Agenda Packets - 1984/10/22 - Laserfiche WebLink

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g — Legal Matters ;. As noted, the CHIP provides two alternntive unplc;nematnr, plans. The first CHIP option, the Master Policy Rn, estabfthes a formal contractual insur nce relauonOilp belwoen the insurance carrier and the city. In easence, the contract is a group insurance pofir vduch the city holds on behalf of Ilia city's insurable homeowners. The city is thus an insured rahret than an insurer and can have no responsibility whatsoever for claims arising out of certificates of insurance-ssn,,d to tile. individual homeowners. This condition pre- vails under all possible circumstances, including unfa,orable loss experience periods when claims exceed available pool reserves accumulated under the cdy's experience -rated premium savings formula. Actual contract terms can be found in the "CHIP Master Policy Endorsement tit." The following excerpts illustrate protecbve provisions of the policy: t) The company covenants not to sue the Master Policyholder (city) and/or its officers, employees, and/or agents (othei than insurance agents) for that portion of any claim, sun, or cause of action which arises out of the claimed negligent act or omission to act by the Master Policyholder or its officers, employees, and/or agents (other than insurance agents) relating to or arising out of the issuance of a Certificato o! Insurance under this Policy. 21 (The company agrees) to hold harmless. daiend and indomn!fr Master Policyholder (city) and/or its officers and/or employees for any claim, suit, or cause of action. whethet groundless or not, for any act of omission to act rela!etg to the issuance of a Certificate of Insurance by flh(., company), their officers, agents or employees. however, nothing herein is intended to obligate (the company) to hold harmless, defend or indemnify the city from the city's, its offi- cer's. agent's or employee's own acts of omissions to act or violation of State or Federal Statute, except as set forth in (covenant paragraph) mfommentioned Thu fist provision was designed to eflective!y remove the insurance company's ability to subrogate against the at/ in the event an act by the city causcd a loss to an insured resident for which the carrier was required to pay a claim. The Bold harmless provision was designed principally by city attorneys to protect the city in the event a cause of action were brought against the insurance company for failtca to handle an insurance matter properly, with the city being named in that suit because of the Master Policy relationship. Under the remaining alternative city participation CHIP formal — the Endorsement Plan — there is no direct contractual relationship between the city and the insurance carrier. Under these programs, a conventional insurance policy is utilized (as compared to a Certificate of Insurance under the Master Policy), which establishes a legal relationship between the insurance company and the insured homeowner, as is usual industry practice. Throuoh the vehicle of inn "assignment of prenattms" and a return provision formula endorsed to the homeowner's policy, the company commits to the homeowner to gift surplus premiums to in- city on his behalf, if such surplus, is in fact developed under the prescribed formula. also ap arin an a^dorsement to the h;:-reownet's ocli. 1�dhGGlegNlAtuJ gifted An alterni live approach to !ra isfering furos to the city Involves the us,: of a non-p,-icipating homeowners Policy and a letter agteenu:ni f•• jm the Ci i;P carrier to the city promisrnc; ..t "donao- any underwriting profit to ih•� city in accordance wilt specilicd terms. This mochardsrn lacks c,:;;.iin advan gas to the homeowner and will be utilized only where insuranr, onlators find nC•; ;r,Lum, lr + -assignment' endorsement con- ' tamed in the standard Endorsement Plan concept. All ('rigs are regu!ar.e' slate to iUv.; anc! „c : I of lit . .in modifications from n r.,