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<br />Priscilla Walker
<br />September 7, 2010
<br />Page 2
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<br />RESPONSE: Agent Bob Hollander has confirmed that PGIT's coverage is truly "blanket coverage". The
<br />property schedule is strictly provided for the City's convenience. Also, Bob has advised that PGIT
<br />conducted an appraisal of the property values of all locations with valuation in excess of $100,000.
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<br />Property Deductible - Both PGIT and FMIT have quoted a $5,000 per occurrence property deductible for
<br />other than Wind. The programs differ substantially, however, in the way they respond to a wind loss
<br />resulting from a non-named storm. PGITs deductible applicable to wind is $5,000 except as respects
<br />Named Windstorms which is 5% per occurrence, subject to a minimum of $20,000. FMITs wind
<br />deductible of 5% per occurrence applies to all .Windstorm and Hail" at locations within Y2 mile of the
<br />coast, subject to a minimum of $25,000 per occurrence. Based on these proposals, wind damage
<br />caused by a non-named storm at the community center (which appears to be located within Y2 mile of the
<br />coast and is valued at $3,200,000 for Building and Contents), would be subject to a $5,000 deductible in
<br />the PGIT program, but a 5% deductible of $160,000 in the FMIT program. On the other hand, a named
<br />storm at a location greater than Y2 mile from the coast would be subject to just a $5,000 deductible in the
<br />FMIT program, but 5% of the property value by PGIT.
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<br />We assume, because the City is a beach community, very little, if any, of the City's property is located
<br />further than Y2 mile of the Atlantic. Based on that assumption, it appears PGIT is offering the best wind
<br />coverage option.
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<br />As neither proposal indicates how their percentage deductible will be applied, we recommend that the
<br />method of determining the deductible be confirmed with the chosen proposer. We assume the
<br />percentage applies to the total insurable value at damaged locations, but we have seen instances where
<br />the percentage deductible applied otherwise.
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<br />RESPONSE: The PGIT deductible is 5% for "Named Storms" not withstanding the distance to the
<br />Atlantic. The FMIT deductibles are 5% for "Named Storms" for property outside of Y2 mile of the Atlantic
<br />and 5% for "ANY" windstorm for properties within Y2 mile of the Atlantic.
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<br />Liabilitv Coverage Limits - PGIT has proposed continuation of the current $3,000,000 policy limits for
<br />Public Officials and Employment Practices Liability with a $5,000 deductible but has also proposed
<br />optional higher limits of $5,000,000 with a $2,500 deductible. FMIT has quoted a single limit of
<br />$5,000,000 per claim for Public Officials and Employment Practices Liability with a $2,500 deductible.
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<br />PGIT's coverage for Public Officials, Employment Practices Liability, Employee Benefit Liability and Law
<br />Enforcement Liability is provided on a "claims made" basis. FMIT's Employee Benefit Liability coverage is
<br />claims made, but Public Officials, Employment Practices Liability and Law Enforcement Liability would be
<br />on Occurrence forms. Although FMIT has quoted three years prior acts coverage which is intended to
<br />help close the gap between the claims made and occurrence coverages, it is not clear whether that costly
<br />additional coverage option includes prior Law Enforcement acts and we suggest that the inclusion of that
<br />coverage be clarified if you are considering the FMIT program. However, even with the three years prior
<br />acts coverage offered by FMIT, we have reservations about moving the coverage unless there is an
<br />overwhelming reason to do so. Any time coverage is changed from a claims-made to an occurrence
<br />policy or even from one claims-made policy to another claims-made policy, there is a potential risk of
<br />creating a coverage gap from future claims that arise from circumstances which occurred prior to the
<br />change, but were not known and therefore not reported on the old policy.
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<br />Overall Price - PGIT proposed a renewal premium of $518,901 and FMIT quoted a base premium of
<br />$559,721, before any additional premium for the optional FMIT prior acts coverage, a difference of
<br />$40,820. The proposed FMIT prior acts coverage ($29,410), which we would highly recommend if that
<br />program was selected, raises FMIT's premium to $589,131, making the difference even greater at
<br />$70,230.
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