by formal rules of
evidence.
14.The arbitration panel's decision shall be final and binding on the Member
and the Authority. Decisions of the arbitration panel shall be by majority
vote.
15.The decision of the arbitration panel shall be written and shall govern the
issue decided but may be referred to by the Authority and future arbitration
panels for precedent.
L.Limitation of Liability
Under no circumstances shall the Authority be liable for consequential damages, “bad faith”
damages, or any sums beyond the amounts due under Section II. PROTECTION
PROVIDED, plus interest at the same rate as the Authority earned on investments for the
time period involved.
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ENDORSEMENT: LIABILITY PROGRAM
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Liability Coverage Program
Endorsement 1
l.ENDORSEMENT
The Liability Program Memorandum of Coverage is amended for members of the Primary
and Excess Liability Programs.
This Endorsement constitutes an amendment to the coverage found in the 2021-2022
Liability Memorandum of Coverage for members of the Primary and Excess Liability
Programs as follows:
ll.PROTECTION PROVIDED
C.Protection Limit
Notwithstanding what is stated in the Cover Page, a Sublimit of $1,000,000 (one million
dollars) per Occurrence applies to any claim arising out of Organic Pathogens. The
Sublimit is the most the Authority will pay, in excess of the Member Retained Limit (if
applicable) for the total of Damages and Defense Costs arising out of or related to:
ORGANIC PATHOGENS
1.All liability or expense arising out of any actual, alleged or threatened
infectious, pathogenic, toxic or other harmful properties of any Organic
Pathogen, including exposure to any Organic Pathogen; and
2.Any loss, cost or expense arising out of any:
a)request, demand, order or statutory or regulatory requirement that
any Protected Party or others test for, monitor, clean up, remove,
contain, treat, detoxify or neutralize, or in any way respond to, or
assess the effects of any Organic Pathogen,
b)Claim or suit by or on behalf of a governmental authority for
damages because of testing for, monitoring, cleaning up, removing,
containing, treating, detoxifying or neutralizing, or in any way
responding to, or assessing the effects of any Organic Pathogen,
or
3.All liability or expense arising out of any actual or alleged failure by a
Protected Party to properly quarantine those affected by an Organic
Pathogen.
Endorsement
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This Endorsement does not apply to Bodily Injury caused by any Organic
Pathogen in or on any food or beverages sold, distributed, served or
handled by the Protected Party.
DEFINITION
ORGANIC PATHOGEN
“Organic Pathogen” means any:
1.Viruses or other pathogens (whether or not a microorganism); or
2.Colony or group of any of the foregoing.
Endorsement
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Liability Coverage Program
Endorsement 2
This Endorsement is issued to:
Member Name Member Retained Limit
Alhambra $750,000
Azusa $150,000
Commerce $250,000
Hemet $250,000
Irwindale $150,000
La Verne $250,000
Pacific Grove $150,000
San Luis Obispo $500,000
Santa Clarita $100,000
Stanton $100,000
Vista $150,000
West Covina $1,000,000
West Hollywood $250,000
Endorsement
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l.ENDORSEMENT
The Liability Program Memorandum of Coverage is amended for the listed participants in
the Excess Liability Program.
This Endorsement constitutes an amendment to the coverage found in the 2022-2023
Liability Memorandum of Coverage for members of the Excess Liability Program as
follows:
ll.PROTECTION PROVIDED
A.Payments on Behalf of Protected Parties
Subject to all provisions of this Memorandum, the Authority will cause the Program to
pay on behalf of the Protected Party all sums above the Member Retained Limit that the
Protected Party shall become legally obligated to pay as Damages by reason of Tort
Liability imposed by law, or the Tort Liability of others assumed in a Protected
Contract, because of:
1.Bodily Injury or Property Damage, including Automobile Liability
2.Personal Injury;
3.Public Officials Errors and Omissions;
4.Broadcast/Publication Injury;
5.Employment Practices Injury; or
6.Employee Benefit Administration Liability
caused by an Occurrence during the Protection Period, to which this Memorandum
applies.
B.Defense and Settlement
The Authority shall have no duty to assume charge of investigation or defense of any
Claim. However, the Authority shall have the right to assume control of the negotiation,
investigation, defense, appeal, or settlement of any Claim which the Authority
determines, in its sole discretion, to have a reasonable possibility of resulting in a total of
Damages and Defense Costs in excess of the applicable Member Retained Limit. The
Member and Protected Parties shall fully cooperate in all matters pertaining to such
Claim or proceeding. If the Authority assumes control of the handling of a Claim, the
Member and Protected Parties shall be obligated to pay, at the direction of the
Authority, any sum as it is incurred, necessary for Defense Costs for the settlement of a
Claim or to satisfy liability imposed by law, up to the applicable Member Retained Limit.
