HomeMy WebLinkAboutRESOLUTION - 93-86 - 11/25/1986 - HIGH LEVEL EXCESS LIABILITY POOL HELP RESOLUTION NO. 93-86
A RESOLUTION AUTHORIZING MEMBERSHIP IN THE HIGH-LEVEL EXCESS
LIABILITY POOL (HELP)
WHEREAS, Section 10 of Article VII of the Illinois Constitution of
1970 authorizes units of local government to contract or otherwise
associate among themselves in any manner not prohibited by law or by
ordinance; and
WHEREAS, Chapter 127, Section 741, et seq. , Illinois Revised Statutes,
entitled the "Intergovernmental Cooperation Act," authorizes public agencies
to exercise any power or powers, privileges or authority which may be ex-
ercised by such public agency individually to be exercised and enjoyed
jointly with any other public agency in the State; and
WHEREAS, the Intergovernmental Cooperation Act in Section 746 in
furtherance of the provisions contained within Article VII, Section 10 of
the Constitution authorizes an intergovernmental contract which among other
undertakings allows public agencies to jointly self-insure and authorizes
each public agency member of the contract to utilize its funds to protect,
wholly or partially, any public agency member of the contract against liability
or loss in the designated insurable area; and
WHEREAS, Chapter 85 of the Illinois Revised Statutes authorizes multi-year
contracts for joint self-insurance and allows self-insured governments to assert
a range of immunities; and
WHEREAS, units of local government within Illinois have found it in-
creasingly difficult to purchase excess insurance from commercial sources and
where such insurance is available the costs of such coverage often exceeds
the ability of the units of local government to pay for such insurance; and
WHEREAS, many governmental bodies are capable of self-insuring or con-
ventionally insuring risks below one million dollars, but require the par-
ticipation of other governmental bodies to deal with infrequent but catastro-
phic claims above one million dollars; and
WHEREAS, a number of municipalities have studied the possibility of
creating a joint self-insurance pool to provide coverage for its members
above claims which at the commencement date of the Agency will be $1,000,000.00;
and
WHEREAS, the Members of the proposed Agency, including this municipality,
are prepared to individually fund a self-insured retention amount of $1,000,000.00
which they may fund through individual self-insurance, conventional insurance or
membership in a self-insurance pool; and
WHEREAS, the Corporate :authorities of this municipality acknowledge that
the concept of an excess insurance pool requires each Member to assume the
obligation for all claims below the high-level excess self-insurance amount
at which the Agency will commence its coverage; and
WHEREAS, the Corporate Authorities recognize that membership in such a
pool requires a multi-year commitment and an obligation to fund claims made
against the Members of the Pool for an extended period of time after the
occurrence of the incident which caused the claim to be made; and
WHEREAS, the Corporate Authorities have reviewed the Contract and By-Laws
of the proposed High-Level Excess Liability Pool and find that the goals of
that organization and the obligations imposed upon this municipality are in
accordance with the philosophy and public policy objectives of this com-
munity; and
WHEREAS, self-insurance pools have successfully served the needs of
Illinois governmental bodies since at least January 1, 1979; and
WHEREAS, the Corporate Authorities of this public body find that it is
in the best interest of its citizens that it become a Member of the High-
Level Excess Liability Pool.
NOW, THEREFORE, BE IT RESOLVED by the President and Board of Trustees
of the Village of Elk Grove Village, Counties of Cook and DuPage, State of
Illinois.
Section 1: That the Village President and Village Clerk are hereby
authorized to execute on behalf of the municipality the Contract and By-Laws
of the HIGH-LEVEL EXCESS LIABILITY POOL (hereinafter "Agency") . A copy of
the Contract and By-Laws is appended to and made a part of this Resolution
as Appendix 1.
Section 2: The powers of the Agency, unless the Contract and By-Laws be
amended, shall be limited to those contained within Appendix 1.
Section 3: The commencement of the operations of the Agency and the
obligation of this municipality to fully participate in such operations shall
be effectuated in 'accordance with the Contract and By-laws.
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Section 4: Except to the extent of the limited financial (:ontributions to
the Agency set forth in the Contract and By-Laws, this municipality by its
entry as a Member of the Agency shall not be held responsible in any way for
the claims in tort made against any other Member of the Agency; and the
financial obligations are limited to the payment of claims above the self-
insured retention with claims and costs below this amount individually assumed
by each Member.
Section 5: That this Resolution shall be in full force and effect from
and after its passage and approval according to law.
VOTES: AYES: 5
NAYS: 0
ABSENT: 1
PASSED this 2 th day of November 1986.
APPROVED this 25th day of November 1986.
Charles J. Zettek
Village President
ATTEST:
Patricia S. Smith
Village Clerk
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H. F - . P . 10/10/86
CONTRACT AND BY-LAWS
HIGH-LEVEL EXCESS LIABILITY POOL
I N D E X
Page No.
1 ARTICLE I. Definitions and Purpose.
7 ARTICLE II. Powers.
9 ARTICLE III. Participation and Term.
12 ARTICLE IV. Commencement of the Agency.
13 ARTICLE V. Board of Directors .
24 ARTICLE VI. Board of Directors Meetings.
26 ARTICLE VII. Finances and Risk Management Pool.
36 ARTICLE VIII. Scope and Amount of Loss Protection.
40 ARTICLE IX. Obligations of Members.
44 ARTICLE X. Liability of Board of Directors
or Officers.
46 ARTICLE XI. Additional Coverage.
47 ARTICLE XII. Optional Defense by Member.
50 ARTICLE XIII. Contractual Obligation.
52 ARTICLE XIV. Host Member
53 ARTICLE XV. Expulsion of Members.
56 ARTICLE XVI. Termination of the Agency.
APPENDIX 1
CONTRACT AND BY-LAWS
HIGH-LEVEL EXCESS LIABILITY POOL
ARTICLE I. Definitions and Purpose.
DEFINITIONS:
As used in this agreement, the following terms shall
have the meaning hereinafter set out:
AGENCY - The High-Level Excess Liability Pool (H.E.L.P. )
established pursuant to the Constitution and the statutes
of this State by this intergovernmental agreement.
ANNUAL PAYMENT - The minimum amount a MEMBER shall be
obligated to pay to the AGENCY during a fiscal year.
CLAIMS ADMINISTRATOR - A person or group of persons who
either as employees or independent contractors are employed
to administer the claims made against the MEMBERS.
CONVENTIONAL INSURANCE - Insurance coverage which may
from time to time be purchased by or through the AGENCY
from an insurance company approved by the Department
of Insurance to write such coverage in Illinois for risks
which the MEMBERS determine will not be covered or be
entirely covered by the JOINT RISK MANAGEMENT POOL; also
excess insurance.
DEBT INSTRUMENTS - Bonds , letters of credit, loan agree-
ments, or other documents by which funds are borrowed
N . E . L. P . 1 „ L') 6
by the AGENCY or by a MEMBER of the AGENCY to fund in
whole or in part the Joint Risk Management Pool.
HOST MEMBER - A MEMBER of the AGENCY which issues or
becomes principally obligated for a debt instrument.
JOINT RISE MANAGEMENT POOL - A fund of public monies
established by the AGENCY to provide risk management
services, administer and jointly self-insure certain
claims within an agreed scope, to purchase conventional
insurance where such coverage is available in reasonable
amounts and, where issued, to repay debt instruments
and to pay other costs within the purposes of the AGENCY;
also RISK MANAGEMENT POOL.
JOINT SELF-INSURANCE - A self-insurance program in which
MEMBERS agree to contribute annual, and where required,
supplementary payments and other required payments such
as interest payments to support the costs of administra-
tion, a risk management program and a joint risk management
pool.
MEMBERS - Units of local government and joint contractual
agencies composed of units of local government which
initially or later enter into the intergovernmental con-
tract established by this intergovernmental agreement.
POOL CONTRIBUTION FORMULA - A formula approved by the
Board of Directors which will establish the amount of
required annual payment to the AGENCY.
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RISK MANAGEMENT - A program attempting to reduce or limit
injuries to persons or property caused by the operations
of MEMBERS.
STEERING COMMITTEE - A committee organized to bring about
the creation of the AGENCY. Documents or funds to be
sent to the Steering Committee should be sent to:
George Coney
Steering Committee Chairman
High-Level Excess Liability Pool
c/o Village of Elk Grove Village
901 Wellington Avenue
Elk Grove Village, Illinois 60007
SUPPLF4ENTARY PAYMENTS - Payments which may be called
for, in accordance with the Contract and By-Laws, by
the Board of Directors from time-to-time if the amount
of the annual payment is insufficient to fund the AGENCY.
PURPOSE:
The AGENCY is a cooperative agency voluntarily established
by contracting units of local governments and similar govern-
mental entities as defined in the Illinois Constitution of
1970 pursuant to Article VII, Section 10 of the 1970 Constitu-
tion of the State of Illinois, Chapter 85 , Sections 1-101
through 9-107 , and Chapter 127 , Section 746 of the Illinois
Revised Statutes for the purpose of seeking the prevention
or lessening of liability claims for injuries to persons or
property or claims for errors and omissions made against the
MEMBERS and other parties included within the scope of coverage
of the AGENCY.
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H. E . L . ° .
It is the intent of the MEMBERS of the AGENCY to create
an entity which will administer a joint risk management pool
and utilize such funds contributed by the MEMBERS to defend
and protect, in accordance with these By-Laws, any MEMBER
of the AGENCY and other parties against stated liability.
Such By-Laws shall constitute the substance of a contract
among the MEMBERS.
All funds contained within the Risk Management Pool are
funds directly derived from its Members which are units of
local government or similar governmental entities within the
State of Illinois . It is the intent of the parties in entering
into this agreement that, to the fullest extent possible,
the scope of risk management undertaken by them through a
joint self-insurance program using governmental funds shall
not waive, on behalf of any local public entity or public
employees as defined in the Local Governmental and Governmental
Employees Tort Immunity Act, any defenses or immunities therein
provided.
Specifically, the MEMBERS of this AGENCY intend to effect
no waiver of immunities through their contribution of public
funds retained within the risk management pool. Such contribu-
tions being reserves to protect against uninsured risks in
accordance with Chapter 127, Section 746, are not intended
to constitute the issuance of a policy for insurance coverage,
(by an insurance company authorized by the Department of Insur-
ance to write such coverage in Illinois) , as provided in Chapter
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85 , Section 9-103 of the Illinois Revised Statutes . Nor do
the MEMBERS, if permitted by law, intend to waive any immunities
by the purchase of conventional insurance by the AGENCY.
In order to give the MEMBERS the ability to partially
pre-fund the joint risk management pool, through the possible
sale of debt instruments , it is necessary to establish a term
for the AGENCY which is long enough to permit the sale and
retirement of debt instruments payable over a period of up
to the term of the AGENCY to be retired by the commitment
of the MEMBERS to make payments . In addition, by entering
into a contract which will provide some coverage on an occur-
rence basis , even if the claim is filed at some time after
eleven years from the date of the commencement of this contract,
the MEMBERS state and acknowledge their continuing contractual
obligations arising out of occurrences which take place during
the term of this contract.
In creating an excess self-insurance pool, the MEMBERS
of this AGENCY are entering into a type of intergovernmental
contract which has not previously existed in Illinois . In
forming such an AGENCY, the MEMBERS state and acknowledge
that the AGENCY has no responsibility for the payment of claims
for amounts less than the level at which the scope of coverage
of this AGENCY shall from time to time commence. The scope
of coverage to be provided by the AGENCY is excess coverage
to commence only after the MEMBER or some other party on behalf
of the MEMBER has fully paid the amount of its self-insured
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retention. At the commencement of the term of the AGENCY,
the amount of that retention is $1, 000 , 000 , per occurrence.
The AGENCY, always subject to any limit on aggregate payments ,
shall not be obligated to expend any funds or pay any claim
until the MEMBER, or some party on behalf of the MEMBER, has
paid $1, 000 , 000, including costs of defense, for each occurrence
against which a claim is made against the assets of the AGENCY.
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ARTICLE II. Powers .
The powers of the AGENCY to perform and accomplish the
purposes set forth in Article I shall, within the budgetary
limits and procedures set forth in these By-Laws, be the fol-
lowing:
(a) To employ agents, employees and independent contrac-
tors,
(b) To lease real property and to purchase or lease equip-
ment, machinery, or personal property necessary for
the carrying out of the purpose of the AGENCY,
(c) To carry out educational and other programs relating
to risk reductions,
(d ) to cause the creation of, see to the collection of
funds for, and administer a joint risk management
pool and to repay debt instruments of the AGENCY,
its MEMBERS, or both,
(e) To purchase conventional insurance to supplement
the joint risk management pool,
(f ) To establish reasonable and necessary loss reduction
and prevention procedures which shall be followed
by the MEMBERS. It is the intent of the MEMBERS
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that the use of this power shall be exercised with
discretion with a goal of undertaking oversight re-
sponsibilities rather than the direction by the AGENCY
of the day-to-day operations of a MEMBER,
(g) To provide risk management services, and, where re-
quired, the investigation, defense, litigation, or
settlement of claims ,
(h) To admit and expel MEMBERS as provided herein,
(i ) Solely within the budgetary limits established by
the MEMBERS to carry out such other activities as
are necessarily implied or required to carry out
the purposes of the AGENCY specified in Article I
or the specific powers enumerated in Article II.
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ARTICLE III . Participation and Term.
All MEMBERS of the AGENCY, except for those whose member-
ship is terminated in accordance with the expulsion provisions
of Article XV, and such extension of the term as may be made
if the fiscal year of the AGENCY is changed, shall remain
MEMBERS of the AGENCY for a period of eleven (11 ) years after
the AGENCY shall have commenced its operations .
