Memorandum of Coverage What is an MOC? Why do you need it? What - PDF document

9/11/2014 It Isn’t Insurance Yet 2014 F ALL C ONFERENCE AND T RAINING S EMINAR September 16 ‐ 19, 2014 presented by Robin Johnson, JD, CPCU Doug Alliston, JD 2014 FALL CONFERENCE 1 & TRAINING SEMINAR Memorandum of Coverage  What is an MOC?  Why do you need it?  What are the critical components?  Approaches?  Questions? 2014 FALL CONFERENCE 2 & TRAINING SEMINAR 1

9/11/2014 What is an MOC?  Defines the coverage provided  Defines who is afforded the coverage  Defines the period during which the coverage is provided  Defines the conditions that trigger the coverage  Defines the means to resolve disputes regarding coverage 2014 FALL CONFERENCE 3 & TRAINING SEMINAR What is an MOC? It is Not Insurance  Not a contract of adhesion  Part of a larger relationship  Covered Party or Member vs. Insured  Less scrutiny to the MOC form 2014 FALL CONFERENCE 4 & TRAINING SEMINAR 2

9/11/2014 What is an MOC? Not Insurance – Yet a Good Start  Insurance companies’ vast resources  Wording tested in court  Know where and why deviations exists 2014 FALL CONFERENCE 5 & TRAINING SEMINAR What is an MOC? Coverage to Excess • Excess Insurance Excess R/I • Gaps Insurance • Reinsurance GAP JPA JPA • Exceptions to following Coverage Coverage form 2014 FALL CONFERENCE 6 & TRAINING SEMINAR 3

9/11/2014 Why an MOC?  Need to define coverage for Members • Members can manage risk • Know what coverage they have and what they need • Pool can limit liability  Need to define coverage for Others • Additional Insured • Loss Payees • Reinsurance 2014 FALL CONFERENCE 7 & TRAINING SEMINAR What are the Critical Components? Declarations Exclusions Insuring Clause Conditions Limits and Deductibles Definitions Who Is an Insured 2014 FALL CONFERENCE 8 & TRAINING SEMINAR 4

9/11/2014 Critical Components Declarations  Name of Covered Party  Coverage Period  Limits of Liability  Deductible or SIR  Forms attached at inception 2014 FALL CONFERENCE 9 & TRAINING SEMINAR Critical Components Coverage Clause  Promise  Generally broad coverage • All Risk • Damages  Limited to a dollar amount • Per Loss • Per Occurrence 2014 FALL CONFERENCE 10 & TRAINING SEMINAR 5

9/11/2014 Critical Components Coverage Clause, cont’d  During Policy Period • Act or Injury Continuing or repetitive • conduct 2014 FALL CONFERENCE 11 & TRAINING SEMINAR Critical Components Coverage Clause, cont’d  Defense Coverage Duty and Right or just a Right • • Right to Associate • If Duty, until when 2014 FALL CONFERENCE 12 & TRAINING SEMINAR 6

9/11/2014 Critical Components Limits and Deductibles  Coinsurance clauses  Deductibles versus Self ‐ Insured Retentions  Sublimits  Aggregates 2014 FALL CONFERENCE 13 & TRAINING SEMINAR Critical Components Who is Covered?  Member, employees, officials  Covered Party v. Covered Party  Additional Covered Party 2014 FALL CONFERENCE 14 & TRAINING SEMINAR 7

9/11/2014 Critical Components Exclusions  Reasons for Exclusion Better covered elsewhere • • Moral or Morale Risk Catastrophic • • Maintain affordability 2014 FALL CONFERENCE 15 & TRAINING SEMINAR Critical Components Exclusions, cont’d  Broad Insuring Clause – More Exclusions  Exceptions to Exclusions 2014 FALL CONFERENCE 16 & TRAINING SEMINAR 8

9/11/2014 Critical Components Conditions  Not Insurance  Claims Reporting  Duty to cooperate  Coverage Disputes –When and How  Other Coverage  Severability 2014 FALL CONFERENCE 17 & TRAINING SEMINAR Critical Components Definitions  Clear  Consistent with Excess or Reinsurance  Distinguish words with definitions from those with the common meaning 2014 FALL CONFERENCE 18 & TRAINING SEMINAR 9

9/11/2014 Approaches  Stand Alone MOC • Coverage driven by Members • Needed for reinsurance • Possible gaps with Excess • Use of unfamiliar terms • Possible breadth straining financial condition 2014 FALL CONFERENCE 19 & TRAINING SEMINAR Approaches  Following Form • Proven form –tested in court • Less consideration/scrutiny by Members • Must use excess rather than reinsurance 2014 FALL CONFERENCE 20 & TRAINING SEMINAR 10

9/11/2014 CAJPA Accreditation Requirements  Declarations  Definitions  Indemnity Agreement  Conditions  Exclusions Note this can be met by reference to other agreements or laws, e.g. Labor Code (Mandatory) 2014 FALL CONFERENCE 21 & TRAINING SEMINAR Conclusion  Delicate Balance between • Broad Coverage and • Solvency  Clear, concise and well vetted by the Members 2014 FALL CONFERENCE 22 & TRAINING SEMINAR 11

9/11/2014 Questions? 2014 FALL CONFERENCE 23 & TRAINING SEMINAR 12