LAW ENFORCEMENT LIABILITY COVERAGE - OTHER CONSIDERATIONS

(July 2019)

There is no standard Law Enforcement Liability coverage form or policy. Each carrier develops features according to its appetite for risk and the market segments it targets. As a result, they vary significantly in the Insuring Agreements, Exclusions, Conditions, and Defense and it is very difficult to compare coverage forms for this line of business. Analyzing the coverage forms various insurance companies offer we concluded that there are two different approaches to providing coverage, basic and broad forms.

BASIC FORM

This coverage form addresses and responds to a law enforcement agency's minimum or basic coverage needs. The limited coverage provided is the result of numerous exclusions but a wide variety of endorsements are available to buy back many of the coverages excluded so coverage can be tailored to meet specific needs. Its advantage is a lower premium. The disadvantage is that additional coverage may not be available in every case and might be very expensive if it is.

BROAD FORM

This coverage form addresses and responds to most of the coverage needs of most law enforcement agencies. Since it has a limited number of exclusions and most coverage is included automatically, comparatively few endorsements are available. Its advantage is automatically including most coverages. The disadvantage is that the insured may pay for coverage it does not need.

Note: Premium is important but it isn’t the only criteria used to select the coverage form or to compare them. The Broad Form is more expensive but provides fuller coverage which reduces the chance of uninsured losses. The Basic Form may result in uninsured gaps in coverage. Further, while basic coverage is cheaper than the Broad Form, it could be more expensive in the long run because of having to identify and purchase other needed coverages separately.

INSURANCE COMPANIES

Insurers who provide Law Enforcement Liability coverage have their own programs which fit their desired market niche, such as municipal agencies overseen by public officials, private agencies who operate only for such entities as public transportation systems, educational institutions or housing authorities, or private security guard services. Certain agencies offer emergency medical treatment and need medical malpractice coverage. Others permit officers to moonlight wearing the law enforcement agency's uniform. Each insurance company's products, coverages, target markets, specialties, and underwriting eligibility must be evaluated carefully to ensure compatibility with each insured.

An important area to examine when dealing with nonstandard products such as Law Enforcement Liability is whether the insurance company is an admitted or non-admitted carrier. State insurance guaranty funds do not respond if a non-admitted carrier becomes bankrupt or insolvent and this may have a significant impact on the insured’s insurance program. If the insured’s coverage is placed with a non-admitted carrier, some considerations to examine carefully include:

Are you familiar with licensing laws and regulations for non-admitted carriers?
Are those laws and regulations compatible with the corresponding laws and regulations in the insured’s state?
What is the non-admitted carrier's financial strength?
What is the non-admitted carrier's claims service like?
What other services, such as ongoing loss control, are provided?
What effect does an admitted carrier's Commercial General Liability (CGL) coverage have on the insured's non-admitted Law Enforcement Liability coverage?

POTENTIAL COVERAGE GAPS AND OVERLAPS

Law Enforcement Liability Coverage and Commercial General Liability (CGL) Coverage

Law Enforcement Liability is not a form of Commercial General Liability (CGL) coverage for law enforcement agencies. The CGL coverage form excludes the coverage Law Enforcement Liability provides because it does not cover professional services, errors, or omissions for law enforcement agencies and their operations. Law Enforcement Liability provides that coverage and both are needed to properly insure a law enforcement agency.

Note: One of these coverage forms should insure personal injury liability. It is best if the same insurance company provides both coverages because it minimizes difficulties encountered in coordinating claims. A plaintiff's claim can allege personal injury as well as acts that clearly fall under either CGL or Law Enforcement Liability coverage.

Example: Sergeant Smith is an officer for the Aberdeen Police Department. He tries to interview two suspects when they disagree on who the bigger liar is and begin a fight. While yelling at them to stop, Smith steps between them and grabs each by an arm. One breaks free, falls over a desk, breaks his ankle and then sues for bodily injury and personal injury. The bodily injury is from the broken ankle. The personal injury allegations are that Smith's yelling humiliated him in front of others and that grabbing him by the arm constituted unlawful detention.