New MEMBERS, including those units of local government
listed in Appendix A, which do not join at the inception of
the AGENCY, shall be admitted only by a two-thirds ( 2/3 ) affir-
mative vote of the entire membership of the Board of Directors
and subject to the payment of such funds and under such condi-
tions as the Board shall in each case or from time to time
establish.
Provided further that before new MEMBERS may be admitted
these by-laws will be amended to provide for the method by
which the payments received from new MEMBERS will be used
in the JOINT RISK MANAGEMENT POOL and the manner in which
such new MEMBERS will receive the payment of any funds available
after all claims have been paid or provision has been made
for the payment of all claims .
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N . L . P . L
It is anticipated that within the first year of the term
of the AGENCY, the amount of coverage as specified in
Article VIII to be provided will be increased to not less
than $5 , 000 , 000 per occurrence and in the aggregate for each
MEMBER. This increased amount of coverage is expected to
be backed by the issuance of bonds by a host MEMBER, the pro-
curement of a Letter of Credit, or through some other debt
instrument. In the event that the amount of coverage provided
by the AGENCY should not be increased to at least $5 ,000 ,000
per occurrence and in the aggregate during the first year
of its term or to commence at the beginning of the second
year, any MEMBER of the AGENCY may withdraw from the AGENCY
by giving written notice to the Chairman of the Board of Direc-
tors within fifteen ( 15 ) days after the close of the first
fiscal year. Such withdrawal shall relate back to the end
of the first fiscal year. In addition, if the AGENCY should
vote to increase its scope of coverage to not less than $5 , 000, 000
at some time during the first fiscal year and should require
all MEMBERS to execute documents providing in more detail
the manner in which they shall be obligated to pay their propor-
tional share of the retirement or repayment of a debt instru-
ment, a MEMBER may withdraw from the AGENCY by refusing to
execute such documents. Such withdrawal shall be effective
at the date that the AGENCY shall increase the amount of its
coverage, but in no case later than the end of the first fiscal
year. Any MEMBER which withdraws from the AGENCY in the manners
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specified above shall, however, be responsible for its propor-
tional share of claims within the scope of coverage of the
AGENCY as it existed prior to the effective date of its with-
drawal. The proportional share due from that MEMBER shall
be that proportion which its annual payments bear to those
annual payments of all of the other MEMBERS.
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11/14/86
ARTICLE IV. Commencement of the Agency.
The AGENCY will commence its term at 12 : 01 a.m. on January
1, 1987 , if: by December 15, 1986, there has been deposited
with the Steering Committee resolutions or ordinances approving
the Contract and By-Laws of the AGENCY by at least ten ( 10 )
of the governmental bodies , the names of which are set forth
in Appendix A, obligating themselves to become MEMBERS of
the AGENCY in accordance with these By-Laws , and to pay in
the first fiscal year annual payments totalling at least
$1, 100 , 000. 00 .
At the time that the submission of the resolution or
ordinance approving the Contract and By-Laws of the AGENCY
is sent to the Steering Committee, the MEMBERS shall enclose
a check in the amount of 508 of the first year ' s initial payment
to the AGENCY as is shown on Appendix A. The other 508 shall
be due within 30 days after the AGENCY commences its term.
Provided, however, that if necessary to produce at least
$1, 100 , 000 . 00 , each MEMBER which signs the Contract and By-Laws
shall be obligated to increase its second installment payment
to a total annual payment not more than 108 higher than the
amount shown on Appendix A.
If the required acts necessary to bring about the commence-
ment of the AGENCY have not occurred by December 15 , 1986 ,
the obligation of those governmental bodies which have passed
the resolution or ordinance to become a MEMBER of the AGENCY
shall cease and all funds sent to the Steering Committee will
be returned with any interest earned.
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ARTICLE V. Board of Directors .
(a ) There is hereby established a Board of Directors
of the AGENCY. Each MEMBER shall appoint one ( 1 )
person to represent that body on the Board of Directors
along with another person to serve as an alternate
representative when the initial representative is
unable to carry out that representative ' s duties .
The representative and alternate shall be appointed
in the same manner as other appointive officers are
selected when no specific method for such office
is established by statute. Once such appointments
are made known to the AGENCY the persons appointed
shall remain in office until the AGENCY receives
evidence of the appointment of other persons . The
AGENCY shall be the judge of the proper appointment
of representatives and alternates to the Board of
Directors and shall utilize in case of dispute general
principles of Illinois law. The representative and
alternate selected need not be elected officials
of the MEMBER. It is anticipated, but not required,
that persons chosen to serve on the Board will have
responsibilities within their MEMBER community for
some management duties relating to the AGENCY.
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The Board of Directors shall select from among
the representatives a Chairman, Vice Chairman, Secre-
tary and Treasurer. In the first fiscal year of
the AGENCY, these persons shall be selected during
the first quarter of the fiscal year to serve terms
of two ( 2 ) years from the commencement date. There-
after, they will be selected during the final quarter
of the appropriate fiscal year to serve two year
terms commencing at the start of the next fiscal
year. No' person may serve as Chairman of the Board
of Directors for more than two ( 2 ) consecutive full
two-year terms . The Chairman shall be the chief
executive officer of the AGENCY. The Chairman shall
preside at all meetings of the Board and the Executive
Committee at which the Chairman is present. The
Chairman may request information from any officer
of the Board or the AGENCY or any employee or independ-
ent contractor of the AGENCY. The Chairman shall
vote on all matters that come before the Board or
Committees on which the Chairman serves. The Chairman
shall be a non-voting ex-officio member of all commit-
tees of the AGENCY on which the Chairman does not
directly serve. The Chairman shall have such other
powers as are set forth in these By-laws and such
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F . _ .
other powers as he may be given from time to time
by action of the Board.
The Vice Chairman shall carry out all duties of
the Chairman of the Board during the absence or inabil-
ity of the Chairman to perform such duties and shall
carry out such other functions as are assigned from
time to time by the Chairman or the Board of Directors .
The Treasurer shall have charge and custody of
and be responsible for all funds and securities of
the AGENCY; receive and give all receipts for moneys
due and payable to the AGENCY from any source whatso-
ever; deposit all such moneys in the name of the
AGENCY in such banks, savings and loan associations
or other depositories as shall be selected by the
Board of Directors; invest the funds of the AGENCY
as are not immediately required in such investments
as the Board of Directors shall specifically or gener-
ally select from time to time; and maintain the finan-
cial books and records of the AGENCY. Provided,
however, that all investments of AGENCY funds shall
be made only in the manner permitted to an Illinois
home rule community. The Treasurer shall, in general,
perform all the duties incident to the office of
Treasurer and such other duties as from time to time
may be assigned to him by the Board of Directors.
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The Secretary shall keep the official records
of the AGENCY. The Secretary shall see to the keeping
of the minutes of meetings of the AGENCY and shall
retain past financial records of the AGENCY. The
Secretary shall see to the sending of all notices
required by these By-Laws and shall carry out other
clerical duties of the AGENCY.
The AGENCY shall purchase a bond in the cumulative
amount of at least $2,500, 000. 00 to assure the fidelity
of the Chairman and Vice Chairman of the Board, the
Treasurer and any other officer, committee member,
or employee who shall have the right to authorize
the transfer or payment of AGENCY funds. Without
amending these By-Laws, the Board of Directors, by
motion, may increase the amount of the bonds or the
persons covered.
The Board may select a financial institution
to carry out some or all of the functions which would
otherwise be assigned to a Treasurer and may select
a risk management company or agent to serve as claims
administrator. The Board may also employ persons
or companies as independent contractors to carry
out some of the functions of officers of the AGENCY.
The Board of Directors may from time to time establish
other officers of the Board and may elect a representa-
tive on the Board to serve in any of such offices.
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The Board shall fill any vacancies which may occur
in any offices for the remainder of the term.
(b) The Board of Directors shall determine the general
policy of the AGENCY which policy shall be followed
by the AGENCY officers , agents , employees and indepen-
dent contractors employed by the AGENCY. Among other
items, it shall have the responsibility for ( 1) Hiring
of AGENCY officers , agents, employees and independent
contractors ; ( 2 ) Setting of compensation for all
persons, firms and corporations employed by the AGENCY;
( 3 ) Setting of fidelity bonding requirements for
officers, employees or other persons; ( 4) Approval
of amendments to the By-Laws; (5 ) Approval of the
acceptance of new MEMBERS and expulsion of MEMBERS;
( 6 ) Approval and amendment of the annual budget of
the AGENCY; ( 7 ) Establishment and amendment of the
scope and amount of pooled self-insurance coverage
offered by the AGENCY; ( 8 ) Resolution of disputes
over the scope of pooled self-insurance coverage
provided by the AGENCY; ( 9 ) Approval of educational
and other programs relating to risk reduction; ( 10 )
Approval of reasonable and necessary loss reduction
and prevention procedures which shall be followed
by all MEMBERS; (11) Purchase of conventional insurance;
( 12 ) Authorization to a host MEMBER to issue debt
instruments when all other contractual prerequi-
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sites for such issuance have been effected; ( 13 )
Approval of annual and supplementary payments to
the Risk Management Pool for each MEMBER; ( 14 ) Approval
of rules and regulations regarding the payout of
funds from the Risk Management Pool as shall from
time-to-time seem appropriate.
(c) Each MEMBER shall be entitled to one ( 1) vote on
the Board of Directors. Such vote may be cast only
by the designated representative of the MEMBER or
in the representative 's absence, by an alternate
selected by the MEMBER in the same manner as specified
for the selection of the principal representative .
No proxy votes or absentee votes shall be permitted.
Voting shall be conducted by voice vote unless one
( 1) or more MEMBERS of the Board of Directors shall
request a roll call vote; provided, however that :
1. Any vote which requires a greater than majority
vote for passage shall be by roll call vote, and
2. Any member of the Board who abstains or casts
a vote in a minority position on a matter
upon which a voice vote is taken may have
that vote specifically recorded in the minutes
by indicating such desire to the presiding
officer.
(d) The representative selected by the MEMBER shall serve
until a successor has been selected. The representa-
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tive chosen by the MEMBER may be removed in the same
manner as other non-tenured appointive officers within
the MEMBER. In the event that a vacancy occurs in
the representative or alternate representative selected
by the Corporate Authorites of a MEMBER, that body
shall appoint a successor. The failure of a MEMBER
to select a representative or the failure of that
person to participate shall not affect the responsibi-
lities or duties of a MEMBER under this Contract.
(e) The Board of Directors shall have the power to esta-
blish both standing and ad hoc committees. It is
contemplated that the AGENCY will have at least the
following standing committees : Finance, Risk Manage-
ment, Claims Review and Membership and Revenue.
The Chairman of the Board may also establish ad hoc
committees which do not conflict with those established
by the Board. Unless the Board of Directors shall
establish some other procedure, the selection of
members of the Board of Directors who shall serve
on such committees and chair them shall reside with
the Chairman of the Board of Directors, but such
decisions shall be confirmed by the Board. The Chair-
man may make interim appointments to fill vacancies
which occur between Board meetings.
The Board of Directors may assign to a committee
the authority to authorize the expenditure of funds
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for administrative expenses , but the settlement of
claims or suits to be paid from the joint risk manage-
ment pool shall be decided by the Board of Directors ,
except as the Board shall specifically assign in
whole or in part such function to a person or com-
mittee.
The Board of Directors shall create an Executive
Committee. That Executive Committee shall at a minimum
consist of the Chairman and Vice Chairman of the
Board, the Treasurer, the representative or alternate
of any host MEMBERS, and the Chairman of the other
standing committees of the AGENCY along with other
persons . The Executive Committee shall make recommenda-
tions to the Board and shall undertake other functions
as the Board shall assign.
(g) A quorum shall consist of a majority of the MEMBERS
of the Board of Directors . Except as provided in
Subsection (h) , herein, or elsewhere in these By-Laws,
a simple majority of a quorum shall be sufficient
to pass upon all matters.
(h) A greater vote than a majority of a quorum shall
be required to approve the following matters :
(i) Such matters as the Board of Directors shall
establish within its rules as requiring for
passage a vote greater than a majority of a
quorum, provided, however, that such a rule
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can only be established by a greater than a
majority vote at least equal to the greater
than majority percentage within the proposed
rule.
(ii ) The approval of the payment of the settlement
of claims from the joint risk management pool
shall require the concurrence of a majority
of the entire membership of the Board of Direc-
tors. By such a vote, the Board of Directors
may also establish procedures whereby in cases
where a rapid decision on the terms of a prospec-
tive settlement must be made, a committee or
person may approve settlements in an amount
higher than that previously authorized by the
Board.
(iii ) The admission of a new MEMBER and the expulsion
of a MEMBER shall require at least the concur-
rence of two-thirds (2/3 ) of the entire member-
ship of the Board of Directors.
(iv) The purchase of excess or aggregate insurance
shall require at least the concurrence of two-
thirds (2/3 ) of the entire membership of the
Board of Directors .
(v) Any amendment of these By-Laws except as provided
in Subsection (vi ) below, shall require at
least the concurrence of two-thirds (2/3 ) of
the entire membership of the Board of Directors .
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(vi ) The amendment of these By-Laws to cause the
termination of this agreement sooner than eleven
(11 ) years after its commencement but only
if any debt instruments issued have been entirely
paid or provision has been made for their payment ,
or the amendment of these By-Laws to cause
a modification of more or less than the high
or low range of the debit-credit formula, as
provided for in Article VII(i ) , or the modifi-
cation of the scope or amount of coverage of
the AGENCY and the authorization to a host
MEMBER which has specifically agreed by resolu-
tion of its corporate authorities to obligate
itself to execute a debt instrument shall require
that specific written notice of the proposed
change be sent by registered or certified mail
to the chief executive officer of the MEMBER
and to the regular and alternate representative ,
of the MEMBER on the Board of Directors , no
less than ten ( 10 ) days prior to a meeting
at which this matter is proposed and that the
amendment as proposed or as amended at a Board
meeting shall require concurrence of at least
two-thirds (2/3) of the entire membership of
the Board of Directors .
