Presented by:

Michael McHughArea Executive Vice President

Arthur J. Gallagher Risk Management Services, Inc.

Wednesday - May 19, 2010

1:00 p.m. – Arnold Palmer Room

30 Years Insurance and Brokerage Experience

National Pooling Niche Principal

National K-12 Principal-Arthur J. Gallagher Public Entity & Scholastic Division

ASBO International Member

Illinois ASBO Member for 23 years

Experience working with over 550 districts on various risk & insurance topics

1. Define Risk Management2. Explore basic components of a

typical Risk Management Program

3. Review Property, Casualty & Specialty Coverages

Planning for the negative consequences of any decision process or action by using whatever means feasible to control the chance of financial loss.Public Sector Risk Management Manual

Trying to stop losses from happening (through avoidance, risk control, loss control or loss prevention)

Paying for the losses that do occur (through reduction, insurance or risk transfer)

School Districts = “Institutions of Learning” Education of Students Athletics & Extracurricular Activities

Employees & Volunteers Transportation Food Service/Cafeteria PTO/PTA/Booster Groups Buildings/Contents including Materials and Mobile

Equipment Playgrounds and Athletic Facilities Educational Foundations

A contractual relationship that exists when one party (the insurer) for a consideration (premium) agrees to reimburse another party (the insured) for loss to a specified subject (the risk) caused by designated contingencies (hazards or perils).

Definition of Insured Needs to be broad so that it covers

the following: District and its employees / student teachers Elected / appointed officials Sponsored / endorsed organizations Volunteers who do work at your

direction on behalf of the District

Buildings Contents Inland Marine

EDP Equipment EDP Extra Expense EDP Media AV Equipment

Valuable Papers Fine Arts Musical Instruments

Builder’s Risk Needed for new

construction and renovations at your district

Extra Expense Increased Cost of

Construction / Demolition Coverage

Auto Physical Damage

Employee Dishonesty Loss of Money - inside / outside

premises Depositor’s Forgery Bonds

i.e. working cash / treasurer’s / life safety

Fired / Unfired Pressure Vessels MEA coverage Refrigeration coverage Air Conditioning Units Extra Expense Water Damage Joint Loss Endorsement

Comprehensive General Liability/ Employee Benefits Liability

School Board Legal Liability Coverage Workers’ Compensation Umbrella Liability

Limits usually $1M per occurrence / $3M aggregate

Fire Damage (Legal Liability) $500K limit

Employee Benefits Liability $1M Claims-Made

coverage

Broad form General Liability coverage form, which includes: Bodily Injury /

Property Damage Personal Injury and

Contractual coverage Sexual Abuse /

Misconduct coverage Athletic Participation

coverage

Coverage for autos, trucks, bus fleet Auto Liability Auto Physical Damage Hired / Non-owned Coverage Limit $1,000,000

This is you, your boss, and your Board

Get a broad definition of named insured

Can be written on an “occurrence” basis or on a “Claims-Made” basis

Make sure it covers Employment Practices

Liability Discrimination Harassment Wrongful Termination IDEA coverage Back Wages coverage Non-Monetary

coverage Front Wages Coverage

What is it?

Provides Excess Liability Coverage over theGeneral Liability, Auto Liability, School Board Legal

LiabilityAnd Workers’ Compensation coverages

Minimum Limit: $10,000,000

Ideal Limit: $25,000,000 or higher

Why?$60,000,000 – pending Illinois case for alleged sexual abuse by a

teacher vs. a student

$27,300,000 – 2005 Illinois verdict (1995 claim). Fox River Grove bus/train accident – 7 student fatalities and 21 students injured. $16,200,000 District responsibility; $11,100,000 other entities

$19,000,000 – 2007 Illinois verdict (2003 claim). 9 year old was helping move a television set on a cart when it fell striking the boy’s head resulting in brain injury

$13,150,000 – 2007 Ohio verdict (2006 claim). Lab experiment exploded and burned student over 46% of her body.

$12,500,000 – 2005 Illinois verdict (1999 claim). High School football player injured when he was tackled into a fencepost. Quadriplegic.

$9,587,000 – 2008 Illinois verdict (2005 claim). School Bus driver ran over pedestrian. Quadriplegic

Medical Indemnity Statutory Employers’ Liability Other States Endorsement Voluntary Compensation

Endorsement

Student Accident Program Pollution Liability Foreign Liability Special Events Professional Liability

Nurses Educational Foundations Fiduciary Liability – 403(b) exposure

Provides $5M of coverage for ALL students in the district for all school sponsored activities

Covers 100% of any out of pocket cost incurred by parent/guardian for medical expenses

In case of no primary medical insurance, becomes primary medical insurance for injured student

Provides option for 24 hour coverage to be purchased by parent/guardian

Reduces General Liability Premiums

Reduces litigation against district Reduces administrative burden on

district administration Good will gesture towards

community Reduces claim costs Easy for parents to get reimbursed

Separate Board of Directors creates exposure

Provides up to $5M for fiduciary liability arising out of funds managed by Foundation

Covers liability arising from trips overseas

Provides coverage in case of bodily injury or property damage to a third party while traveling abroad

VERY INEXPENSIVE COVERAGE

Michael McHugh - Area Executive Vice President

Public Entity & Scholastic DivisionArthur J. Gallagher Risk Mgmt ServicesVoice: (630) 285-4373Email: michael_mchugh@ajg.com