Congratulations to the following winners:

Brady Koch PCoRP Award, recognizing an elected official's support of PCoRP and risk management: George Halcovage, Schuylkill County Commissioner.

Sherm Doebler PCoRP Award, recognizing a staff member's support of PCoRP and risk management: Melissa Kestermont, Executive Assistant, Cambria County.

Ron Shearer Award, recognizing a member of the PCoRP Board of Directors for service to PCoRP:

Frank Staudenmeier, Schuylkill County Commissioner.

Claims Reporting Award, for outstanding work handling claims and assisting PCoRP staff:

Julie Doyle, Administrative Officer, Human Services, Wayne County.

Willis Pooling PCoRP Loss Experience Award, for the member with the lowest loss experience in 2012: Tioga County.

By the time this article is published, the President of the United States and members of Congress will have either come to a meaningful - and likely painful - solution to the much-publicized "Fiscal Cliff," or they will have found a way to table the issue for another year or so. Whatever the case, 2013 will bring some significant changes to the financial markets. Regardless of how tax rates might increase or how spending might go down - or vice versa, it is still critically important to check the basics where your municipal fund planning strategy is concerned for the new year.

PLGIT is offering some all-purpose recommendations to our investors for reviewing the fundamentals. While these suggestions are important regardless of the state of the economy, they become even more valuable when the economic recovery is still uncertain and the New Year is just beginning.

SMPLGIT, PLGIT-Class Shares, PLGIT/PLUS-Class Shares, PLGIT/I-Class Shares, PLGIT/TERM, PLGIT-CD, PLGIT/ARM, PLGIT/SAM, and PLGIT-CAP are service marks of the Pennsylvania Local Government Investment Trust.

Most property insurance policies contain sections titled something like "Additional Coverages" or "Coverage Extensions." Here we'll take a look at four coverages normally included under "Additional Coverages" or "Coverage Extensions" including "Debris Removal", "Pollutant Cleanup and Removal", "Increased Cost of Construction" and "Newly Acquired Property". The PCoRP policy contains these provisions under a section titled "Property Specific Conditions". Different insurance policy forms vary slightly in these coverage descriptions, but basically provide similar coverage with differences in limits or how the limits are applied.

The debris removal coverage provides for the expense to remove debris of covered property damaged or destroyed by a covered cause of loss occurring at an insured premises. Standard policy forms provide a limit of 25 percent of the sum of the deductible plus the amount of direct damage loss paid plus a possible additional $10,000 if the 25 percent limit is not sufficient. The PCoRP policy form does not include a separate limit for debris removal, but includes the coverage within the full per occurrence policy limit.

In addition to physical damage caused by an insured peril, there may be significant costs incurred to remove debris. Debris removal will likely increase in proportion to the size of the loss. Hazardous material debris (i.e., asbestos) will further increase the overall expense related to debris removal.

A catastrophic loss may use a substantial portion or the entire direct damage limit, leaving an insufficient amount for debris removal expense. It is important to consider the cost of debris removal when establishing a direct damage limit at any one location. There is no benchmark that can be used to estimate the pre-loss cost of debris removal. However, factors to consider include the age of the building, construction type and whether or not any type of hazardous materials exist at the location.

It is important to review the debris removal coverage on your policy to determine whether the limit is adequate. An increase in the coverage sublimit and/or the overall location limit may be warranted. The estimated debris removal cost can be trended each year much like trended replacement cost values.

Most policies provide a limit of $10,000 for expenses to extract pollutants from land or water at the scheduled location if the release of pollutants occurs as a result of a covered cause of loss. The catastrophic nature of pollutants may result in land and water extraction costs far greater than those insured under a typical property policy. An increased pollutant extraction limit should be considered based on exposure, although it is uncertain as to what limits an insurer may provide. It is always better to request an increased limit from the insurer than to assume that none is available. Stand-alone direct damage and business interruption pollution coverage may be available from specialty pollution insurers.

Enforcement of building laws after a property loss may result in costs not otherwise insured by the direct damage portion of a property insurance policy. Such laws may require the condemnation and demolition of the remaining physical structure. Most basic property policies provide some coverage for increased costs of construction (ICC) as long as the building coverage is on a replacement cost basis. Coverage applies to increased costs required by enforcement of ordinance or law to meet current building codes. The limit for the ICC in the most basic policy forms is the lesser of $10,000 or 5 percent of the direct damage insurance that applies to the damaged building. This limit is likely not sufficient if the building is large, old and in need of mandatory upgrades in electric service, plumbing, and ingress and egress. PCoRP's policy includes ICC coverage but does not include a sublimit for the coverage, the limit applying is included within the property per occurrence limit. It is important that the ICC exposure is reviewed along with the exposures for condemnation (coverage for the remaining structure that is not damaged by insured peril) and demolition (cost to demolish the condemned structure).

Property insurance is typically provided on a scheduled location basis either through a schedule included in the policy form or by reliance on a statement of values provided by the insured to the insurer. Additions in property exposures can occur by purchase of an existing structure or construction of a new one. In most property policies, the newly acquired/constructed coverage is temporary as it exists for a finite period no greater than policy expiration or 30 days. Coverage during this temporary period is limited to $250,000 per newly acquired or constructed building and $100,000 for personal property at each of these same covered buildings. PCoRP's policy provides a $5,000,000 limit on newly acquired property with a 120 day reporting period. It is important that the insured have in place a process to ensure proper internal reporting of all newly acquired or constructed property. Proper identification of all property exposures is necessary to make proper changes to scheduled insured locations, update the statement of value for reporting to the insurer, and track values in relation to policy limits, sublimits or otherwise.

It is important to understand the loss exposures contemplated by the additions and extensions of a property insurance policy. Both the exposure to loss and the policy coverage should be compared and understood and revisions made as needed. The quality of any insurance coverage never really comes to light until a loss occurs.

Questions or comments? Contact Karen Cohen, CCAP's Property and Casualty Programs Manager.