Item C20BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: September 17, 2014 Division: Employee Services
Bulk Item: Yes X No Department: Risk MgMement
.; of - 0- $1
T-UwcePt renewal IT19 to providefortable E qu'pmej P
and Emergency Apparatus Insurance and authorize the Risk Management Administrator to sign the
Florida Consent-To-Rate/Excess Rate Application.
ITEM BACKGROUND: The policies provide insurance coverage for Emergency Vehicle and
Portable Equipment damages and/or losses.
PREVIOUS REVELANT BOCC ACTION: American Alternative Insurance Company through the
VFIS Insurance Agency is specialized especially for portable equipment used in firefighting,
m,bulance and rescue operations. The BOCC approved the last renewal with WIS on September 15,
I-P013.
CONTRACT/AGREEMENT CHANGES: American Alternative has proposed the policies with the
same terms Atxc.f•c-r �
and $5,785 for the Portable Equipment. The total premium increase is $2,399.10 (4.41/o). The
premium is to be paid in four quarterly payments.
STAFF RECOMMENDATIONS: Approval to accept proposal from VFIS Insurance Agency for
period of October 1, 2014 to September 30, 2015. 1
TOTAL COST: 156,663.99 INDIRECT COST: BUDGETED: Yes X No
COST TO COUNTY: $56, 63.99 SOURCE OF FUNDS: Intemal Service Fund
Primarily Ad Valorem
REVENUE PRODUCING: Yes No X AMOUNT PER MONTH Year
E5.-
APPROVEDBY: CountyAttyX OMB/Purchising -2L Risk Management X
DOCUMENTATION: Included X To Follow Not Required
DISPOSITION: AGE NDAITEM
#
Revised 2/27/01
Contract
Effective Date:
Expiration Date:
10/1/2014
t.ct Mana
(Nam(Department/Stop
for BOCC meeting on 114 -- Amenda Deadline: 0 + 1 1 ,
CONTRACT COSTS
Total Dollar Value of Contract: $ 56,663.99 Current Year Portion: $ 54,264.89
Budgeted? Yes® No ❑ Account Codes: 503-08502-530-450-
Grant: $ — —
County Match: $
ADDITIONAL COSTS
Estimated Ongoing Costs: $ /yr For:
21!of included in dollar value above (e . maintenance, utilities, janitorial, salaries, etc.)
CONTRACT REVIEW
Changes Date Out
Date In Needed Reviewer
Division Director 2.72 4 YesD No[�i g^,
Risk Management OC1i"i14 Yes[] Nop/
O.M.B./Purchasing 2j—/ q Yes❑ No[E
County Attorney $.z . l q Yes❑ NoX
Comments:
•FZM, ff Y. ro. m,
Consultants
Risk Management
Employee Benefits
August 14, 2014
Ms. Maria Slavik, CPM
Risk Administrator
Monroe County
1100 Simonton St.
Suite 268
Key West, Florida 33040
1111 North Westshore Boulevard
Suite 208
Tampa, FL 33607-4711
Phone (813) 287-1040
Facsimile (813) 287-1041
Subject: Emergency Vehicle Physical Damage and Portable Equipment Damage Insurance
Dear Maria:
The County's Emergency Vehicle Physical Damage and Portable Equipment Damage policies are
scheduled to expire on October 1, 2014. Currently the coverages are provided by the American Alternative
Insurance Company through the VFIS Insurance Agency. Both of these policies provide broad coverages
and have served the County well in years past. The current premium for the Emergency Vehicle Physical
Damage policy is $48,294.78 and the current premium for the Portable Equipment Damage policy is
$5,970.11
It should be noted that American Alternative's Emergency Vehicle Physical Damage and Portable
Equipment policies contain features that are not normally available from traditional insurers. Some of
these more notable features are discussed below.