Law Enforcement Liability Coverage and Professional Liability

Law Enforcement Liability covers professional liability that relates to law enforcement activities of law enforcement agencies. It usually excludes other types of professional liability exposures that may be covered separately by means of an endorsement or separate professional liability coverage. Examples are medical or nursing operations, counseling, or legal services.

Example: The Aberdeen Police Department hires a number of emergency medical technicians (EMTs) to administer emergency medical aid at accident and crime scenes. An EMT's treatment of a victim at a crime scene makes his injuries worse and he sues the police department. The unendorsed Law Enforcement Liability coverage form excludes coverage for this incident because it was not directly related to the law enforcement agency’s core function.

Note: In this case, it is necessary to either endorse professional medical malpractice coverage for EMTs to the Law Enforcement Liability coverage form or purchase separate professional medical malpractice liability coverage.

Law Enforcement Liability Coverage and Employment-related Practices Liability Insurance

Employment-related practices claims are routinely filed against law enforcement agencies and either Law Enforcement Liability coverage or the CGL should include Employment Practices Liability coverage. Separate coverage may be needed if it is not available as an endorsement to either of these coverage forms.

Example: A Latina officer who served 15 years in the Aberdeen Police Department is denied promotion to the rank of detective. She sues for racial and sexual discrimination because such promotions of non-minorities in the past were always based solely on the number of years of experience as an officer. The Department's Law Enforcement Liability insurance company denies this claim because there was no coverage for employment related practices liability.

INSURING AGREEMENTS

Law Enforcement Liability coverage varies significantly between insurance companies and it is important to compare them to determine how they address and meet the exposures and financial needs of a given law enforcement agency. Different coverage forms even have substantially different insuring agreements.

Example: Consider the following three different insuring agreements.
Company A Insuring Agreement	Company B Insuring Agreement	Company B Insuring Agreement
The language in this agreement refers to coverage provided being contingent on receiving the policy premium. It states that coverage is subject to all relevant policy provisions and that policy issuance is a result of completely relying on the accuracy of the information provided by the applicant/insured. This agreement refers to a "Self Insured Retention."	This company's agreement is worded much like the language found in most standard commercial policies. It states that the company will pay on behalf of an insured that faces an allegation of performing a wrongful act. It also states that it will not respond to acts that occur before either the policy's effective date or the applicable retroactive date.	The language in this agreement is more specific. It refers to paying on behalf of an insured due to liability involving eligible acts arising from the insured’s operations as a law enforcement agency. It also contains wording that reflects its claims-made basis of coverage.

OCCURRENCE PROVISIONS

While most Law Enforcement Liability coverage is written on a claims-made basis, some carriers offer it on an occurrence basis. This approach covers liability or damage losses that occur during the policy period, regardless of when the insurance company is notified of the loss or claim. The key to this approach is the date of loss or the period of time when the loss occurs. The occurrence date triggers coverage.

Example: The Aberdeen Police Department has Law Enforcement Liability coverage for the period 03/01/18 to 03/01/19. An officer mistakenly shot a bystander during an altercation with two armed robbery suspects on July 15, 2018. Under the occurrence coverage form, coverage applies because the incident that resulted in injury occurred during the policy period. However, the bystander does not inform either the insured or the insurance company of the injury until October 10, 2019. Even though the claim is reported more than a year after the event and during another policy period, the coverage for the period when the injury occurred responds because the injury occurred during the 03/01/18 to 03/01/19 policy period.

CLAIMS-MADE PROVISIONS

As indicated above, most Law Enforcement Liability coverage is written on a claims-made basis. It is triggered by the date that a claim is actually filed or received, in addition to the date the loss occurred. The coverage form handles any covered claim or loss filed during the policy period, regardless of the date that the loss or injury occurred, subject to the retroactive date. The retroactive date is determined at policy inception.

Note: It is recommended that the retroactive date be the initial date for claims-made coverage but insurance companies often want to limit coverage and may not permit the retroactive date to be more than a certain number of years prior to the current policy’s inception date. The current coverage does not apply to loss or injury that takes place before that date.