No Claim shall be settled for an amount in excess of the Member Retained Limit without
the prior written consent of the Authority, and the Authority shall not be required to
contribute to any settlement to which it has not consented. With regard to Claim that are
determined by the Authority to have a reasonable possibility of exceeding the Member
Retained Limit, the Authority shall, from the point of such determination, have sole
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settlement authority, control selection of defense counsel, Claims investigation and Claims
handling.
For Claims which have not yet been determined by the Authority to have a reasonable
possibility of exceeding the Member Retained Limit, or for which the Authority
determines, in its sole discretion, should continue to be managed entirely within the
Member Retained Limit a collaborative approach is utilized in which the Member:
1.Retains settlement authority, except in cases of death or serious injury, or
any Claim type listed in Section VI. CONDITIONS AND
RESPONSIBILITIES of the Addendum (claims with catastrophic potential);
2.Retains the right to select defense counsel, from the Authority’s pre-
approved defense panel;
3.Receives professional analysis and recommendations on matters such as
defense strategy, and other key decisions throughout the claims handling
process;
4.Receives regular and frequent communication regarding Claims as they
develop;
5.Retains the ability to tailor participation and level of engagement to its
preferences;
6.Is required to establish and maintain a trust account for liability claim
payments;
7.Is required to use the Authority-designated Claims Administrator;
8.Is encouraged to provide input and guidance concerning procedural
preferences for claims handling;
9.Is not permitted to self-administer Claims.
C.Protection Limit
For the purpose of determining the Protection Limit and Member Retained Limit, all
Bodily Injury, Property Damage, Personal Injury, Public Officials Errors and
Omissions, Broadcast/Publication Injury, Employment Practices Injury, Employee
Benefit Administration Liability, or Chief Executive Separation Payment arising out of
exposure to substantially the same general condition(s), the same act, policy, or course of
conduct by a Protected Party shall be considered as arising out of one Occurrence.
D.Reduction of Limits
All covered Claim payments for Damages or Defense Costs, which fall within the Member
Retained Limit, will reduce the Protection Limit under this Program.
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E.Partial Coverage And Pre-Tender Fees
With respect to a Claim for which the Authority has determined that only a portion is
encompassed by this Program, the Authority shall cause the Program to fund any
defense of the Claim against the Member and any settlement or final judgment of that
Claim above the Member Retained Limit, subject to the reservation by the Authority of
the right to recover from the Member any amounts paid by the Authority for such
settlement, Defense Costs, or final judgment paid to claimants for Claims, or portions
thereof, not encompassed by the Program.
Expenses incurred prior to the reporting of a Claim, including but not limited to legal fees,
Defense Costs and all expenses related to Claim investigation are not covered under this
Memorandum, unless such expenses are approved by the Authority in writing.
F.Chief Executive Separation Payment
This Program will also pay a Chief Executive Separation Payment to an eligible Chief
Executive who is separated from employment involuntarily, by the governing body of the
Member. A Chief Executive that is forced to resign in lieu of termination will also be
eligible for the Chief Executive Separation Payment. The Member Retained Limit shall
not be assessed to this coverage. A Chief Executive that is subjected to a Termination
for Cause, as defined in this Memorandum, shall not be eligible for the Chief Executive
Separation Payment, nor will an interim or acting Chief Executive. The Authority at its
sole discretion shall determine eligibility for the Chief Executive Separation Payment.
lll.MEMBER RETAINED LIMIT
A.General Rules
The Member Retained Limit shall be applied to the aggregate of all covered Claims
arising from an Occurrence as defined in this Memorandum. The Member Retained
Limit shall be reduced by both the payment of Defense and Defense Costs. The
following general rules apply to Claims within the Member Retained Limit:
1.The Member Retained Limit shall not be impaired by any Claim brought
against a Member which is not covered under this Memorandum.
2.The Member agrees not to insure or otherwise reinsure the Member
Retained Limit without the Authority’s written permission.
3.This Memorandum will not drop down to assume or satisfy the financial
obligations of the Member for Damages or Defense Costs within the
Member Retained Limit. The Member Retained Limit can be satisfied
only through payments for Damages and Defense Costs actually paid by
the Member, to which the Authority has agreed.
4.The Member agrees that in the event of a judgment, settlement, or any
Claim payment (including Defense Costs), in excess of the Member
Retained Limit, all outstanding amounts within the Member Retained
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Limit will be due and payable to the Authority upon demand. Such
payment must be made before the Authority pays, tenders, or deposits in
court, any part of said judgment, settlement, or defense expenditure.