-22-
e . � . . F . 1). � �
(i ) No one serving on the Board of Directors shall receive
any salary or other payment from the AGENCY. Any
salary, compensation, payment or expenses for such
representative, shall be paid by each MEMBER separate
from this Contract. Provided, however, that the
Chairman of the Board, Vice Chairman, Treasurer and
Secretary and such other Board officers as are given
by the Board of Directors a right to reimbursement
may submit to the Board of Directors for its approval
claims for reimbursement of expenses incurred in
the pursuit of their positions as officers of the
AGENCY. The reimbursement for such expenses shall
include amounts advanced on behalf of the AGENCY
either by the officer himself or by a MEMBER of the
AGENCY. A host MEMBER may be compensated for agreeing
to issue or issuing a debt instrument, be reimbursed
for expenses or be granted credits for sums otherwise
due the AGENCY.
-23-
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ARTICLE VI . Board of Directors Meetings .
(a) Regular meetings of the Board of Directors shall
be held at least three ( 3 ) times a year. The dates
of regular meetings of the Board shall be established
at the beginning of each fiscal year. Any item of
business may be considered at a regular meeting.
A special organizational meeting may be held within
thirty ( 30 ) days prior to the commencement date of
the AGENCY upon not less than seven ( 7 ) days ' written
notice from the Chairman of the Steering Committee.
At least one ( 1) meeting must be held during
the first half of the fiscal year. Special meetings
of the Board of Directors may be called by its Chairman,
or by representatives of any three ( 3 ) MEMBERS.
Ten ( 10 ) days ' written notice of regular or special
meetings shall be given to the official representatives
of each MEMBER government and an agenda specifying
the subject of any special meeting shall accompany
such notice. Business conducted at special meetings
shall be limited to those items specified in the
agenda. Provided, however, that where it is necessary
to call a special meeting of the Board to authorize
-24-
the payment of the settlement of a claim or claims
or other matter requiring rapid attention, such a
meeting may be called by delivered written or tele-
phonic notice of no less than 48 hours .
(b) The time, date and location of regular and special
meetings of the Board of Directors shall be determined
by the Chairman of the Board of Directors or by the
convening authority.
(c) To the extent not contrary to these By-laws, and
except as modified by the Board of Directors , Roberts
Rules of Order, latest edition, shall govern all
meetings of the Board of Directors .
(d) Minutes of all regular and special meetings of the
Board of Directors shall be sent to all members and
alternate members of the Board of Directors within
twenty ( 20 ) days after each meeting. The Board shall
subsequently vote on the approval of the minutes .
-25-
H . � . P . 1J - ice , 00
ARTICLE VII. Finances and Risk Management Pool.
(a ) The fiscal year of the AGENCY shall commence on the
date the AGENCY comes into existence and shall be
for a twelve ( 12 ) month period except that the Board
may change the date of the commencement of the fiscal
year. In the event that the Board chooses to change
the fiscal year of the AGENCY, the term of this con-
tract shall be extended for the number of months
necessary to accommodate the new fiscal year, provided,
however, that the right of withdrawal accorded MEMBERS
during the first fiscal year of the AGENCY shall
terminate twelve (12 ) months from the commencement
date without regard to any change in the fiscal year.
(b) The Board of Directors shall approve a preliminary
budget for the administration of the AGENCY for each
forthcoming year during the final quarter of the
prior fiscal year. Copies of all preliminary and
final budgets shall be promptly mailed to each member
of the Board of Directors. The Board of Directors
shall, before the end of the year prior to the start
of each fiscal year, approve a final budget, the
-26-
H .
pool contribution formula , and the amount of annual
payments due from each MEMBER, including, where applic-
able, a debit and credit calculation for each MEMBER
and the date upon which the payment is due. Provided,
however, in its first year of operations , the initial
annual payment for the first year of the AGENCY shall
be that amount shown on Appendix A and the budget
shall be that approved by the Board of Directors
during the first quarter of the fiscal year.
Failure to approve a preliminary or final budget
within the times set forth within this Section shall
not relieve the MEMBERS of the obligation to make
annual or supplementary payments to the AGENCY so
long as such budgets are finally adopted, and the
MEMBERS are given at least thirty (30 ) days after
the passage of the final budget or the determination
of amounts due in which to make payments to the AGENCY.
Where the proceeds of a debt instrument have been
received, the obligation of MEMBERS to repay that
debt shall not be dependent upon the approval of
a budget. Budgets may be amended at any time by
majority vote of the Board of Directors .
(c) Calls for supplementary payments shall be made by
the Board of Directors . Supplementary payments shall
be called for where required in order that the scope
and amount of coverage of the AGENCY can be provided
-27-
to all MEMBERS. The Board shall, where necessary,
make calls for supplementary payments from MEMBERS,
including expelled MEMBERS, claims which occurred
during the time of their membership. Provided, that
in any year in which the scope of coverage is provided
on a "claims made" basis , supplementary payments
may only be used to pay and administer claims made
during the subject year or such later period as assumed
by the AGENCY or specified in a conventional insurance
policy purchased by the AGENCY.
The forwarding of annual and supplementary payments
within a time specified in notices to the MEMBERS
giving them not less than thirty (30 ) days to make
such payments, shall be of the essence of this con-
tract. Supplementary payments shall only be required
by the Board of Directors in a situation in which
there is a reasonable concern that the sum remaining
from the annual payment or prior supplementary payments
will not be sufficient to meet the responsibilities
of the AGENCY. MEMBERS shall be responsible for
supplementary payments during the entire life of
the AGENCY and any later period when claims or expenses
need be paid which are attributable to the year of
membership when the event out of which the expense
or claim occurred or for "claims made" coverage during
that claim year or such later period assumed by the
-28-
r. . L. P .
AGENCY or specified in a conventional policy. In
years after the first fiscal year, the Board of Direc-
tors may permit annual or supplementary payments
to be made on a monthly or quarterly basis .
(d ) Each MEMBER shall have prepared and submit to the
AGENCY an annual audited statement of all revenues
prepared by a certified public accountant on a G.A.A. P.
basis . For the purpose of computing amounts due
for participation in the AGENCY, revenues shall be
classified by fund type as follows :
General Fund:
Included:
1) . taxation of all types; real estate, sales,
utility, income tax etc.
2 ) . license and permit fees
3 ) . intergovernmental revenue
4 ) . fines and forfeitures
5 ) . interest earnings
6 ) . fees charges or service
7 ) . franchise revenues
Excluded:
1 ) . refunds
2 ) . interfund transfers
Special Revenue Funds
Included:
1) . taxation of all types
2) . intergovernmental revenue
3 ) . interest earnings
4 ) . grant funds
Excluded:
1 ) . interfund transfers
2 ) . refunds
Debt Service Funds
Special Assessment/Special Service District Funds
-29-
Included:
1) . taxation of all types
2 ) . interest earnings
Excluded:
1 ) . proceeds from new debt where proceeds are
to be used to retire existing debt
2 ) . interfund transfers
Capital Project Funds
Included:
1) . taxation of all types
2 ) . interest earnings
3 ) . developer contributions
4 ) . grant funds
Excluded:
1) . interfund transfers
2 ) . bond proceeds
Enterprise Funds
Included:
1) . all sales
2 ) . license and permit fees
3) . service charges
4 ) . interest earnings
5 ) . taxation
6 ) . grant funds
Excluded:
1) . interfund transfers
2 ) . revenues collected while acting as an agent
for another governmental body where amounts
collected are passed through
Internal Service Funds - Excluded
Trust and Agency Funds - Excluded
General Exclusion
All revenues associated with a specifically excluded
risk or activity will not be included for the calcula-
tion of premiums .
Revenues shall be computed using the figures shown
in the annual audit statement of the MEMBER for the
-30-
r.
last fiscal year available on the date at which the
audits are due . In the event a current audited finan-
cial statement is not available, or, if available,
does not present revenues in the manner required,
the Board of Directors shall estimate the revenues
of the MEMBER based upon the best figures then avail-
able. The decision of the Board shall be final.
For the first year of the existence of the AGENCY,
revenues shall be those utilized in the development
of the computation of the annual payment shown in
Appendix A.
(e) The Board of Directors shall in subsequent years
after reviewing the audit submitted from each MEMBER
establish a tentative computation of the revenues
of each MEMBER. Written notice of this tentative
determination shall be sent to each MEMBER. If a
MEMBER wishes to contest the determination of the
amounts, it may request a hearing before the Board
of Directors. The decision by the Board after such
hearing shall be final unless the Board shall be
found by a court to have committed a clear abuse
of discretion.
(f ) During the final quarter of each fiscal year, the
Board of Directors shall establish the pool contribu-
tion formula which will be used in determining the
annual payments due from each MEMBER for the next
-31-
F - . ` . P . 10 ' _ , _
succeeding fiscal year. The four factors which will
be equally weighted in creating the formula are :
Revenues , as defined in Article VII(d) , Miles of
Streets , Full-Time Equivalent Employees and the Total
Number of State Licensed Vehicles . MEMBERS shall
be required to provide information to the AGENCY
which will allow the Board of Directors to quantify
each of these four factors . All questions relating
to the computation of these four factors will be
resolved by the Board of Directors and will be applied
equally to all MEMBERS. The assessment of supplemen-
tary payments, whenever required to be paid, will
be based upon the same proportion which the payment
of one MEMBER bears to the payment of another MEMBER
in the annual payment, except where the Board of
Directors should modify that proportion based upon
an error in the information reported or an error
in computation. In the event that for any reason
the proportional payments due from a MEMBER shall
be adjusted, the amounts due from other MEMBERS shall
likewise be subject to adjustment but the implementa-
tion of the adjustment may be delayed until the funds
are needed.
(g ) If all claims known or unknown within the scope of
coverage provided by the AGENCY, plus any other amounts
owed by the AGENCY during any particular period for
-32-
H ', . P . _0
which funds of the AGENCY were combined to create
the joint risk management pool, have either been
paid or provision has been made for such payment ,
the Board of Directors as then constituted shall
distribute any surplus funds to the MEMBERS which
constituted the membership of the Pool during that
period after first deducting therefrom reasonable
administrative and other non-allocated costs incurred
by the AGENCY in the processing of the claims in
years other than the period for which the claim was
made. The distribution among the MEMBERS shall be
in the same proportion to the total as their payments
during the period bore to the payments of all MEMBERS
less any sums owed the AGENCY. Provided, however,
that a MEMBER may elect to transfer such excess funds
to the Joint Risk Management Pool for any later or
prior period for which it owes or will owe funds
to the AGENCY. MEMBERS shall remain obligated for
all payments due the AGENCY under this Contract and
By-Laws if it should be determined even after the
payment of any rebate that additional sums are neces-
sary to fulfill the contractual obligations agreed
to herein. Such obligation shall continue so long
as there are claims made against the AGENCY for in-
juries that fall within the scope of coverage provided
by the AGENCY for the period in question.
-33-
r E . L . P . 10."_0_'S�
(h ) The Board of Directors shall provide to the MEMBERS
an annual audit of the financial affairs of the AGENCY
to be made by a certified public accountant at the
end of each fiscal year in accordance with the gener-
ally accepted auditing principles . The annual report
shall be delivered to each MEMBER within 180 days
after the close of the prior fiscal year.
(i ) The Board of Directors may require reports from all
agents and independent contractors including attorneys
with regard to the status of their work for the AGENCY,
problems encountered during the performance of their
duties , and recommendations for improvements in the
performance of the AGENCY including their efforts
on the AGENCY' S behalf.
( j ) The Board of Directors may, commencing with the fourth
year of the AGENCY, apply to the annual and supplemen-
tary payments due from a MEMBER a debit or credit
computed in a manner determined by the Board of Direc-
tors which shall affect the payment due from the
MEMBER to the extent that the number and the amount
of reserved claims and losses attributable to that
MEMBER in no more than three prior years , in amounts
of at least $10, 000. 00, shall compare with the general
frequency and amount of similar claims and losses
attributable to MEMBERS of the AGENCY in proportion
to the level of their payments to the AGENCY in rela-
-34-
tionship to all payments made to the AGENCY. In
developing a debit-credit formula, the AGENCY may
also consider the existence and effectiveness of
the loss prevention programs put in place by the
MEMBERS. All adjustment shall not result in a credit
of more than 258 nor a debit of more than 258 from
the average. The Board of Directors shall approve
the debit or credit formulation either directly or
in the approval of the adjusted annual payment due
from the MEMBERS. Provided, however, that the Board
of Directors shall, for each year of the existence
of the AGENCY provide a sum in the joint risk manage-
ment pool which, after the debit or credit adjustment
has been made, shall be in a gross amount sufficient
to pay for the anticipated total costs required to
fully fund the operations of the AGENCY.
(k) Those MEMBERS which did not contribute to the initial
developmental costs of the AGENCY and became MEMBERS
at the commencement date shall be required to pay
an additional sum to the AGENCY such that all initial
MEMBERS shall have equally contributed to such costs .
Any excess sums may be returned or placed within
the joint risk management pool.
-35-
iu/Li; 06
ARTICLE VIII. Scope and Amount of Loss Protection.
Scope of coverage and the amount of coverage to be provided
by the AGENCY shall be determined from time to time by the
Board of Directors . The AGENCY may modify both the scope
of coverage and the amount of coverage, both upward and down-
ward, provided, however, that any modifications shall only
apply prospectively.
The AGENCY shall provide coverage for each MEMBER up
to $1,000,000 in the aggregate for losses in excess of $1,000 ,000
per occurrence. No indemnification shall be provided by the
AGENCY until the MEMBER has expended $1, 000 , 000 in loss payments
as a result of the occurrence. Defense costs shall be included
toward satisfying both the loss payment by the MEMBER and
the coverage provided by the AGENCY.
