2027 Coverage Changes

The following coverage changes apply for coverages renewing in 2027 and are provided at a summary level — more detail can be provided upon request. All changes below relate to coverage lines in the property/casualty program. There are no coverage changes for the workers’ compensation program.

Material changes

This set of five changes materially modify the scope of the respective LMCIT coverages.

• THC products (liability, liquor liability, property, and crime coverages)

Liability, liquor liability, property, and crime coverages are modified to exclude claims associated with cannabinoid products that become illegal under any federal or state law. This is particularly relevant for members with municipal liquor stores that sell THC infused drink or edible products.

• Seized cryptocurrency (liability coverage)

A new $250,000 sublimit will apply for liability claims made by a third party against a member for damages arising out of the seizure of cryptocurrency for law enforcement purposes, alleging either mismanagement of seized cryptocurrency, or damages due to changes in the market value of the seized cryptocurrency.

• Terrorist acts (property coverage)

There are two significant limit enhancements and three modest coverage restrictions to the property coverage for claims arising out of an act of terrorism. The pool-wide shared limit is increasing from $50 million to $350 million, and a $1 million per member sublimit is increasing to $3 million for specific categories of loss involving a terrorist act — e.g. discharge of pollutants, chemical/biological release, most types of cyber-caused loss. Regarding the three coverage restrictions, the following specific types of loss will now be subject to the $3 million specific categories sublimit: all property loss caused by cyber terrorism; cessation, variation, or insufficiency of utility services; and loss caused by an electromagnetic weapon.

• High voltage transformers (property coverage)

The standard limit for loss of revenue, extra, and expediting expense (also known as business income coverage) associated with a covered property loss is $5 million per occurrence. The limit will be reduced to $500,000 for property locations with an electrical transformer of 100 MVA or greater, unless the member can demonstrate there is a contingency plan in the event the transformer is rendered inoperable.

• Drones (liability and property coverages)

Historically, coverage has applied for claims arising out of a member’s use of a drone used to carry a camera but not drones used to carry any other type of cargo. Coverage will be expanded so LMCIT liability and property coverage will apply for claims arising out of a member’s use of drones used to carry cameras as well as public safety equipment other than weapons or armaments.

Cleanup and clarifying changes

The following nine changes do not materially modify the scope of the respective LMCIT coverages — rather, they are clarifying in nature, making coverage wording easier to read and interpret, or more precise to leave less room for ambiguity in interpretation.

• Med Pay Coverage (liability coverage)

Medical and Related Expense Coverage (also known as Med Pay Coverage), provides a small amount of coverage, $5,000 per claimant, for no-fault medical expenses to parties injured by a condition on member-owned property. Two unnecessary exclusions will be removed, for claims brought by members or guests of 1) clubs; or 2) tourist courts.

• Broadband litigation (liability coverage)

Land Use and Special Risk Litigation Coverage will be clarified to better reflect LMCIT’s intent to provide coverage for broadband litigation in the same manner as other telecommunications services and utilities.

• Liquor liability assumed in a contract (liability and liquor liability coverages)

This is an interrelated clarification in the municipal liability and liquor liability coverages to better coordinate where coverage belongs in the event a member assumes the liquor liability (claims arising out of an illegal sale) of third party in a contract. It better belongs under liquor liability coverage and has been adjusted to reflect such.

• Definition of “damages” (liability coverage)

Amounts a member owes under contractual obligations, such as amounts a member owes in a service contract fee, lease payment, or loan repayment have never been covered “damages” in the liability coverage. This change reinforces that this exclusion applies regardless of whether the amount is owed under a verbal or written contract.

• Definition of “data security breach claim” (liability coverage)

The definition of “data security breach claim” as well as two other related definitions for “electronic data” and “electronic media” will be updated. The updated definitions in the liability coverage more closely align with the definitions in the LMCIT’s Cyberrisk coverage. The changes don’t impact how either the liability or Cyberrisk coverages work; they provide consistency in how we are defining terms across coverage agreements. 

• Property loss valuation (property coverage)

This is a technical clarification in the property coverage with respect to an appraisal process used to resolve disagreements about the value of a loss. The existing coverage references the term “arbitration,” but the process does not technically involve arbitration, so we are no longer referencing the term “arbitration.”

• Cyberrisk shared limits (cyber coverage)

In the Municipal Cyberrisk Coverage, there is a $10 million pool-wide shared limit for an aggregation of claims involving multiple members arising out of the same or related series of events, and a $25 million 12-month pool-wide shared limit for all losses LMCIT incurs from all members during any 12 consecutive months. Clarification will be applied to ensure these limits apply net of reinsurance recoveries. In other words, if a reinsurance recovery applies for LMCIT, the value of the claim or claims LMCIT cedes to reinsurers does not count towards either of the shared limits.

• Auto declarations page (auto physical damage and auto liability coverages)

There are formatting changes to the auto declarations page to make it easier to read and interpret.