Failure of the Member to comply with this provision will not invalidate the
Memorandum, but in the event of such failure, the Authority will be liable
only to the extent that it would have otherwise been liable had the
Member complied with this provision.
B.Reserving Policy
With regard to the case reserves of individual Claims within the Member Retained Limit,
the Authority-designated Claims Administrator, with oversight from Authority staff, shall
determine reserve amounts as necessary and appropriate, in a manner consistent with the
Authority’s reserving policy, using reasonable estimates of probable liability exposure,
based on facts and circumstances relevant to individual Claims. The Authority-
designated Claims Administrator and Authority’s staff shall inform the Member of large
reserve changes and provide the Member with an opportunity to give input concerning the
establishment of reserve estimates for large Claims, however the Member’s sole recourse
for disputing reserve estimates is to appeal in writing to the Executive Committee. The
Executive Committee shall make a determination by majority vote, and the Executive
Committee’s determination shall be final and binding.
C.Total Incurred Claim Value Trigger
Total incurred Claim values, which include actual Claim payments as well as reserves for
defense, indemnity, and expenses shall serve as the basis for the Authority determining
whether a Claim has a reasonable possibility of exceeding the Member Retained Limit,
and therefore trigger the Authority’s control of settlement and disposition of the Claim. At
such time as the total incurred value of a Claim exceeds the Member Retained Limit,
settlement authority and control of the Claim shall transfer from the Member, and become
the sole responsibility of the Authority.
D.Transfer Of Settlement Authority
Upon transfer of settlement authority from the Member to the Authority as described in
Section III.C. Total Incurred Claim Value Trigger of the Addendum, the Authority’s control
of settlement and disposition of the Claim is inclusive of the Member Retained Limit;
meaning, the Member is required to contribute up to the full amount, if necessary, of its
Member Retained Limit in order to pay for Damages and Defense Costs, as those
payments become due. The Member shall be notified by the Authority of the transfer of
settlement authority from the Member to the Authority.
E.Trust Account For Claim Payments
The Member agrees to establish and maintain a trust account with a financial institution for
the purpose of paying for Claims, Damages, Defense Costs, and any other covered
claims expense within the Member Retained Limit. The Member further agrees to:
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1.Grant appropriate authorization to the Authority-designated Claims
Administrator to issue checks and/or other methods of payment as
necessary;
2.Use the trust account exclusively for liability claim payments covered
under this Program;
3.Issue all claim payments through the trust account, meaning: no liability
claim payments are to be made or disbursed from other accounts, or from
any other source without first providing written notice to the Authority;
4.Take reasonable steps to ensure that the trust account is adequately
funded so that claim payments can be made without delay, as they
become due;
5.In the event that funds in the trust account are inadequate to pay for claim
expenses as they become due, the Member shall be notified and required
to deposit the necessary funds. If a lack of funding in the Member’s trust
account results in a delay in the payment of a settlement, judgment, or
any other authorized Claim expense, which subsequently results in fees
or penalties, the Member will be solely financially responsible for any and
all such costs, arising from the late payment;
6.Provide read-only access for on-line banking to the Authority, to facilitate
claim payment reconciliations, and other data management needs of the
Authority.
F.Authority-Designated Claims Administrator
The Member agrees to exclusively utilize the Claims Administrator that has been approved
and designated by the Authority, and to report all Claims, regardless of whether the
estimated Damages fall within or exceed the Member Retained Limit. Self-administration
of Claims under this Memorandum is not permitted. The Authority agrees to take
reasonable and appropriate steps to ensure that the designated Claims Administrator is
periodically evaluated, and either meets or exceeds performance standards for claims
handling and customer service, based on industry best practices. The Authority further
agrees to provide appropriate oversight, regulate adjuster caseloads, and ensure that
claims administration fees remain fair and equitable.
lV.DEFINITIONS
A.Member Retained Limit means the amount per Occurrence stated on the cover
page that the Member retains as its self-insurance. The Member Retained Limit
includes both Defense and Defense Costs. For the purpose of settlement authority
determination, the Member Retained Limit includes actual claim payments, and case
reserves.
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B.Protection Limit means the sum of the Member Retained Limit and the Pooled
Retained Limit, above which a Claim is tendered to the Program’s excess or
reinsurance carriers.
V.EXCLUSIONS
A.Earth Movement – Any Claim of property damage directly or indirectly arising out of,
caused by, resulting from, contributed to or aggravated by the settling, sinking,
slipping, falling away, caving in, shifting, eroding, mud flow, rising, tilting, or any other
subsidence or movement of land.
