The MCIT Board of Directors approved recommendations from the Governance Committee to modify coverage during the board’s November meeting. Coverage enhancements for 2019 address builder’s risk, dams, data compromise and cyber liability, general liability, and electronic data processing equipment.*
All changes approved by the board become effective Jan. 1, 2019, and will be detailed in the MCIT Coverage Review webinars later that month (see Coverage Reviews).
Builder’s Risk Sublimits Increase for all Members
MCIT’s property coverage provides all members coverage for losses arising from new building and property-in-the-open construction projects, including additions and alterations. The board approved increasing the coverage limit from $500,000 to $750,000 for the structure, and raising the limit for contents damage from $100,000 to $150,000 at no additional cost to members.
This coverage is provided to members as a convenience in cases where a builder’s risk policy is typically required. Although not as broad as a builder’s risk policy, MCIT’s coverage responds to the damaged structure, related materials and supplies, equipment and machinery for the structure, all when located within 500 feet.
Liability Coverage Expands to Class III Dams
MCIT has previously excluded both property and liability coverage for dams and similar structures. Generally, dams involve specialized structures and equipment that have the potential to result in catastrophic loss and damage appropriately addressed under specialized insurance products. After considerable research, the board approved expanding liability coverage to claims arising from Class III dams as classified by the Department of Natural Resources.
Benefits of this coverage enhancement include:
- Coverage applies to all Class III dams, not only those owned by the member.
- Coverage is automatic; it is not necessary to report or schedule dams for coverage to apply.
- Members will not be charged for the increased coverage.
MCIT continues to exclude all dams for first-party property coverage and liability coverage arising from Class I and Class II dams, which include dikes and levees.
County Cyber Coverage Limits Increase; Members Can Purchase Higher Limits
Since introducing data compromise and CyberOne coverage in 2017, all MCIT members have received the following coverage structure:
- $50,000 for first-party response expense for data compromise claims
- $50,000 for third-party defense and liability costs for data compromise claims
- $50,000 for first-party response expense for computer attack claims
- $50,000 for third-party defense and liability costs for network security claims
The MCIT Board approved increasing the coverage provided to member counties from $50,000 to $100,000; and increasing sublimits from $25,000 to $50,000 for forensic IT, legal review, fines and penalties, and loss of business. All noncounty members will remain at the $50,000 coverage limit level.
Beginning in 2019, all members will also have the option to purchase higher coverage limits up to $1 million. Requests are subject to Hartford Steam Boiler’s (HSB) underwriting guidelines and are not guaranteed. Details of the underwriting process for requesting higher limits are being developed and will be shared with the membership early next year.
General Liability Coverage Expanded for All Endorsed Drones
The growing use of drones nationwide presents coverage concerns for insurance providers. MCIT has offered physical damage coverage for drones but has limited the general liability coverage, reserved only for specified law enforcement activities. After extensive research and discussion, the MCIT Board approved a drone endorsement specifically for endorsed drones when owned and operated by the member in accordance with Federal Aviation Administration (FAA) guidelines.
Highlights of the coverage enhancement:
- Endorsed drones receive a package coverage endorsement consisting of property and liability coverage tailored to the unique exposure.
- Coverage extends to all departments (law enforcement, highway, environmental, etc.) and uses (e.g., bridge inspections, surveying, GIS mapping, buffer inspections, search and rescue, accident reconstruction).
- Common deductibles are $1,000 for property and $2,500 for liability.
- Specialized rating and contribution based on the weight of the drone and attached equipment.
Members with drones currently covered through MCIT will receive the new drone endorsement with their 2019 Coverage Document issued later in December.
Electronic Data Processing (EDP) Equipment Updates
MCIT’s EDP coverage is designed to provide coverage specific to the exposures of sensitive electronic equipment. A unique feature of this coverage is that it is provided to members on a blanket basis with the coverage limit determined by the sum total of all equipment listed on the member’s internal EDP inventory. As such, each individual item does not need to be scheduled with MCIT. Rather, it simply needs to be listed on the inventory that is submitted to MCIT annually.
Examples of EDP equipment include desktop and laptop computers, hard drives, monitors, electronic voting equipment, servers, 800 MHz/ARMER equipment, printers and copiers.
The MCIT Board approved several changes to this coverage section designed to improve its readability, adapt to the increased role electronics play in member business operations and lift several coverage restrictions that present challenges to the membership.
Examples of EDP coverage enhancements include:
- Removing the $50,000 sublimit for equipment while in transit or stored at a temporary location. Coverage now extends to EDP equipment wherever it is located.
- Removing the requirement to schedule equipment individually that is permanently placed, mounted or stored at a nonmember location.
- Covering damaged software subject to a $100,000 sublimit.
- Increasing the extra expense sublimit from $5,000 per claim to $50,000 per claim.
- Eliminating the “no one item to exceed” underwriting requirement.
No additional charge for the expanded coverage.
The changes include adding a definition of “EDP inventory” that places increased importance on the member’s role in maintaining an accurate listing of all EDP equipment it wants covered under its blanket limit and submitting it to MCIT on an annual basis. Updated inventories will be requested from members April 1, 2019. Additional instruction and guidance will be provided to members later this year.
Determining Coverage Changes
The Governance Committee of the MCIT Board of Directors generally meets two times a year to consider changes and updates to the MCIT Coverage Document and formation agreements. Concerns considered by the committee arise from emerging legal issues, claim trends, legislative changes, member input and new exposures as identified by staff.