LAW ENFORCEMENT LIABILITY UNDERWRITING CONSIDERATIONS

(July 2019)

Law Enforcement Liability coverage is a non-standard coverage offered by specialty insurance companies that have substantial knowledge, resources and experience in underwriting the law enforcement field. Each company usually specializes in a specific sub-group within the broad category of law enforcement risks, such as municipal law enforcement agencies, police departments, county sheriffs, specialized law enforcement agencies like those that serve transit systems, airline security, public or private schools or housing authorities, independent 911 dispatch services, or private security guard and patrol services.

Each company’s underwriting guidelines must be evaluated to determine whether they match the insured's operation. This must be done carefully because there is no standard for comparing programs. Certain companies may have separate eligibility requirements for overall coverage, certain individual coverages, and the way premiums are paid.

It is also important to determine the company’s level of expertise in the market. Some indicators are how long it has been in the market and the niche markets it serves.

EVALUATE THE COVERAGES

Since each insurance company develops its own coverage features according to the type of law enforcement agency it targets, there are significant differences among various programs. It is likely that there are important differences in the terms and wording in the:

Insuring Agreements
Exclusions
Conditions
Defense
Limits
Supplemental Coverages
Optional Coverages

These differences should make the agent and/or broker and the insured aware of the need to carefully review and examine the companies and the coverages they offer. The premium a given company charges for its product is important but should not be the only consideration when comparing programs.

EVALUATE THE LOSS EXPERIENCE

Regardless of a risk's size, previous loss experience is extremely important. The type, frequency and severity of the insured's claims must be examined and evaluated carefully. The facility's age and history, and the background, education and experience of its board, directors, officers, and other employees to be covered are important considerations. Data that accompanies the initial application provides the agent and the insurance company with a feel for the insured's quality, integrity, knowledge and experience. This information assists the company to determine if the risk is desirable and the features of the program to offer, such as:

Coverage options
Exclusions
Per occurrence, per claim, and aggregate limits
Deductible or self-insured retention
Excess liability limits, if available or applicable

EVALUATE LOSS PREVENTION

Law enforcement risks must have risk management measures in place in order to minimize their exposure to legal liability claims. A commitment to effective risk management has certain benefits such as:

It increases the likelihood that a given agency will meet the insurance company's eligibility requirements
It may allow the risk to select from a number of insurance companies that write the insurance program that applies to it
It usually reduces the premium the risk pays
It allows the insurance agency or broker to spend less time handling losses and more time on its core operations

Law enforcement agencies must establish guidelines and procedures to minimize their claim exposure. Establishing procedures and monitoring them, as well as documentation and keeping records, notes and correspondence, is also extremely important.

Many claims arise out of a law enforcement agency’s personnel decisions. Thorough background checks should be performed for all employees who will have significant contact with the public. This includes verification of education, criminal records and psychological testing. If the Law Enforcement Liability coverage form includes employment-related practices liability coverage, additional loss control requirements include careful documentation of hiring, firing, and disciplinary actions.

While many Law Enforcement Liability coverage forms include personal injury, special attention should be paid to the specific acts covered as well as the acts excluded. Law enforcement agencies should have policies and procedures in place with respect to how it deals with the general public, especially concerning the use of deadly and non-deadly force, vehicle hot pursuit, domestic violence, sexual harassment, investigation of crimes against children and handling intoxicated or impaired individuals.

It’s critically important for a law enforcement entity to minimize its loss exposures with a policy manual requiring strict adherence. Manuals must be constantly reviewed; particularly with a strong, legal eye, and must also be updated. Of course, even the best manual is of little use unless it is backed by a proper training program. Further, the training has to be flexible enough to work around the various schedules of a law enforcement agency’s personnel.

The training programs used by the law enforcement agency should also be documented. Program evaluation should include the quality of programs used, whether the programs match the agency’s needs and actual operations and if audit programs are in place to monitor effectiveness.

The political entity or subdivision and its directors, officers and elected officials charged with and responsible for overseeing the law enforcement agency's activities and operations should regularly and routinely review how it adheres to its risk management guidelines. Internal guidelines are strengthened and enhanced by being willing to try different strategies, correct weaknesses, and take advantage of the experiences of others. Many insurance companies offer significant premium credits for effective risk management programs and some maintain ongoing risk management relationships with their law enforcement agency insureds. This includes offering loss control seminars.