Coverage, other than errors and omissions coverage, is
provided by the AGENCY only for those occurrences which occur
during a fiscal year for which the MEMBER has made an ANNUAL
PAYMENT and all required SUPPLEMENTARY PAYMENTS and for which
written notice is given to the AGENCY within ten ( 10 ) years
subsequent to the date of occurrence. Where an occurrence
is continuous and involves more than one such fiscal year,
-36-
coverage is provided only to the extent of the coverage amounts
rds the MEMBER, during the fiscal year in
in effect, as rega
which the occurrence began. rovided by the AGENCY
Errors and omissions coverage is p
only for those occurrences which occur subsequent to the First
day of continuous membership in the AGENCY by the MEMBER and
for which written notice is first given to the AGENCY during
a fiscal year for which the MEMBER has made an ANNUAL PAYMENT
and all required SUPPLEMENTARY PAYMENTS.
Aggregate limits are provided on a fiscal year basis
and all payments to or on behalf of a MEMBER for occurrences,
other than errors and omissions, occurring during the fiscal
Year plus all payments to or on behalf of that MEMBER for
errors and omissions occurrences for which written notice
is first given during the fiscal year accumulate towards the
satisfaction of the aggregate limit for the fiscal year.
The amount of money which a member must pay before the
obligation of the AGENCY shall commence is known as the self-
insured retention. The AGENCY will commence with a self-insured
retention by its MEMBERS of $1, 000, 000 per occurrence. Under
no circumstances shall the obligation of this AGENCY commence
until a MEMBER has paid for that occurrence the amount of the
self-insured retention established by the AGENCY from time to
time. The MEMBERS of the AGENCY are aware of a limited number
anies
of cases in the United States in which insurance comp
purporting to offer coverage excess of a deductible or a self-
-37-
J�_
i
insured retention amount have been compelled by courts to
commence the level of their coverage at lower levels . By
entering into this contract each MEMBER acknowledges that
it is the absolute understanding of the MEMBERS of this AGENCY
that under no circumstances shall the AGENCY be compelled
to make any payments until a MEMBER has fulfilled the full
responsibility of paying the total amount of the self-insured
retention.
MEMBERS may fund the amount of the self-insured retention
through reserve funds , conventional insurance, membership
in pools , the issuance of judgment funding bonds or other
methods . The method by which a member of the AGENCY fulfills
its responsibility to fund the self-insured retention is a
matter of no consequence to this AGENCY. This AGENCY intends
to offer a scope of coverage which will commence only in excess
of the self-insured retention. The extent of intergovernmental
cooperation or contractual obligation of the MEMBERS to fund
the AGENCY does not extend whatever to any primary coverage
or obligations below the amount of the self-insured retention.
The MEMBERS of the AGENCY would not have entered into this
Contract and By-Laws if any MEMBER understood the obligation
of the AGENCY to its MEMBERS to extend in any manner below
the level of the self-insured retention.
For the first year of the existence of the AGENCY the
MEMBERS intend to provide excess coverage which would typically
be provided by conventional comprehensive general liability
-38-
vehicular liability, and errors and omissions policies . Because
the parties desire to commence the term of this AGENCY as
soon as possible, they have not agreed upon the text of such
coverage, including provisions relating to the obligation
of the members to report claims , to defend the claims within
the level of their self-insured retention, dispute resolutions
and other items typically found in conventional insurance
policies . The parties intend to adopt such provisions as
are applicable for a joint governmental self-insurance pool .
Within the first six ( 6 ) months of the commencement of the
AGENCY, the Board of Directors shall, by a vote of at least
the concurrence of a majority of the entire membership of
the Board of Directors , approve a specific text of the scope
of coverage offered which document shall apply to all claims
which occurred prior to the approval of the textural material,
and to all subsequent claims until the nature of the scope
of coverage shall be modified in the manner provided in Article
V(h) (vi ) . In the event that there should be a conflict between
the text of the scope of coverage document and the Contract
and By-Laws , this later document shall prevail. The AGENCY
may from time to time expand the scope or amount of coverage
to be provided, which expansion may be extended to the payment
of claims which occurred prior to the date of the expansion.
In the event that the AGENCY should reduce or modify the amount
or scope of coverage to be provided, such reduction shall
only apply to claims which occurred subsequent to the date
of the modification.
-39-
F - . L . ? .
ARTICLE IX. Obligations of Members .
The obligations of MEMBERS of the AGENCY shall be as
follows :
(a ) To appropriate, budget for, where necessary to levy
for and to promptly pay all annual and supplementary
or other payments to the AGENCY at such times and
in such amounts as shall be established by the Board
of Directors within the scope of this agreement.
MEMBERS shall also be required to pay their propor-
tional share of the repayment of principal and interest
obligations and other costs incurred by a host MEMBER
in obligating itself under a debt instrument. The
proportional share of each MEMBER shall be that propor-
tion its annual payment for that fiscal year bears
to the annual payments of the other MEMBERS. Any
delinquent payments shall be paid with a penalty
which shall be equal to the highest interest rate
allowed by statute to be paid by an Illinois home
rule municipality or the prime rate then in effect
at the Continental Illinois National Bank, or the
First National Bank of Chicago, whichever rate is
lower .
-40-
F . L'
(b ) To select a person to serve on the Board of Directors
and to select an alternate representative .
(c ) To allow the AGENCY reasonable access to all facilities
of the MEMBER and all records relating to claims
and the financial obligations of a MEMBER.
(d ) To provide the Pool the right and give it the opportu-
nity to associate with 'the MEMBER or any conventional
insurance carrier providing coverage to the MEMBER,
or both, in the defense and control of any claim,
suit or proceeding which involves or may involve
the Pool and in which event the MEMBER, such insurers
and the Pool shall cooperate in all things in defense
of such claim, suit or proceeding.
(e ) To furnish full cooperation with the AGENCY' S attor-
neys , claims administrator and any agent, employee,
officer or independent contractor of the AGENCY relat-
ing to the purpose and powers of the AGENCY.
(f ) To follow in its operations all loss reduction and
prevention procedures established by the AGENCY within
its purpose and powers, including, but not limited
to the use of release forms , posting of notice, parti-
cipation in educational and record-keeping programs ,
limitations in activities offered, and the use of
loss preventative techniques and devices .
(g) To furnish to the AGENCY an audit prepared by a Certi-
fied Public Accountant of all revenues of the MEMBER
-41-
for any fiscal year of the MEMBER for which figures
are requested by the AGENCY. If an audit is not
furnished, the AGENCY may employ an auditor to peform
such an audit and the MEMBER shall be required to
pay the reasonable cost of such audit.
(h) To report to the Secretary of the AGENCY and the
claims administrator, at the earliest practicable
moment, any information of a claim received by the
MEMBER and from which the MEMBER could reasonably
conclude that coverage from the AGENCY will be sought.
In the event that the required information is not
submitted to the Secretary and claims administrator
within the time periods set forth above, the Board
of Directors of the AGENCY, may in whole or in part
decline to provide a defense to the MEMBER or to
extend the funds of the AGENCY for the payment of
losses or damages incurred. In reaching its deci-
sion, the Board shall consider whether and to what
extent the AGENCY was prejudiced in its ability to
investigate, defend or earlier settle the claim due
to the failure of the MEMBER to promptly furnish
notice of the claim to the Secretary. In the absence
of a fraud or a clear abuse of discretion, the decision
of the Board of Directors shall be final. Information
must be furnished to the AGENCY not only at the time
that a claim is made which could reasonably be expected
-42-
to be within the scope of coverage of the AGENCY,
but also updated information must be provided as
the nature of the claim becomes more fully known
and litigation occurs and proceeds . Information
must also be furnished if a claim reasonably thought
to be below the level of the amount of coverage provided
by the AGENCY should approach or be asserted by the
claimant to fall within the amount of coverages .
(i ) To either employ a professional claims administration
firm to handle all self-insured claims , enter into
an insurance contract (for claims at lower levels
of coverage than those provided for by the AGENCY)
which includes an obligation of that insurance company
to furnish information to the AGENCY of pending claims
or, if the MEMBER performs claims administration
utilizing its own personnel, the obligation to employ
a firm to perform claims auditing. The claims auditing
firm will be chosen by the AGENCY and the reasonable
cost of such audit will be borne by the MEMBER.
( j ) In the event that the AGENCY shall be required to
expend funds for administrative, legal or other costs
brought about by the failure of a MEMBER to pay sums
owed the AGENCY or to take other actions required
under this Contract and By-Laws , such amounts expended
shall be added to the sums due the AGENCY and shall
be payable by the MEMBER.
-43-
fi . E
ARTICLE X. Liability of Board of Directors or Officers .
The members of the Board of Directors or officers of
the AGENCY should use ordinary care and reasonable diligence
in the exercise of their power and in the performance of their
duties hereunder; they shall not be liable for any mistake
of judgment or other action made, taken or omitted by them
in good faith; nor for any action taken or omitted by any
agent, employee or independent contractor selected with reason-
able care; nor for loss incurred through investment of AGENCY
funds , or failure to invest. No Director shall be liable
for any action taken or omitted by any other Director. No
Director shall be required to give a bond or other security
to guarantee the faithful performance of the Director ' s duties
hereunder. The Board of Directors shall authorize, if neces-
sary, the use of the joint risk management pool to defend
and hold harmless any Director or officer for actions taken
by the Board or performed by the Director or officer within
the scope of his authority for the AGENCY. The AGENCY may
purchase conventional insurance providing similar coverage
for such Directors and officers and if such coverage has been
purchased shall require that the coverage of the insurance
-44-
E?. ^ D . LviO
company shall be relied upon before utilizing the funds of
the joint risk management pool to provide a defense or make
a settlement.
-45-
ARTICLE XI . Additional Coverage.
Membership in the AGENCY shall not preclude any MEMBER
from purchasing any insurance coverage above those amounts
purchased by the AGENCY. The AGENCY shall make its facilities
available to advise MEMBERS of the types of additional or
different coverages available to units of local government.
-46-
H. E p . LG/ 1�,) 6
ARTICLE XII . Optional Defense by Member.
The scope of coverage provided by this AGENCY shall only
commence at such point that the MEMBER has made a good faith
offer to settle the claim at a level within the self-insured
retention of the MEMBER and that offer has been rejected.
Where the scope of coverage of the AGENCY is activated, the
MEMBER, through the procedure set out in this article, shall
have an opportunity to object to a settlement whenever the
AGENCY proposes to settle any pending claim or suit. The
MEMBER shall be given advance notice of any proposed settlement.
Such notice may be given by the establishment of a reserve
amount in documents provided to the MEMBER by or through the
AGENCY, provided that the amount of the settlement does not
exceed the amount reserved. The officers and employees of
the AGENCY shall, however, endeavor to give specific oral
or written notice to a MEMBER of the exact amount of any pro-
posed settlement at least fourteen (14 ) days prior to the
date at which the AGENCY proposes to bind itself to pay such
settlement amount. It is recognized by the MEMBERS that under
some circumstances the AGENCY may not be able to give fourteen
( 14 ) days ' prior oral or written notice of the proposed settle-
-47-
ment. The officers , employees or independent contractors
of the AGENCY shall attempt to give the MEMBERS as much notice
of the settlement as is possible under the circumstances of
each case.
a :MBER should disagree with the amount for which
the ?NC :roposes to settle a case or claim, the represent-
ati-, f ,e MEMBER on the Board of Directors of the AGENCY,
the _cernate member, the local governmental attorney or the
chief administrative officer of the MEMBER may notify the
claims administrator of the AGENCY that the MEMBER exercises
its right to prevent the AGENCY from reaching a settlement
at the agreed-upon amount. The claims administrator may require
that such information be transmitted in writing.
In the event that the case or claim is eventually resolved
through a settlement or judgment within the dollar limits
of coverage provided by the AGENCY and in an amount less than
the amount at which the case could have been previously settled
by the AGENCY, then the MEMBER which has undertaken the costs
of its defense shall be entitled to its additional actual
costs including reasonable attorneys ' fees , up to the level
at which its costs and the prior allocated costs of the AGENCY,
including reasonable attorneys ' fees, equal the amount at
which the case could have been settled by the AGENCY. To
the extent that the case or claim is resolved through settlement
or judgment at an amount greater than that at which the case
or claim could have been previously settled by the AGENCY
-48-
H . F L . P . in,
and a claim is thereby made within the dollar limits of coverage
provided by the AGENCY, the MEMBER shall be obligated for
that portion of the settlement or judgment which exceeds the
sum of money at which the case could have been earlier settled
by the AGENCY including all allocated costs of the AGENCY.
If at :ny ie the amount of the allocated costs of the AGENCY
devo- _ t :he case shall equal or exceed the amount at which
the � ie could have been settled and the AGENCY is providing
a defense, the AGENCY may require periodic supplementary pay-
ments from the MEMBER if the MEMBER wishes to have the AGENCY
continue to provide the defense.
Allocated costs shall mean those costs which are allocated
to individual cases under the bookkeeping and accounting system
utilized by the AGENCY. The AGENCY may establish the amount
at which it could have settled the case through a written
settlement offer by the plaintiff or through other competent
evidence of the availability of the settlement at a particular
sum and the desire of the MEMBER to preclude settlement discus-
sions and the sum at which the AGENCY believed the case could
have been settled.
-49-
H . - L' . P . 1 , . 1"i 'Je
ARTICLE XIII. Contractual Obligation.
-his :�cument shall constitute a contract among those
enti' -:s _ .�. :h become MEMBERS of the AGENCY. The obligations
and r ;pcnsibilities of the MEMBERS set forth herein, including
the obligation to take no action inconsistent with these By-Law
as originally written or validly amended shall remain a contin-
uing obligation and responsibility of each MEMBER. The terms
of this Contract may be enforced in a court of law by the
AGENCY or any of its MEMBERS.