Emergency Vehicle Physical Damage
American Alternative provides Physical Damage (Compressive and Collision) coverage for the County's
fire fighting equipment (fire trucks). While coverage is provided on an industry standard Business
Automobile Liability policy, most standard Business Automobile Liability policies provide coverage on an
"Actual Cash Value" (ACV) basis. ACV is defined as "Replacement Cost" less Depreciation. This means
that all claim payments will be reduced by the amount of the vehicle's depreciation. For example assume a
vehicle has a "Replacement Cost" of $100,000 and has a useful life of 10 years. Further assume this
vehicle is destroyed in the 51h year of its useful life. A traditional Business Automobile Liability insurer
will only honor a claim amount of $50,000 ($100,000 x 50%). American Alternative's policy provides
Physical Damage coverage on an "Agreed Amount" basis. This means that American Alternative will
reimburse the County for what ever value is reflected in policy for that vehicle.
Another unique feature of American Alternative's policy is that it only contains a $500 per claim
deductible. Most Business Automobile Liability policies contain a minimum deductible of $1,000. Many
of them have an even higher deductible, especially for high valued equipment such as fire trucks.
Portable Equipment Policy
American Alternative provides its Portable Equipment policy on an "Inland Marine" form. The policy
defines Portable Equipment as:
"Portable firefighting, ambulance or rescue related equipment and portable communication equipment
commonly used in fire and rescue operations away from your premises"
Most insurers that offer "Inland Marine" coverage requires that all equipment being insured be scheduled
on the policy and the claim amount will be limited to the value reflected in the policy for the damaged or
destroyed equipment. Not only does this make the administration of the policy difficult, requiring the
notification to the insurer every time a piece of equipment is acquired or disposed, the amount recoverable
from the insurer will be limited to the amount reflected on the schedule. American Alternative does not
require that Portable Equipment be scheduled and the policy does not contain any limits. American
Alternative will honor claims in any amount required to replace the damaged or destroyed equipment. I am
not aware of any insurer that offers this feature.
American Alternative's policy also provides coverage for damage to "personal effects" belonging to
volunteers, employees, directors, officers or trustees while in route, during and returning from any official
duty authorized by the County. Most "Inland Marine" insurers are not willing to offer this feature.
Another attractive feature of American Alternative's policy, compared to similar policies offered by other
"Inland Marine" insurers is that claims will be subject to a $250 deductible while traditional "Inland
Marine" policies typically contain a much higher deductible.
It is therefore believed that the County will experience difficulty in receiving competitive bids if it's
Emergency Vehicle Physical Damage and Portable Equipment policies are competitively bid through an
RFP process or even if the County seeks "informal" quotations.
I have reviewed VFIS' proposal for the renewal of the County' Emergency Vehicle Physical Damage and
Portable Equipment policies. American Alternative has proposed to renew these policies with comparable
terms and conditions for an annual premium of $50,089.00 for the Emergency Vehicle Physical Damage
policy and $5,785 for the Portable Equipment policy. In addition to these premiums, the County will be
obligated to pay a total of $789.99 in State imposed fees and assessments. VFIS did not allocate these fees
and assessments between the Emergency Vehicle Physical Damage and the Portable Equipment Damage
policies. The following table compares the proposed renewal premiums for these policies as compared to
the expiring policies.
Policy
2013/14Premium
2014/15Proposed
Premtum
Increase/(Decrease)
Emergency
Vehicle Physical
$47,675.00
$50,089.00
$2,414.00
Damage
Portable
Equipment Policy
$5,785.00
$5,785.00
$0
State Imposed
Taxes, Surcharges
$804.89
$789.99
$(14.90)
and Fees
Total
$54,264.89
$56,663.99
$2,399.10
It is believed that the proposed premium increase of $2,399.10 (4.4%) is reasonable and it is recommended
that Monroe County renew its Emergency Vehicle Physical Damage and Portable Equipment policies with
American Alternative Insurance Company as being proposed by VFIS for the 2014/15 policy term.
VFIS has also requested that the County sign a "Florida Consent-to-Rate/Excess Rate Application. This
authorizes American Alternative to charge rates that are higher than those on file with the State. For the
County to continue the Emergency Vehicle Physical Damage policy, you will have to sign the requested
application. It does not impact the coverages being provided by the policy.
Please give me a call if you have any questions or wish to discuss this issue in more detail.
Cordially,
Sidney G. Webber
CPCU, ARM
CC: Teresa Aguiar