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Coverage Changes <br />The LMCIT Board has approved a number of changes in LMCIT's liability, property, and other coverages <br />for the 2011 -12 underwriting year. Changes will be effective for property/casualty coverage written or <br />renewed on or after November 15, 2011. <br />Property Coverage Changes <br />Data security breach mitigation coverage <br />Coverage has been expanded so that if a member has or believes it has had a data security breach releasing <br />secure or confidential data, LMCIT will pay for the costs to respond to the bleach, including legal and <br />information technology consulting, providing notice to affected persons, credit monitoring and identity theft <br />services, and similar things. A covered breach could range from a stolen laptop containing confidential <br />information to the unauthorized use of paper records retrieved from a dumpster. This coverage provides <br />response costs even if a liability claim has not been filed. There is a $250,000 annual aggregate limit for <br />this coverage. <br />Utility power plant engines <br />The definition of replacement cost for electric generators at electric generating facilities was amended to <br />exclude costs necessary to comply with the U.S. Environmental Protection Agency's (EPA) National <br />Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines, if the <br />equipment did not comply with the standards prior to the loss. <br />Liability Coverage Changes <br />Data security breaches <br />A definition for data security breach claims was written into the liability coverage that mirrors the property <br />coverage definition for these losses. An annual aggregate limit of $2 million was added for these types of <br />claims. <br />Independent contractor exclusion <br />LMCIT's coverage does not extend to independent contractors (except for city ambulance service medical <br />directors). The existing language has been clarified in response to occasional questions LMCIT gets <br />regarding this. <br />Municipal Bankruptcy <br />An exclusion was added to the LMCIT liability coverage for claims which arise from or relate to a city <br />bankruptcy. The goal of this change was to avoid a situation where a bankrupt city's, creditors would <br />attempt to use the city's LMCIT liability coverage as an additional asset in the bankruptcy. As explained <br />more fully below, however, coverage has been created for individual officials in these situations. <br />Securities litigation <br />Litigation relating to city debt obligations, including bonds, notes, financing certificates, lease - purchase <br />agreements, or other similar debt instruments or financial obligations, is now within the scope of the <br />existing coverage for Land Use and Special Risk Litigation. Damages and defense costs under Land Use <br />and Special Risk Litigation coverage are covered on a sliding percentage basis, subject to a $1 million <br />annual aggregate limit. <br />Land Use and Special Risk Litigation Coverage <br />Coverage D under the liability coverage document, previously known as "Land Use, Development, <br />Franchise or Enterprise Operations Litigations ", has been renamed "Land Use and Special Risk Litigation." <br />4 1 P a g e <br />