The consideration for the duties herewith imposed upon
the MEMBERS to take certain actions and to refrain from certain
other actions is based upon the mutual promises and agreements
of the MEMBERS set forth herein. If any dispute arises regard-
ing this Contract, the MEMBERS agree that a court shall inter-
pret the actions and duties of the parties in accordance with
the specific standard or burden of proof set out in this Contract
and By-Laws. This Contract and By-Laws may be executed in
duplicate originals and its passage by entities listed in
Appendix A shall be evidenced by a certified copy of an ordi-
nance or resolution passed by a majority of the members of
-50-
E . F L . P . 10 '10 "cG
the governing board then in office. Provided, however, that
except to the extent of the financial contributions of the
AGENCY agreed to herein or such additional obligations as
may come about through amendments to these By-Laws no MEMBER
agrees or contracts herein to be held responsible for any
claim_ in --:=t or contract made against any other MEMBER.
The c.ntr .. .ing parties intend in the creation of the AGENCY
to establish an organization for joint risk management only
within the scope herein set out and have not herein created
as between MEMBER and MEMBER, except for that limited extent,
any relationship of surety, indemnification or responsibility
for the debts of or claims against any MEMBER.
-51-
H. F P . i"/ ljl06
ARTICLE XIV. Host Member.
The _ 'lage of Elk Grove Village has agreed to consider
serving es i host MEMBER for the AGENCY. During its first
fiscal y=ar, the AGENCY shall produce documents to present
to its host MEMBER and all other MEMBERS to cause the issuance
or commitment to issue a debt instrument. It is anticipated
that the debt instrument will be general obligation bonds
in the amount of $15,000 ,000 or a letter of credit in that
amount. Elk Grove Village shall not be required to execute
any document obligating itself to be a host MEMBER with which
it does not agree. All of the reasonable costs incurred by
Elk Grove Village in considering whether to fulfill its role
as a host MEMBER shall be paid for by the AGENCY. If the
AGENCY has on hand funds other than those received from the
debt instrument, Elk Grove Village may require that any claims
be paid first out of such funds before funds procured from
a debt instrument are utilized. Funds procured by Elk Grove
Village through the issuances of a debt instrument issued
to benefit the AGENCY shall be paid directly to the AGENCY.
Other MEMBERS of the AGENCY may also voluntarily agreed to
be a host MEMBER.
-52-
H . E
ARTICLE XV. Expulsion of Members .
By t_a concurrence of two-thirds ( 2/3 ) of the entire
membersh: of the Board of Directors present at a regular
or special meeting, any MEMBER may be expelled. Such expulsion
may be carried out for one or more of the following reasons :
(a) Failure to make any payments due to the AGENCY.
(b) Failure to undertake or continue loss reduction and
prevention procedures adopted by the AGENCY.
(c) Failure to allow the AGENCY reasonable access to
all facilities of the MEMBER and all records which
relate to the purpose or powers of the AGENCY.
(d) Failure to furnish full cooperation with the AGENCY' S
attorneys, claims administrator and any agent, employ-
ee, officer or independent contractor of the AGENCY
relating to the purpose and powers of the AGENCY.
(e ) Furnish incorrect financial, claims history or other
information to the AGENCY.
(f ) A history of excessive pending or closed claims or
losses which in the absolute discretion of the Board
of Directors creates an unacceptable risk of similar
adverse future claims or losses.
-53-
E
(g ) Failure to carry out any obligation of a MEMBER which
impairs the ability of the AGENCY, to carry out its
purpose or powers .
No MEMBER may be expelled except after written notice from
the AGENCY of the alleged failure along with a reasonable
opportuni---% of not less than thirty ( 30 ) days to cure the
alleged failure. Provided, however, that no opportunity to
cure shall be necessary for an expulsion brought in whole
or in part because of a poor loss or claim history. The MEMBER
may request a hearing before the Board before any decision
is made as to whether the expulsion shall take place. The
hearing must be requested in writing not later than five ( 5 )
days after the time to cure has expired or in case no time
to cure is required within 30 days of the notice by the Board
of an intent to expel. Times required for notices under this
contract shall be measured from the date of mailing or delivery
if personally delivered. The Board shall set the date for
a hearing which shall not be less than ten ( 10 ) days after
the request for the hearing. If the time to request a hearing
has passed and the MEMBER has not requested a hearing or if
no hearing is required or if such a hearing has been requested,
no later than sixty ( 60) days after the close of that hearing,
the Board shall determine whether the MEMBER will be expelled.
A decision by the Board to expel a MEMBER shall be final unless
the Board shall be found by a Court to have committed a clear
abuse of discretion. The Board of Directors may establish
the date at which the expulsion of the MEMBER shall be effective
-54-
at any time not less than thirty ( 30 ) days after the vote
expelling the MEMBER has been made by the Board of Directors .
If the motion to expel the MEMBER made by the Board of Directors
or a subsequent motion does not state the time at which the
expulsion shall take place, such expulsion shall take place
thirty ( 3 ; ; days after the date of the vote by the Board of
Directors expelling the MEMBER.
After expulsion, the former MEMBER shall continue to
be fully obligated for any annual or supplementary payments
for which it was delinquent at the time of its expulsion and
supplementary payments later voted by the AGENCY for losses
which were within the scope of coverage of the AGENCY during
the time of its membership, along with any other unfulfilled
obligation as if it was still a MEMBER of the AGENCY. The
expelled MEMBER shall, after expulsion, no longer be entitled
to participate or vote on the Board of Directors or to receive
the benefits of self-insurance coverage for any claim made
after the date of expulsion and depending upon the nature
and amount of pending claims against an expelled MEMBER, the
Board of Directors may limit the amount of coverage to be
provided or require the expelled MEMBER to make additional
payments to the AGENCY to retain the coverage. No MEMBER
expelled from the AGENCY, except for the payment of third-party
claims , shall receive any return from the AGENCY of funds
paid into the Joint Risk Management Pool.
-55-
H. ^ L. P . LU/ 1U; d6
ARTICLE XVI . Termination of the Agency.
At the conclusion of the eleven-year term of this Contract
and By-Laws , all MEMBERS shall remain fully obligated for
their portion of any claim against the assets of the joint
risk management pool which is within the scope of coverage
of the AGENCY along with any other unfulfilled obligation,
including but not limited to calls for supplementary payments
attributable to the period of their membership which may be
called for in subsequent years. The Board of Directors shall
continue to meet on such a schedule as shall be necessary
to carry out the winding up of the affairs of the AGENCY.
Because of the nature of claims filed against governmental
bodies, it is contemplated that the Board may be required
to meet for some time to conclude all matters relating to
the termination of the AGENCY. When all of the affairs of
the AGENCY are wound up and all claims and expenses of the
AGENCY are paid, the members of the Board of Directors shall
distribute any funds remaining in the joint risk management
pool to the MEMBERS in the proportion which those MEMBERS
contributed funds to the AGENCY. MEMBERS expelled from the
-56-
FL . P . 10 '10. 3^
AGENCY shall not be entitled to the return of any funds .
At the conclusion of the eleven ( 11 ) year term of this Contract
and By-Laws, if all debt instruments shall have been repaid,
MEMBERS of the AGENCY may elect to distribute to the then
existing members some of the funds contained within the joint
risk management pool. The distribution of those funds, however,
shall not affect the obligation of the MEMBERS to make supple-
mentary payments to the joint risk management pool in the
event that claims which fall within the scope of coverage
of the AGENCY need to be paid at subsequent times . In deter-
mining the amount of funds which may be returned to the MEMBERS,
the AGENCY shall procure the recommendation of an actuary.
The AGENCY may also purchase conventional insurance to fund
either the remaining known claims against the AGENCY or incurred
but not reported claims.
DATED: , 19
A C C E P T E D
Mayor
Municipal Clerk
-57-
WHEREUPON under the authority granted to me by Ordinance
(Resolution) No. , passed by the Corporate
Authorities on the day of ,
19 , I do hereby execute and the Clerk does hereby attest
to my signature as evidence that the
has approved participation in the
for a term commencing on ,
in accordance with this Contract and By-Laws in its executed
form and as it may subsequently be validly amended.
ATTEST:
This day of 19
-58-
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EXPLANATION OF "HELP" FOR PROSPECTIVE MEMBERS
Some years ago, nearly all middle-sized municipalities
purchased conventional insurance for general liability, vehic-
ular and errors and omissions risks . Over the past few years ,
many larger and middle-sized municipalities began to self-insure
for a limited amount of risk and to purchase excess insurance
above this self-insured retention from a conventional insurance
company. During the current insurance crisis, many governments
have discovered that the ability to purchase excess insurance
at reasonable prices has entirely disappeared. One solution
to this problem is for a group of larger communities committed
to the use of loss prevention techniques to join together
in collectively assuming a level of risk above a certain large
self-insured retention for which each community will be individ-
ually responsible.
The High-Level Excess Liability Pool (HELP) is being
organized to allow governmental bodies like your own to enter
into a long-term commitment to create a pool of funds contrib-
uted to principally by Illinois home rule municipalities.
Enclosed with this synopsis of the "HELP" Pool is a Contract
and By-Laws and an ordinance authorizing its execution. If
your municipality wishes to become a Member of HELP, it must
pass the enclosed ordinance and execute the Contract and By-
Laws . The HELP organization will commence its existence and
its initial scope of coverage on January 1, 1987 , if by December
15 , 1986 sufficient municipalities have agreed to join the
HELP entity which will contribute as first-year payments at
least the sum of $1, 100 ,000. 00. The municipalities which
are being invited to join HELP are listed on Appendix A of
the Contract and By-Laws. Municipalities which wish to join
the Pool must also send a check in the amount of 508 of the
estimated first year' s initial payment. That amount is set
out in the exhibit at the end of Appendix A. The other 50%
is due thirty ( 30 ) days after the Pocl commences its term.
If the requisite membership has not been achieved by December
15 , 1986 , all money deposited will be returned. The checks
should be made out to "High-Level Excess Liability Pool" and
should be sent to:
George Coney, Chairman
Steering Committee
High-Level Excess Liability Pool
c/o Elk Grove Village Hall
901 Wellington Avenue
Elk Grove Village, Illinois 60007-3499
All municipalities must pass the enclosed ordinance in
exactly the form submitted and sign the Contract and By-Laws
without modification. The Contract and By-Laws for the Agency
EXPLANATION (cont 'd )
Page 2
was drafted by Stewart H. Diamond of the law firm of ANGEL,
GLINK, DIAMOND, MURPHY & COPE, P.C. , which has drafted similar
documents for more than a dozen intergovernmental self-insurance
pools. The Steering Committee has also used as consultants
James B. Finch of Arthur J. Gallagher & Co. on insurance mat-
ters, Flatland, Hinners & Co. on financial matters and Coopers
& Lybrand on actuarial issues .
Each governmental body joining the HELP pool will agree
to cover the first $1,000 , 000. 00 of any claim before the HELP
pool will be required to assist in the payment of that claim.
After the Member has incurred or committed to defense costs
or claims payment of $1, 000 , 000. 00 per occurrence, the HELP
pool will provide an additional layer of coverage of up to
$1, 000, 000 . Each municipality will also be limited in its
coverage to an aggregate amount of $1, 000, 000. 00. Each Member
of the HELP pool is free to determine how it will cover this
self-insured retention of one million dollars . Most will
self-insure, but a community may elect to cover some or part
of this first million dollars through conventional insurance
or membership in another pool. It is contemplated that the
amount of coverage to be offered by the Pool will during or
at the end of the first year of the life of the agency increase
to $5 , 000 , 000 . 00 on an individual and aggregate basis in excess
of $1,000 , 000 . 00 per occurrence obligation of the Member.
In order to increase the amount of coverage to be offered
by the Pool, it is expected that one of its Members will issue
bonds or commit itself to repay possible drawdowns from a
letter of credit in a gross amount of not to exceed
$15 , 000 , 000 . 00. The Corporate Authorities of Elk Grove Village
have indicated a willingness to serve in the role of Host
Member and to assume this responsibility. Because the develop-
ment of the legal documents necessary to secure the right
of all parties are fairly complex, this expansion from a cover-
age of $1, 000 , 000 . 00 to $5 , 000, 000 . 00 will not take place
until all the documents have been prepared.
By signing the enclosed Contract and By-Laws , a Member
municipality agrees to the initial amount of coverage offered
by the Agency and agrees to reasonably consider the execution
of those documents which will be required to expand the amount
of coverage to $5 , 000 , 000 . 00. If a governmental body initially
joins the agency and is unwilling to execute the documents
necessary to allow for the expansion in the amount of coverage,
that governmental body will be required to leave the Pool.
Its claims covered during the period of its membership will
remain covered even if it withdraws at that time. A Member
municipality leaving the Pool will be responsible for its
proportional share of any losses of the Members which occurred
during the period of its membership.
EXPLANATION (cont 'd)
Page 3
The agency may only increase the amount of coverage to
be offered above $1,000 , 000 . 00 if the vote to expand the amount
of coverage receives the concurrence of at least two-thirds
of the Members of the Pool. If an initial Member of the Pool
is unhappy with a decision by the Board of Directors during
its first year not to increase the scope of coverage above
$1, 000 , 000. 00 , that Member may also withdraw from the Pool .
Members electing to withdraw because of a decision by the
Pool to either expand or not to expand its coverage must notify
the Pool of such decision within 30 days after the date at
which the Board acts upon such a motion.
The basic structure of the HELP pool is similar to those
which have successfully operated in Illinois for more than
7 years . The Pool is actually the administrative arm of an
intergovernmental contract adopted pursuant to authority granted
within the statutes and Constitution of the State. With the
exception of two non-home rule municipalities which were members
of the initial Study Group, all other prospective Members
are home rule units . Home rule units have the unlimited power
to tax or borrow to fund contractual obligations . The two
non-home rule units who may become Members are Streamwood,
which has a population of 24 , 254 , and Winnetka, which is an
Illinois charter municipality. These communities, like the
home rule communities , have the ability to levy an unlimited
amount for the payment of tort claims and the establishment
of reserves . In addition, Senate Bill 1200 , recently signed
by the Governor, specifically gives non-home rule municipalities
the right to make multi-year contractual commitments to self-
insurance pools .