1.Any Claim, liability, alleged liability, loss, cost, or expense caused by,
arising out of or in any way connected with the operation of the principles
of eminent domain, condemnation proceedings, or inverse
condemnation, by whatever name called, whether such liability accrues
directly against the Protected Party or by virtue of any agreement
entered into by or on behalf of the Protected Party. This Exclusion A.
shall not apply to liability, loss, cost or expense arising from Property
damage caused by, flooding not caused by the failure of a Dam or
Levee, or sewer backup, even though a legal theory upon which a
claimant seeks recovery is the principle of inverse condemnation. This
Exclusion A shall not apply when the Claim alleges damages arising out
of temporary physical measures taken by the Member for public safety
reasons in an effort to prevent or reduce a loss.
Vl.CONDITIONS AND RESPONSIBILITIES
A.Authority’s Rights And Duties In The Event Of A Claim
For any Claim that has exceeded the Member Retained Limit, or has been determined by
the Authority to have a reasonable possibility of exceeding the Member Retained Limit,
the following rights and duties apply:
1.The Authority shall have the right and the duty to defend any Claim
against the Member seeking Damages on account of such injury as is
covered in this Memorandum, after the Claim has exceeded the
Member Retained Limit, even if the allegations of the Claim are
groundless, false, or fraudulent.
2.The Authority shall conduct the defense of any Claim in the Member’s
name and recover in the Member’s name for the Member’s benefit any
Claim for Damages or otherwise, against any third party, and the
Authority shall have full discretion in the handling of any Claim.
3.The Authority shall have the right to control the litigation and select
defense counsel. In the event that there is a coverage reservation of
rights between the Authority and the Member, the Authority shall retain
its right to select defense counsel and control the defense of the
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Claim, without waiving its right to pay only those Damages which are
covered under the terms of this Memorandum.
4.The Authority has the right, but not the duty, to appeal any judgment.
B.Authority’s Right To Control Claims With Catastrophic Potential
The Authority reserves the right at its sole discretion to exercise exclusive settlement
authority and control over the disposition of certain Claim types, deemed by the nature of
the allegations to automatically have catastrophic potential. The Authority may, at its
sole discretion, exercise this right, commencing at the time the Claim is reported, or at
any time during the Claim evaluation process, regardless of whether the Claim falls within
or exceeds the Member Retained Limit based solely on established reserves.
The Claim types deemed to automatically have catastrophic potential are:
1.Any Claim involving death or serious injury, including but not limited to:
spinal cord damage, brain damage, paralysis, loss of limbs, loss of sight
or hearing, multiple fractures, damage to major organs, and serious
burns;
2.Any Claim involving a proposed or certified class action;
3.Any Claim naming the Authority;
4.Any Claim involving environmental damage or injury with catastrophic
potential, including those involving contamination, pollution, toxic
chemicals, nuclear, radiation, lead, fungus, mold or asbestos;
5.Any Claim involving terrorism or suspected terrorism;
6.Any Claim alleging sexual misconduct of any type, including rape, abuse,
assault, or molestation;
7.Any Claim alleging a civil rights violation with potential for an award of
substantial attorney fees.
C.Defense Counsel Selection
Within the Member Retained Limit, Members retain the right to select defense counsel
from the Authority’s pre-approved defense panel. Should the Member desire to retain
defense counsel not on the Authority’s pre-approved defense panel, at the Authority’s
sole discretion, said counsel may be retained subject to the following provisions:
1.Member selected defense counsel must comply with all Authority
litigation guidelines, including reporting requirements, preparation of a
written litigation management plan, and litigation budget. The negotiated
hourly rate for billing must also be equal to, or less than the Authority’s
standard rate applied to the Authority’s pre-approved defense panel. In
the event that the hourly rate charged by Member selected defense
counsel is greater than the Authority’s standard rate, the Member will
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be solely financially responsible for the difference, and the difference in
cost shall not be considered a covered expense under the Program.
2.Member selected defense counsel must furnish any and all information
related to the Claim that is requested by the Authority, and cooperate
with any counsel selected by the Authority to monitor or participate in the
defense of the Claim.
3.If the Authority defends a Protected Party under a reservation of rights,
defense counsel will be required to maintain records pertinent to the loss
adjustment expenses. These records may be subject to inspection and
audit by the Authority, and they may be used to determine the allocation
of any loss adjustment expenses for which the Protected Party may be
solely responsible, including defense of an allegation not covered by this
Memorandum.
4.This Program does not pay for legal fees incurred by general counsel,
supplemental counsel, or secondary counsel unless approved in writing
by the Authority.
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