Date: January 2023
When a disaster occurs, the Minnesota governor may issue executive orders declaring a state of emergency and authorizing the use of state and local resources. Disasters, such as hurricanes, affect national resources, and federal agencies may request that the State of Minnesota provide equipment and specialized personnel to assist with relief efforts out of state. Public hospitals, health care professionals, social services personnel, law enforcement and emergency management staff could be mobilized for this effort.
Before MCIT members respond, it is important for them to understand how coverage applies to their role in relief activities. Following is an analysis of property, liability (casualty) and workers’ compensation coverage provided by MCIT.
Property Coverage: Inland Marine
Property coverage applies to locations and equipment owned by the member or for which a member has an insurable interest. In response to an emergency situation outside a member’s territory, most often the property involved will be subject to inland marine coverage.
Inland marine coverage applies to items that are portable, moveable and/or require enhanced coverage. Three general types of inland marine coverage are:
- Contractors equipment (e.g., highway equipment not usually licensed for road use).
- Electronic data processing (EDP) equipment (i.e., computer-related equipment, software and data).
- Miscellaneous personal property (everything else that is on the move).
If equipment is moved from its usual location to assist in a relief effort, it will only be covered if it is specifically listed on an inland marine schedule, such as a contractors equipment schedule, a miscellaneous personal property schedule, a boat and motor schedule or the EDP inventory.
As a reminder, equipment that is not listed on the schedule will not be covered while away from a covered location as defined in the MCIT Coverage Document, whereas listed property is covered anywhere within the United States. If a member is unsure whether an item is included on the schedule, staff should check schedules or EDP inventory for a list of property presently covered with MCIT. Members can also view their current schedules through the online member portal. The rule of thumb is that if it is not listed (i.e., scheduled), it is not covered.
A covered loss is subject to the deductible for the particular line of coverage. Members can refer to the MCIT Coverage Document (Schedule section) for this information. MCIT pays actual cash value for all scheduled inland marine property except for EDP equipment. Covered EDP losses are paid at replacement cost.
Members should note that some exclusions may apply. Noncovered losses are the responsibility of the member. Examples of exclusions that may apply in a situation where a member is assisting with an emergency outside its territory include loss or damage from:
- Confiscation or destruction by order of any government or public authority
- Water, humidity, moisture or vapor
- Unexplained loss or mysterious disappearance
- Wear and tear
- Short circuit or electrical disturbance
- Mechanical or structural breakdown or failure
Loss or damage caused by the weight of a load in excess of the manufacturer’s capacity may also be excluded from coverage.
Automobile and Trailer Coverage
Scheduled automobiles and trailers are covered anywhere in the United States. Liability coverage protects for bodily injury and property damage to a third pary involved with an automobile accident. A third party, or the party with an injury or damage, can make a claim if involved in an incident with a member’s vehicle.
Liability coverage extends to a broad base of drivers (see below for details). Following Minnesota automobile laws, MCIT’s automobile liability coverage protects on a permissive-use basis. This means any person while using, with member permission, a covered auto on behalf of or in conjunction with the member. In other words, it is up to a member to decide who drives its vehicles on the member’s behalf.
MCIT’s liability limits follow the tort caps on damages found in Minnesota Statutes, Chapter 466. The current limits are $500,000 per claimant and $1.5 million per occurrence. If Minnesota Statutes, Chapter 466 does not apply, the $2 million liability limit applies.
The MCIT Coverage Document defines a “covered party” as:
- Any elected or appointed official of the member
- Any employee or authorized volunteer of the member
- Any person officially appointed by the member to a board or commission of the member as authorized by law
- Any law enforcement personnel of the member
Each of the above will be provided liability coverage for acts within the scope of his or her employment by or duties on behalf of the member in their official capacity. Coverage limits are in accordance with Minnesota Statutes, Chapter 466 as outlined in the Declarations page of the MCIT Coverage Document.
“Member” means the entity named in the Declarations including any department, subdivision, committee, commission or board under its jurisdiction, control and direction.
Some exclusions may apply, such as pollution and communicable disease. Noncovered losses are the responsibility of the member.
Employees and registered volunteers who are authorized by the member to assist with relief efforts are eligible for workers’ compensation benefits in the event that they sustain an injury or illness in performing their duties.
When members choose to provide assistance, MCIT strongly recommends that the member take official action authorizing employees to assist with relief efforts. This should remove any doubt that the employee is functioning in his or her official capacity.
Some members may be asked to enter into an intergovernmental agreement with Minnesota Homeland Security and Emergency Management, Department of Public Safety. The agreement provides that the State of Minnesota will reimburse the county for authorized expenses related to the use of county staff and equipment.
Official action preserves an opportunity for the member to request reimbursement from the state for payments made in the event that an employee is injured or becomes ill. Losses sustained by these employees have the potential to affect the member’s future contributions and dividends. Preserving an avenue to recover these funds and replenish the pool mitigates the member’s exposure.
Minnesota Statues, Chapter 12 requires that volunteers be registered to be considered employees for purposes of workers’ compensation and tort claim defense and indemnification. The law makes it so that volunteers are subject to the same protection as employees if volunteers are registered. MCIT members should recognize that losses sustained by these individuals have the potential to affect the member’s future contributions and dividends.
Risk Management Recommendations
- Review schedules and the EDP inventory, and update them as necessary
- Schedule and report all equipment to MCIT that may be used in relief efforts
- Take official (board) action to identify the property that will be used in the relief effort
- Register all volunteers
- Take official action to identify employees and registered volunteers who will be responding to a call for aid
The MCIT Coverage Document contains complete terms and conditions. Members should contact their MCIT risk management consultant toll-free at 1.866.547.6516 if they have questions regarding specific situations.