The Board of Directors will operate as the governing
body of the Pool. Each municipality which joins the Pool
will be entitled to cast one vote on the Board of Directors .
The Board of Directors shall establish the policy of the Pool,
hire persons who work for the Pool, establish its budget and
the scope of pooled self-insurance coverage offered from time
to time. The Board of Directors are obligated to meet at
least three times a year and will come together as required
in special meetings. The Board of Directors will select a
Chairman, Vice Chairman, Secretary and Treasurer who will
serve for two-year terms . Decisions regarding claims will
be made by the Board of Directors or as the Board may delegate.
The specific language of the scope of coverage document
to be provided by the Pool will be approved by the Board of
Directors in the first 90 days after the Pool commences its
operations . That scope of coverage will apply retroactively
to the commencement date of the Pool. The intent of the parties
is to provide a scope of coverage at least as broad as that
EXPLANATION (cont 'd )
Page 4
generally enjoyed by the Members of the Pool in conventional
insurance policies . The coverage offered will be on an occur-
rence basis rather than on the more restrictive claims made
basis currently being offered by insurance companies . The
scope of coverage provided shall, however, extend only to
a claim made against the Member and reported to the Pool within
10 years after the first date of the occurrence. The coverage
to be provided will extend to general liability, vehicular
liability, and errors and omissions risks . As in the conven-
tional market, errors and omissions coverage will be on a
claims made basis .
The term of the Contract and By-Laws is eleven ( 11 ) years .
This term was chosen since the Members contemplated the possi-
bility of providing the $15, 000 , 000. 00 necessary to expand
the scope of coverage of the Pool beyond $1, 000 , 000. 00, through
the sale of general obligation bonds . In order to retire
those bonds with acceptable annual payment levels , a term
of at least 10 years was required. The eleventh year of the
membership in the Pool was added to allow the financing to
be arranged. At the end of the eleven-year period, the Members
will determine whether they wish to extend the term of the
contract or to allow the contract to expire and wind up the
affairs of the Pool. Since the coverage provided by the Pool
would extend beyond the life of the agreement, the Members
will be required to continue to meet periodically to see to
the payment of unresolved claims . Ultimately, if the Pool
has produced surplus funds and all claims have either been
paid or provision has been made for their payment, surplus
funds will be distributed among the Members in the same pro-
portion that they were contributed.
Article VII of the Contract and By-Laws is entitled
"Finances and Risk Management Pool" . That article describes
in detail the manner in which the payments due from each Member
are determined. The Pool utilizes a formula which considers
revenues, miles of streets, full-time equivalent employees,
and the total number of State licensed vehicles . Commencing
with the fourth year of the existence of the agency, sums
due the Pool may also include a factor for the reserved claims
and losses attributable to all Members . The debit or credit
to be factored into the payments due may not exceed 258 from
the unadjusted payment. The Pool may not only consider the
loss and claims history of Members in establishing payments
due, but may also require reasonable and necessary loss reduc-
tion and prevention procedures to be followed by its Members .
Such powers, however, are to be exercised with discretion
with the goal of undertaking oversight responsibilities rather
than the direction by the Pool of the day to day operations
of a Member.
EXPLANATION (cont 'd )
Page 5
All funds paid to the Pool will be invested in the same
general manner as the funds of Illinois municipalities , and
an annual audit of those funds is required by the Contract
and By-Laws .
Any Member of the Pool which objects to a claim sought
to be settled by the Pool on its behalf may instead direct
that the Pool not settle the claim. If, however, the amount
of the claim and additional defense costs ultimately paid
should exceed the sum of the original settlement, the Member
cannot look to the Pool to pay amounts above this level.
The purpose of this provision is to alleviate the experience
of many governmental bodies which discovered only after the
fact that their insurance carrier had settled a claim on their
behalf at a level unacceptable to the community.
The preparation of these documents and the development
of the Pool was supervised by eleven municipalities which
organized to investigate and provide the initial funding for
the creation of this Pool. Other communities which join at
the commencement date shall share in the development costs
of the Agency. Those municipalities to which an invitation
to join has been extended had excellent loss histories and
expressed a commitment to engage in loss prevention techniques .
Only the municipalities on Appendix A to the Contract and
By-Laws will be allowed to become initial Members of the Pool.
Once organized, the Pool Members will consider whether it
will be beneficial to admit new Members . Part of that decision
will center on a determination of how to use reserve funds
previously established by the Pool.
Each Member of the Pool, by signing the Contract and
By-Laws initially commits itself to fully fund their propor-
tional share of the scope of coverage. If four municipalities
each experienced losses of $2 , 000 , 000 . 00 , then under the initial
scope of coverage the membership would be obligated to pay
their proportional share of $4 , 000 , 000 . 00, the first million
dollars of each loss being covered by the Member. The practical
limitation upon the obligation of the Members is the
$1, 000 , 000. 00 aggregate limit placed upon the claims which
must be paid from any particular municipality along with the
historically low frequency of such claims . If the Members
of the Pool believe that the amount of coverage they had agreed
to provide was excessive, they could prospectively reduce
the amount of coverage at any time. The Members of the Pool
would, however, be responsible for the claims which occurred
prior to the limitation in coverage.
EXPLANATION (cont'd)
Page 6
The members of the Steering Committee believe that the
conventional insurance market has repeatedly failed us in
the past. We anticipate that because of the cyclical nature
of that market, it will fail municipalities in the future.
A self-insured pool to protect against extremely infrequent
claims will allow the Members of this Pool to fund their anti-
cipated losses while allowing the return of surplus funds
in the event that the group experiences a good loss history.
If you have any questions about the contents of this
brief summary or the Contract and By-Laws, you may contact
either the Steering Committee Chairman, George Coney at ( 312 )
439-3900 or the Agency Attorney, Stewart Diamond at ( 312 )
782-7606 . No community should pass the sample ordinance prior
to the informational meeting which will be held on Thursday,
November 13 , 1986 , at 8 : 00 p.m. at the Glenview Village Hall.
If there are any changes to be made in the attached Contract
and By-Laws as a result of your review of these documents
and your submission of comments prior to that date, a final
version of the Contract and By-Laws will be handed out at
that meeting.
October 10 , 1986
022
Draft 11/6/86
HIGH-LEVEL EXCESS LIABILITY POOL
/ MEMORANDUM OF COVERAGE
Name of Public Entity:
Address:
Term:
Annual Payment*: $ peryear
Coverage Provided
Section One -General Liability and Covered
Employer's Liability
Section Two -Automobile Liability Covered
Section Three - Errors and Omissions Covered
Limits of Liability
$5,000,000 Per Occurrence and in the Aggregate for each Public
Entity excess of:
$1,000,000 Per Occurrence Self-Insured Retention for General
Liability and Employer's Liability, Automobile Liability
and Errors and Omissions
Retroactive Date: December 1, 1986 applicable to claims occurring within the
terms and conditions of the Errors and Omissions Coverage Part.
*This does not include amounts of supplementary payments or other sums due
under the contract or by-laws.
Draft 11/6/86
SECTION ONE
COMPREHENSIVE GENERAL LIABILITY
' AND EMPLOYER'S LIABILITY
I. Coverage Agreements:
A. The Pool hereby agrees subject to the limitations, terms and conditions
hereunder mentioned to pay on behalf of the Public Entity all sums
which the Public Entity shall be obligated to pay by reason of the liability
imposed upon the Public Entity by law or assumed by the Public Entity
under any written contract or agreement for which the Public Entity
receives benefit in its operations, for damages, direct or consequential
defined by the term "Ultimate Net Loss", on account of personal injuries,
including death at any time resulting therefrom, suffered or alleged to
have been suffered by any person orpersons(excluding employees of the
Public Entity) and/or damage to or destruction of tangible property, or
the loss of use thereof; arising out of any occurrence happening during
the coverage period.
B. The Pool hereby agrees to pay on behalf of the Public Entity all sums
which the Public Entity has become legally obligated to pay for the sale
or distribution of alcoholic beverages by reason of any local, state or
federal liquor control laws now in force and all laws amendatory
thereto; and that such extension includes indemnity for loss of means of
support: all provided however that the Public Entity is not engaged in
the business of manufacturing, distributing, selling or serving of
alcoholic beverages.
C. The Pool hereby agrees to pay on behalf of the Public Entity all sums that
the Public Entity shall become obligated to pay for Incidental Medical
Malpractice Injury.
Incidental Medical Malpractice Injury means injury arising out of the
rendering of or failure to render, during the coverage period, the
following services:
1. Medical, surgical, dental, x-ray or nursing service or treatment
or the furnishing of food or beverages in connection
therewith; or
2. The furnishing or dispensing of drugs or medical, dental or
surgical supplies or appliances
3. Mobile intensive care personnel as defined in Chapter 111I,
4103, or the Illinois statutes are covered for bodily injury
arising out of any of the services they are authorized to do
under 4104 and forwhich liability is incurred under 4109.
CSPAa
Draft 11/6/86
This Coverage Does Not Apply to:
1. Any Public Entity engaged in the business or occupation of
providing any of the services described under Section C-1 and
C-2 above;
2. Injury caused by any indemnitee if such indemnitee is engaged
in the business or occupation of providing any of the services
described under Section C-1 and C-2 above.
D. To pay on behalf of the Public Entity all sums which the Public Entity shall
become obligated to pay as a result of the products and/or completed
operations hazards as further defined herein.
IL EXCLUSIONS
This coverage does not apply:
A. to any obligation for which the Public Entity or any carrier as his insurer
may be held liable under any workers' compensation, unemployment
compensation or disability benefits law, or under any similar law:
B. to personal injury to any employee of the Public Entity arising out of and
in the course of his employment by the Public Entity; but this exclusion
does not apply to liability assumed by the Public Entity under an
incidental contract:
C. to property damage to (1) property owned or occupied by or rented to
the Public Entity, (2) property used by the Public Entity, but part (2) of
this exclusion does not apply with respect of liability under a written
C:11 sidetrack agreement.
D. to loss of use of tangible property which has not been physically injured
or destroyed resulting from:
1. a delay in or lack of performance by or on behalf of the
Named Public Entity of any contract or agreement, or
2. the failure of the Public Entity's products or work performed
by or on behalf of the Public Entity to meet the level of
performance, quality, fitness or durability warranted or
represented by the Public Entity; but this exclusion does not
apply to loss of use of other tangible property resulting from
the sudden and accidental physical injury to or destruction of
the Public Entity's products or work performed by or on behalf
of the Public Entity after such products or work have been put
to use by any person or organization other than the Public
Entity:
E. to property damage to the Public Entity's products arising out of such
products or any part of such products;
F. to damage claimed for the withdrawal, inspection, repair, replacement
or loss of the use of the Public Entity's products or work completed by or
on behalf of the Public Entity or of any property of which such products
or work form a part, if such products, work or property are withdrawn
from the market or from use by the Public Entity or any claimant against
CBPA4 -2-
Draft 11/6/86
the Public Lntity because of any known or suspected defect or deficiency
therein.
G. to property damage to work performed by or on behalf of the Public
Entity arising out of the work or any portion thereof, or out of materials,
parts or equipment furnished in connection therewith.
H. to liability arising out of aircraft products or reliance upon any
representation or warranty made with respect thereto, or to any liability
arising out of the grounding of any aircraft;
I. to personal injury or property damage arising out of the hazardous
properties of nuclear material;
J. to personal injury or property damage arising out of the discharge,
dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis,
toxic chemicals, liquids or gases, waste materials or other irritants,
contaminants or pollutants into or upon land, the atmosphere or any
water course or body of water; but this exclusion does not apply if such
discharge, dispersal, release or escape is sudden and accidental;
K. to liability imposed upon the Public Entity under the "Employee
Retirement Income Security Act of 1974" Securities Act of 1933 or
Securities Act of 1934 and any law amendatory thereof, or any similar
provision of any Federal, State or local statutory law or common law.
L. to liability arising out of the rendering of, or the failure to render,
professional services by or on behalf of the Public Entity, for others, in
the Public Entity's capacity as an architect, engineer or surveyor,
including, but not limited to, any negligent act, error, omission or
mistake involving the preparation of surveys, maps, plans, designs or
specifications or supervisory inspection or engineering services furnished
in connection therewith;
M. to personal injury or property damage due to war, (whether or not
declared) civil war, insurrection, rebellion or revolution, or to any act or
condition incident to any of the foregoing.
N. to personal injury or property damage arising out of the ownership,
maintenance or use, including loading or unloading, of any aircraft, or
any watercraft over 40 feet;
O. to personal injury or property damage arising out of the ownership,
maintenance or use of any automobile;
P. to punitive or exemplary damages;
Q. to liability of individuals otherwise covered for acts committed
outside of the scope of their duties and powers;
R. to causes of action seeking only nonmonetary claims such as
injunction, mandamus and declaratory relief;
S. to payment of the attorneys' fees of opposing counsel or other
court costs where a judgment providing no other monetary relief to
the plaintiff is entered;
caeca -3-
Draft 11/6/86
T. to causes of action where the plaintiff seeks no damages but only
the return of tax funds or any other funds alleged to have been
paid to or received by the municipality in error or without authority
in law;
U. to causes of action seeking only back pay or retroactive salary
increases based upon alleged discrimination;
V. to causes of action alleging improper ads by officers of the public
entities who serve as representatives of those entities on other
intergovernmental agencies to the extent that such a claim alleges
actions performed beyond service as a mere member of the
legislative body of such Agency (for example, ads performed by an
agency officer.);
W. to causes of action involving the ownership, operation or
participation of a public entity in any way in an airport facility;
X. to liability arising out of or in any way connected with the
operation of the principles of eminent domain, condemnation
proceedings, or inverse condemnation, by whatever named called,
whether such liability accrues directly against the public entity by
virtue of any agreement entered into by or on behalf of the public
entity;
Y. to liability arising or resulting from any Landfill sites owned,
operated or in the control of the Public Entity except for those
premises operations claims normally found in the ownership or use
of an office building.
Z. to liability arising or resulting from Hospital or Physician
Malpractice.
CSOA-1 -4-
Draft 11/6/86
III. Definitions:
When used in this benefit schedule (including endorsements forming a part
hereof)
A. "aircraft" means a heavier-than-air vehicle containing an internal power
source and designed for the transport of persons or property principally
in the air.
B. "aircraft products" means aircraft (including missiles or spacecraft) or
any other goods or products manufactured, sold, handled or distributed
or services provided or recommended by the Public Entity or by others
trading under his name for use in the manufacture, repair, operation,
maintenance or use of any aircraft.
C. "completed operations hazard" includes personal injury and property
damage arising out of operations or reliance upon a representation or
warranty made at any time with respect thereto, but only if the personal
injury or property damage occurs after such operations have been
completed or abandoned and occurs away from premises owned by or
rented to the public entity. "Operations" include materials, parts or
equipment furnished in connection therewith. Operations shall be
deemed completed at the earliest of the following times.
1. When all operations to be performed by or on behalf of
the Public Entity under the contract have been
completed.
2. When all operations to be performed by or on behalf of
the Public Entity at the site of the operations have been
completed, or
3. When the portion of the work out of which the injury or
damage arises has been put to its intended use by any
person or organization other than another contractor or
subcontractor engaged in performing operations for a
principal as a part of the same project.
Operations which may require further service or maintenance work, or
correction, repair or replacement because of any defect or deficiency, but
which are otherwise complete shall be deemed completed.
The completed operations hazard does not include personal injury or
property damage arising out of
1. operations in connection with the transportation of
property, unless the personal injury or property damage
arises out of a condition in or on a vehicle created by the
loading or unloading thereof.
2. the existence of tools, uninstalled equipment or
abandoned or unused materials;
D. "defense costs" means attorney's fees, costs and expenses and all other
fees, costs and expenses incurred in connection with the investigation,
adjustment, defense and appeal of a claim or suit covered hereunder.
However, "defense costs" do not include the office expenses of the Pool
CBPA4 5-
Draft 11/6/86
or the Public Entity nor the salaries of employees or officials of the Pool
orthe Public Entity;
i` E. "grounding" shall mean the withdrawal of one or more aircraft from
flight operations or the imposition of speed, passenger or load
restrictions on such aircraft, by reason of the existence of or alleged or
suspected existence of any defect, fault or condition in such aircraft or
any part thereof sold, handled or distributed by the Public Entity or
manufactured, assembled or processed by any other person or
organization according to specifications, plans, suggestions, orders or
drawings of the Public Entity or with tools, machinery or other
equipment furnished to such persons or organizations by the Public
Entity, whether such aircraft so withdrawn are owned or operated by the
same or different persons or organizations;
F. "Public Entity" means any person or organization qualifying as an Public
Entity under the Persons or Entities Public Entity section of this coverage.
The coverage afforded applies separately to each Public Entity against
whom claim is made or suit is brought, except with respect to the limits
of the Pool's liability. It is understood and agreed that the word "Public
Entity" as defined in this coverage shall also include any trustee,
executive officer, other employee, director or stockholder of the Named
Public Entity while acting within the scope of his duties as such, except
with respect to the ownership, maintenance or use including loading or
unloading of automobiles or of aircraft;
G. "Public Entity's products" means goods or products manufactured, sold,
handled or distributed by the Public Entity or by others trading under his
name, including any container thereof (other than a vehicle) but "Public
' Entity's products" shall not include a vending machine or any property
other than such a container, rented to or located for use of others but
not sold;
H. "nuclear material" means source material, special nuclear material, or by
product material.
I. "source material", "special nuclear material", and "by product material"
have the meanings given them in the Atomic Energy Act of 1954 or in any
law amendatory thereof;
J. "occurrence" means an accident, including injurious exposure to
conditions, which results, during the coverage period, in personal injury
or property damage neither expected nor intended from the standpoint
of the Public Entity;
K. "personal injury" means (a) bodily injury, (including death at any time
resulting therefrom), sickness, disease, disability, shock, mental anguish
and mental injury resulting from bodily injury; (b) false arrest, detention
or imprisonment or malicious prosecution; (c) the publication or
utterance of a libel or slander, including disparaging statements concern-
ing the condition, value, quality or use of real or personal property, or a
publication or utterance in violation of rights of privacy; (d) wrongful
entry or eviction, or other invasion of the right of private occupancy; (e)
discrimination based upon race, religion, nationality, national origin,
color, creed, sex or age but excluding discrimination committed by, at the
direction of, or with the consent of the Public Entity; and (f) assault and
battery, not committed by, at the direction of or with the consent of the
CBFea -6-
Draft 11/6/86
Public Ent,.,, unless committed or directed for .,,e purpose of protecting
persons or property from injury or death;
L. "products hazard" includes personal injury and property damage arising
out of the Public Entity's products or reliance upon a representation or
warranty made at any time with respect thereto, but only if the personal
injury or property damage occurs away from premises owned by or
rented to the Public Entity and after physical possession of such products
has been relinquished to others;
M. "property damage" means physical injury to or destruction of tangible
property;
N. Ultimate Net Loss -The term "ultimate net loss" shall mean the total sum
which the Public Entity becomes obligated to pay by reason of personal
injury or property damage claims, either through adjudication or
compromise, after making proper deductions for all recoveries and
salvages, and shall also include hospital, medical and funeral charges and
all sums paid as salaries, wages, compensation, fees, charges and law
costs, premiums on attachment or appeal bonds, interest, expenses for
doctors, lawyers, nurses and investigators and other persons, and for
litigation, settlement, adjustment and investigation of claims and suits
which are paid as a consequence of any occurrence covered hereunder,
excluding only the salaries of the Named Public Entity's permanent
employees and fees, charges and expenses incurred by Entity and the
Claims Service fees for services performed within the contract between
the Public Entity and Claims Service Company.
O.. "Watercraft" means a vehicle designed for the transport of persons or
property principally on water.
�w
OPA-I -7-
Draft 1116186
IV. Stop-Gap Supplement:
A. Declaration:
The Public Entity named in this program declares that he has complied
with the provisions of all workers' compensation or industrial insurance
acts, laws,statutes of codes of the state of: Illinois
with respect to all employees of the Public Entity subject to the
compulsory provisions and, if applicable,the elective adoption provisions
of such ads, law, statutes or codes, and
1. thereby has insured payment of all required
compensation and medical benefits to any such
employee injured in the course of his employment;
2. has obligated himself to report the remuneration,
number of "workmen hours" or other required basis of
premium developed by all such employees, to the
department, commission, or board as prescribed by said
acts, laws statutes or codes.
B. Insuring Agreement:
It is agreed that if it is determined that any such employee sustains an
injury in the course of or arising out of his employment; but is not
entitled to received, or elects not to accept the benefits provided by such
acts, laws, statutes or codes, then this supplement shall cover the legal
liability of the Public Entity for such bodily injury, including disease or
death resulting therefrom.
C. Exclusions:
This supplement does not apply to:
1. bodily injury, disease or death suffered by a master or
member of a crew of any vessel or by any employee of
the Public Entity in the course of an employment
subject to the United States Longshoremen's and
Harbor Workers' Compensation Act or the Federal
Employers Liability Act;
2. bodily injury, disease or death suffered by any person
knowingly employed by the Public Entity in violation of
any law as to age, or under the age of 14 years
regardless of any such laws;
3. bodily injury, disease or death suffered or caused by any
employee whose remuneration has not been included
in the total renumeration upon which premium for this
supplement is based;
4. aircraft operation or the performance of any duty in
connection with aircraft while in flight;
5. any premium, assessment, penal%y, fine, benefits, or
other obligation imposed yy any workers'
C5PG-1 -8-
Draft 11/6/86
compensation, unemployment compensation or
disability benefits law or under any similar law;
6. any claim for bodily inJ'ury, disease or death with
respect to which the Public Entity is deprived of any
defense or defenses, or is otherwise subject to penalty
because of default in premium payment under or any
other failure to comply with the provisions of any act,
law, statute or code described in the declaration above.
7. any injury sustained because of any act committed
intentionally by or at the direction of the Public Entity.
None of the exclusions of this coverage to which this endorsement is
attached apply except exclusions and definitions applicable to the
hazards of nuclear energy and other hazards thereto.
Exclusion (8) shall not exclude coverage for the legal liability of the Public
Entity, other than benefits or compensation provided for under any
workers' compensation act, resulting from the deliberate intentional act
of an employee or agent to produce injury or death to another employee
when such act is committed within the scope of employment.
D. Supplement Period:
This supplement applies only to accidents or occurrences happening on
and after the effective date hereof and during the insurance period.
E. Coverage Provisions:
None of the coverage agreements, conditions or other terms shall apply
to the benefits afforded by this supplement except the following
agreements and conditions: Notice of Accident or Occurrence,
Severability of Interest, Other Insurance, Action Against Company,
Defense, Settlement, Supplementary Payments, Assistance and
Cooperation of the Insured, Notice of Claim or Suit, Subrogation,
csvq., -9-
Draft 11/6/86
SECTION TWO
COMPREHENSIVE AUTOMOBILE LIABILITY
I. Coverage Agreements:
The Pool will pay on behalf of the Public Entity all sums which the Public Entity
shall become legally obligated to pay as damages because of
A. Bodily Injury D. Nonowned Automobile Liability
B. Property Damage E. Hired Automobile Liability
C. Medical Payments J. Personal Injury Protection
to which this certificate applies, caused by an occurrence and arising out
of the ownership, maintenance or use, including loading and unloading
of any automobile, and the Pool shall have the right to defend any suit
against the Public Entity seeking damages on account of such bodily
injury or property damage.
11. Exclusions:
This coverage does not apply:
A. to any obligation for which the Public Entity or any carrier as his insurer
may be held liable under any Workers' Compensation, Unemployment
Compensation or Disability Benefits law, or under any similar law;
B. to bodily injury to any employee of the Public Entity arising out of and in
f the course of his employment by the Public Entity or to any obligation of
the Public Entity to indemnify another because of damages arising out of
such injury; but this exclusion does not apply to any such injury arising
out of and in the course of domestic employment by the Public Entity
unless benefits therefor are in whole or in part either payable or required
to be provided under any workers' compensation law; or any liability
under any personal injury protection (no-fault) statute;
C. to property damage to
1. property owned or being transported by the Public Entity, or
2. property rented to or in the care, custody or control of the
Public Entity, or to which the Public Entity is for any purpose
exercising physical control, other than property damage to a
residence or private garage by a private passenger automobile
covered by this agreement;
D. to bodily injury or property damage due to war,whether or not declared, .
civil war, insurrection, rebellion or revolution or to any ad or condition
incident to any of the foregoing, with respect to expenses for first aid
under the Medical Payments provision;
E. to bodily injury or property damage arising out of the discharge,
dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis,
toxic chemicals, liquids or gases, waste materials or other irritants,
contaminants or pollutants into or upon land, the atmosphere or any
Cen» _10-
Draft 11/6/86 '
watercourse or body of water; but this exclusion does not apply if such
discharge, dispersal, release or escape is sudden and accidental.
III. Covered Entity:
A. the Public Entity;
B. any trustee or executive officer thereof, but with respect to a non-
owned automobile only while such automobile is being used in the
business of the Public Entity;
C. any other person while using an owned automobile or a hired
automobile with the permission of the Public Entity, provided his actual
operation or (if he is not operating) his other actual use thereof is within
the scope of such permission, but with respect to bodily injury or
property damage arising out of the loading or unloading thereof, such
other person shall be a Public Entity only if he is:
1. a lessee or borrower of the automobile, or
2. an employee of the Public Entity or of such lessee or borrower;
D. any other person or organization but only with respect to his or its
liability because of acts or omissions of an Public Entity under (a), (b) or
(c) above.
E. None of the following is a Public Entity:
1. any person while engaged in the business of his employer with
Crespect to bodily injury to any fellow employee of such person: injured in the course of his employment;
2. the owner or lessee (of whom the Public Entity is a sub- lessee)
of a hired automobile or the owner of a nonowned
automobile, or any agent or employee of any such owner or
lessee;
3. a trustee or an executive officer with respect to an automobile
owned by him or by a member of his household;
F. This coverage does not apply to bodily injury or property damage arising
out of (1) a nonowned automobile used in the conduct of any
partnership or ,joint venture of which the Public Entity is a partner or
member and which is not designated in this benefit schedule as a Public
Entity, or (2) if the Public Entity is a partnership, an automobile owned by
or registered in the name of a partner thereof.
IV. LIMITS OF LIABILITY
Regardless of the number of (1) public entities under this coverage, (2) persons
or organizations who sustain bodily injury or property damage, (3) claims
made or suits brought on account of bodily injury or property damage or (4)
automobiles to which this coverage applies, the Pool's liability is limited as
follows:
CoverageA - The limit of bodily injury liability stated in the
schedule as applicable to "each entity" is the limit of the Pool's
liability for all damages, including damages for'care and loss of
C9nnd -��-
Draft 11/6/86
services, because of bodily injury sustained by one entity as the
result of any one occurrence; but subject to the above provision
respecting ' each entity", the total liability of the Pool for all
damages, including damages for care and loss of services, because
of bodily injury sustained by two or more persons as the result of
any one occurrence shall not exceed the limit of bodily in)ury
liability stated in the schedule as applicable to "each occurrence '.
Coverage 8 - The total liability of the Pool for all damages because
of all property damage sustained by one or more persons or
organizations as the result of any one occurrence shall not exceed
the limit of property damage liability stated in the schedule as
applicable to "each occurrence".
Coverage A and 8 - For the purpose of determining the limit of the
Pool's liability, all bodily injury and property damage arising out of
continuous or repeated exposure to substantially the same general
conditions shall be considered as arising out of one occurrence.
V. DEFINITIONS
When used in reference to this coverage:
"hired automobile" means an automobile not owned by the Public
Entity which is used under contract in behalf of, or loaned to, the
Public Entity, provided such automobile is not owned by or
registered in the name of (a) a partner or executive officer of the
Public Entity or (b) an employee or agent of the Public Entity who is
granted an operating allowance of any sort for the use of such
automobile;
"nonowned automobile" means an automobile which is neither an
owned automobile nora hired automobile;
"owned automobile" means an automobile owned by the Named
Public Entity;
"private passenger automobile" means a four-wheel private
passenger or station wagon-type automobile;
VI. CONDITIONS
Excess- Hired and Nonowned Automobiles
With respect to a hired automobile, or a nonowned automobile, this
certificate shall be excess over any other valid and collectible insurance
available to the Public Entity.
Draft 11/6/86
SECTION THREE
' ERRORS AND OMISSIONS
THIS IS A CLAIMS MADE COVERAGE PART
The Pool agrees, subject to the terms and conditions hereof,to pay on behalf of the
Public Entity (as herein defined) any claims or claims made against them individually
or collectively during the period of this coverage, by reason of a wrongful act, error
or omission, whenever or wherever committed or alleged to have been committed
while acting in their capacity as an official, trustee, director or council member.
IT 15 FURTHER agreed:
(1) There shall be no liability hereunder for any claim made against the
Public Entity for any wrongful act, error or omission committed or
alleged to have been committed prior to the retroactive date.
(2) In the event of nonrenewal or termination of this Certificate, then
this coverage shall extend to apply to claims made against the
Public Entity during the twelve (12) calendar months following
immediately upon such expiration or termination, but only for
wrongful act, error or omission, committed or alleged to have been
committed between the Retroactive Date and such expiration or
termination.
For the purposes of this Section the word "Public Entity" shall mean the Public
Entity named in the Declarations including all persons who were, now or shall be
lawfully elected or lawfully appointed officials, trustees, directors or council
members of the Public Entity connected entity in the regular service of the Public
Entity during the existence of this coverage, and any heir, executor, administrator,
assign or legal representative of said persons in the event of their death or
incapacity.
The Pool shall not be liable to make payment for loss in connection with any claim .
made against the Public Entity if a judgment or final adjudication in any action
brought against the Public Entity shall be based on a determination that acts of
fraud or dishonesty or acts outside their capacity as an official were committed by
the Public Entity.
The Pool shall not be liable to make payment for loss in connection with any claims
under this coverage part resulting from EEOC or anti-trust violations.
This section is subject to all terms and conditions of Section I of this Coverage
agreement.
COPA4 -13-
Draft 11/6/86
GENERAL CONDITIONS ALL SECTIONS
r-
A. Inspection and Audit
The Pool shall be permitted but not obligated to inspect the Public Entity's
property and operations at any time. Neither the Pool's right to make
inspections nor the making thereof nor any report thereon shall constitute an
undertaking, on behalf of or for the benefit of the Public Entity or others, to
determine or warrant that such property or operations are safe. The Named
Public Entity shall maintain records of cuch information as is necessary for
premium computation, and shall send copies of such records to the Pool at the
end of the coverage period and such times during the coverage period as the
Pool may direct. The Pool may examine and auditthe Public Entity's books and
records at any time during the coverage period and extensions thereof and
within three years after the final termination of this coverage, as far as they
relate to the subject matter of this coverage.
B. Public Entity's Duties in the Event of Occurrence, Claim or Suit
1. It is the responsibility of the Public Entity to report to the Secretary of the
Agency and the claims administrator, at the earliest practicable moment,
any information of an occurrence received by the Entity and from which
the Member could reasonably conclude that coverage from the Agency
will be sought. In the event that the required information is not
submitted to the Secretary and claims administrator with the time
periods set forth above, the Board of Directors of the Agency, may in
whole or in part decline to provide a defense to the Member or to extend
the funds of the Agency for the payment of losses or damages incurred.
In reaching its decision, the Board shall consider whether and to what
extend the Agency was prejudiced in its ability to investigate, defend or
earlier settle the claim due to the failure of the Member to promptly
furnish notice of the claim to the Secretary. In the absence of a fraud or a
clear abuse of discretion, the decision of the Board of Directors shall be
final. Information must be furnished to the Agency not.only at the time
that a claim is made which could reasonably be expected to be within the
scope of coverage of the Agency, but also updated information must be
provided as the nature of the claim becomes more fully known and
litigation occurs and proceeds. Information must also be furnished if a
claim reasonably thought to be below the level of the scope of coverage
provided by the Agency should approach or be asserted by the claimant
to fall within the scope of coverages.
2. In addition to any notice requirements above, the following shall also
apply:
a. The Pool shall not be called upon to assume charge of the
settlement or defense of any claim made or suit brought or
proceedings instituted against the Public Entity, but the Pool
shall have the right and shall be given the opportunity to
associate with the Public Entity in the defense and control of
any claim, suit or proceeding relative to an occurrence where
the claim or suit involves, or appears reasonably likely to
involve, the Pool, in which event the Public Entity and the Pool
shall cooperate in all things in the defense of such claim, suit
or proceeding.
b. In the event of an occurrence reasonably likely to involve the
Pool; or the setting of a reserve on any claim or suit including
CB>4.1 -14-
Draft 11/6/86
multipie claims or suits arising out of one occurrence, such
reserve being fifty percent or more of the retained limit; Title
42 USC 1983 cases with reserves of twenty five percent or more
• of the retained limit; or regardless of reserve, any occurrence
involving:
1. One or more fatalities,
2. Loss of a limb,
3. Loss of use of any sensory organ,
4. Quadriplegia or paraplegia,
5. Third degree burns involving ten percent or more of the
body,
6. Serious facial disfigurement,
7. Paralysis;
written notice containing particulars sufficient to identify the
Public Entity and also reasonably obtainable information with
respect to the time, place and circumstances thereof, and the
names and addresses of the Public Entity and of available
witnesses, shall be given by or for the Public Entity to the Pool
or any of its authorized agents as soon as practicable.
C. If claim is made or suit is brought against the Public Entity, the
Public Entity shall be obligated upon demand to forward to
the Pool every demand, notice, summons or other process
received by him or his representative.
d. The Public Entity shall cooperate with the Pool and upon its
request assist in making settlements, in the conduct of suits
and in enforcing any right of contribution or indemnity
against any person or organization who may be liable to the
Public Entity because of coverage afforded; and the Public
Entity shall attend hearings and trials and assist in securing
and giving evidence and obtaining the attendance of
witnesses. The Public Entity shall not, except at its own cost,
voluntarily make any payment, assume any obligation or incur
any expense on behalf of the Pool without written authority
from the Pool.
e. In the event that the amount of ultimate net loss becomes
certain either through trial courtudgment or agreement by
the Public Entity, the claimant and the Pool as being in excess
of the Public Entity's Retention per occurrence,then the Public
Entity may pay the amount of ultimate net loss to the claimant
to effect settlement and the Pool will, upon request of the
Public Entity, make such payment to the claimant on behalf of
the Public Entity any payments in excess of the retained limits
of liability up to the further sum stated in the Declaration with
respect to each occurrence subject to the limit in the
aggregate where applicable for each annual period during
the currency of this coverage.
f. The Public Entity shall not make any payment, settlement or
admission of liability in respect of any claim for injury or
disease for which the Pool may be liable without the prior
consent of the Pool.
CSPnd 5'
Draft 11/6/86
g. In respect of claims for which they may be liable, the Pool shall
be entitled to take over the conduct of the proceedings and/or
to nominate the Attorneys or Assessors to be employed. The
: Pool shall be entitled to use the name of the Public Entity for
all purposes connected with the settlement of claims or the
bringing or enforcing or of defending arbitrations or legal or
other proceedings and the Public Entity shall give the Pool all
necessary information and assistance with regard thereto.
h. The Public Entity shall use due diligence and concur in doing
all things reasonably practicable to avoid or diminish any loss.
C. Appeals
In the event the Public Entity elects not to appeal a judgment in excess of the
retained limit, the Pool may elect to do so at its own expense, but in no event
shall the liability of the Pool for the Ultimate Net Loss exceed the applicable
amount specified in the Limits of Liability Section of the Declarations plus all
defense costs necessary and incident to such appeal and interest occurring on
the judgment after its entry in a ratio which its proportions of the liability for
the judgment rendered bears to the entire amount of said judgment and
before the Pool has paid or tendered or deposited in court that part of the
judgment which does not exceed the limit of the Pool's liability thereon.
D. Action Against The Pool
No action shall lie against the Pool with respect to any one occurrence unless,
as a condition precedent thereto, the Public Entity shall have fully complied
with all the terms of this coverage, nor until the amount of the Public Entity
( obligation to pay an amount of ultimate net loss in excess of the retained limit
shall have been finally determined either by judgment against the Public
Entity after actual trial or by written agreement of the Public Entity, the
claimant and the Pool. Any person or organization or the legal representative
thereof who has secured such judgment or written agreement shall thereafter
be entitled to recover under this benefit schedule to the extent of the
certificate afforded by this benefit schedule. Nothing contained in this benefit
schedule shall give any person or organization any right to join the Pool as a
co- defendant in any action against the Public Entity to determine the Public.
Entity's liability.
Bankruptcy or insolvency of the Public Entity shall not relieve the Pool of any
of its obligations hereunder.
E. Other Coverage
If collectible coverage with any other insurer is available to the Public Entity
covering a loss also covered hereunder (whether on a primary, excess or
contingent basis), the certificate hereunder shall be in excess of, and shall not
contribute with, such other certificate; provided that this clause does not
apply with respect to excess coverage purchased specifically to be in excess of
this benefit schedule.
F. Subrogation
The Pool shall be subrogated to the extent of any payment hereunder to all
the Public Entity's rights of recovery therefor; and the Public Entity shall do
CBPc-I
-16-
Graft 11/6/86 _
nothing after lox,to prejudice such rights and shall do everything necessary to
secure such rights. Any amount so recovered shall be apportioned as follows:
Any interest (including the Public Entity's) having paid an amount in excess of
the retained limit plus the limit of liability hereunder shall be reimbursed first
to the extent of actual payment. The Pool shall be reimbursed next to the
extent of its actual payment hereunder. If.any balance then remains unpaid, it
shall be applied to reimburse the Public Entity. The Expenses of all such
recovery proceedings shall be apportioned in the ratio of respective recoveries.
If there is no recovery in proceedings conducted solely by the Pool, it shall bear
the expenses thereof.
G. Changes
Notice to any agent or knowledge Possessed by any agent or by any other
person shall not effect a waiver or a change in any part of this coverage or stop
the Pool from asserting any right under the terms of this coverage; nor shall
the terms of this coverage be waived or changed, except by endorsement
issued to form a part of this benefit schedule.
H. Assignment
Assignment of interest under this coverage shall not bind the Pool until its
consent is endorsed hereon; if, however, a covered individual shall die, such
coverage shall apply (a) to the Named Public Entity's legal representative, as
the Named Public Entity, but only while acting within the scope of his duties as
such, and (b) with respect to the property of the Public Entity, to the person
having proper temporary custody thereof, as Public Entity, but only until the
appointment and qualification of the legal representative.
I. Cancellation
This coverage may be canceled by the Public Entity during the first year by
F1iving written notice to the Chairman of the Board of Directors within fifteen
5) days after the close of the first fiscal year. In addition, cancellation can be
effective midterm at the date that the Pool requires the Public Entity to
execute documents providing for their retirement or repayment of a debt
instrument.
This coverage may be canceled by the Pool by mailing written notice to the
Public Entity stating when, not less than thirty (30) days thereafter, such
cancellation shall become effective. Such cancellation may be carried out for
one or more of the following reasons:
1. Failure to make any payments due to the Agency.
2. Failure to undertake or continue loss reduction and
prevention procedures adopted by the Agency.
3. Failure to allow the Agency reasonable access to all facilities of
the Member and all records which relate to the purpose or
powers of the Agency.
4. Failure to furnish full cooperation with the Agency's
attorneys, claims administrator and any agent, employee,
officer or independent contractor of the Agency.
CBPR-1 -17-
Draft 11/6/86
5. Furnish incorrect financial, claims history or other information
to the Agency.
6. A history of excessive pending or closed claims or losses which
in the absolute discretion of the Board of Directors creates an
unacceptable risk of similar adverse future claims or losses.
7. Failure to carry out any obligation of a Member which impairs
the ability of the Agency,to carry out its purpose or powers.
If the Public Entity or the Pool cancels, earned premium will be computed on a
pro rata basis.
J. Territory
This coverage applies only to claims occurring:
Anywhere in the world provided the original suit for such damage is brought
within the United States of America, its territories or possessions, or Canada.
K. Cumulation of Limits
An "occurrence" with a duration of more than one coverage period shall be
treated as a single "occurrence" arising during the coverage period when the
"occurrence" begins.
C9V4A p-
PROBABLE MEMBERS
Arlington Heights $ 112,533
Bolingbrook 53,394
Deerfield 34,528
Des Plaines 109,934
Elk Grove Village 73,813
Glenview 60,024
Highland Park 74,397
Hoffman Estates 63,723
Lincolnshire 12,968
Moline 106,962
Morton Grove 45,559
Mount Prospect 74,951
Northbrook 55,593
Park Ridge 60,401
Skokie 101,506
Streamwood 40,358
Winnetka 43,145
Total Premium $1,123,789