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HomeMy WebLinkAbout10-1001 Travelers Claims Service ID- i06\ TRAVELERS CLAIMS SERVICE AGREEMENT (NOT AN INSURANCE POLICY) THIS CLAIMS SERVICE AGREEMENT ("Agreement") dated as of October 1, 2010, is by and between City of Elgin("Client"), and The Travelers Indemnity Company, a Connecticut corporation at 385 Washington Street, St. Paul, Minnesota, 55102, and its subsidiaries and affiliates ("Travelers"). WHEREAS, The Client and Travelers have entered into insurance policy number GP03400092, GP03400227, GP03400388, GP03400552, GP03400600, GP06301453, 9158P444, GP06302445 (which together with all applicable riders, endorsements, extensions and renewals are hereinafter referred to as the "Policy") under which the Client is responsible for paying a portion of the damages as well as certain expenses as more fully described in the policy (i.e. self-insured retentions). NOW THEREFORE,for and in consideration of the mutual promises herein contained, the parties agree as follows: A. Claims Services 1. Travelers agrees to administer, investigate, adjust, settle, deny or otherwise dispose of claims to which this agreement applies, including handling such claims to final conclusion and in conjunction with the Client arranging for the reasonable defense thereof. Travelers may meet its obligations to perform services under this Agreement by engaging the services of firms or persons outside the organization of Travelers or by using staff counsel or other employees of Travelers. Notwithstanding anything to the contrary in this Agreement, the Client shall select and designate any and all legal counsel for defense work. 2. Travelers agrees to determine the amount of allocated loss expense that should be paid in the investigation, adjustment, settlement, denial and defense of any claim and to pay allocated loss expense out of the claim fund. It is understood that Travelers does not have to obtain consent to such payment prior to committing to or paying these expenses, that the discretionary authority limit does not apply to payment of such expenses, and that it shall not be the responsibility of Travelers to at any time expend its own funds to anyone for the payment of allocated loss expense. 3. Travelers agrees to determine the amount of compensation, if any,that should be paid in the settlement of any claim in light of the nature of the particular claim and the applicable laws and to make payments for the adjustment and settlement of such claims out of the claim fund;provided, however, that Travelers will obtain the prior consent of the Client before settling any claim, or portion thereof, within any self-insured retention for an amount in excess of the discretionary authority limit set out in section A.8. Travelers will also obtain the prior consent Page 1 of the underwriters of policies under which there is coverage prior to a settlement for amounts exceeding any self-insured retention, and will turn over the handling of a claim to the underwriter of those policies when the damages are expected to exceed the self-insured retention. It shall not be the responsibility of Travelers to at any time expend its own funds to anyone for the payment of any adjustment or settlement of a claim. 4. Travelers agrees to reasonably advise the Client of material developments which arise in the administration, investigation, adjustment, settlement, denial or defense of a particular claim. 5. Travelers agrees to maintain a claim file on each reported claim, which files are the property of the Client and will be available to the Client for inspection upon request at the Travelers office responsible for the claim. One week prior written notice to Travelers is required prior to inspection date. In the event that claims services under this Agreement are terminated and the Client requests that the claim files in Travelers possession be sent to the Client, Travelers may create and maintain archival copies of the claim files. The client will also have interface access to claim information, based on Travelers corporate interface policies. 6. Travelers agrees to maintain the confidentiality of claim files by not disclosing the contents of those files to third parties other than Travelers affiliates and the underwriters of the policies under which there is coverage for a claim, except with the Client's written permission or except as it is reasonably necessary in carrying out its responsibilities under this agreement, or in delegating its responsibilities to others, or in meeting its legal responsibilities. 7. Travelers agrees to provide loss reports upon request. 8. For purposes of this agreement the discretionary authority limit, on a per claim basis, is an amount up to and including $10,000 on any self-insured retention. B. Definitions 1. Allocated Loss Expense means all costs incurred in connection with the investigation, adjustment, settlement or defense of a particular claim. Allocated loss expense includes but is not limited to the following: attorneys' fees (including the fees of staff counsel whom are employees ofTravelers), commercial photographers' fees, appraisal fees, subrogation costs, rehabilitation expenses, court costs, fees for process services, detectives' fees, witnesses' fees, travel expense, or other costs associated with the investigation, adjustment, settlement or defense of any claim. Allocated loss expense does not include wages or salaries of Travelers (or its affiliated insurance companies) employees, except for staff counsel fees, nor does it include the fee of independent adjusters paid by Travelers for the complete handling of a particular claim. Page 2 2. Claim or Claims means a claim or claims as defined in and to the extent they are subject to self-insured retention(s) under the policy. 3. Discretionary Authority Limit means the total amount of money, as set out in section A.8, for which Travelers is authorized to spend in payment or settlement of any claim, and, in the case of denial,the total Travelers projected money value of a claim for which Travelers is authorized to deny, without first seeking approval from the Client. The discretionary authority limit does not include allocated loss expense. 4. Self-Insured Retention Amount. The insurance policies contain a provision for a self-insured retention over which the insurer(s)under policies for which there is coverage has agreed to provide excess insurance. For purposes of this agreement, the self-insured retention shall be the amount of the self-insured retention for claims covered under those policies. These policies may be provided by insurers other than Travelers. 5. Claim Fund means an amount deposited with Travelers and replenished from time to time to be used by Travelers for the payment of claims and allocated loss expense pursuant to the terms of this agreement and the policy. C. Claim Fund 1. The Client agrees to make funds available to Travelers from which Travelers may draw at its discretion for payment of all allocated loss expense and for the payment of all claims which are within the discretionary authority limit as well as for payments which exceed the discretionary authority limit but which have been specifically consented to by the Client. 2. The Client will make a cash payment to Travelers to establish a claim fund: (a) $100,000 shall be deposited by inception of this agreement. This amount shall be the initial minimum claim fund level. Travelers has the right to commingle the claims fund with its general assets and deposit in its standard banking accounts any and all amounts in the claims fund. Travelers shall not be responsible for allocating any amounts between the entities of the Client. (b) Travelers shall bill the client for incurred claims on a monthly basis. The client shall be obligated to pay to Travelers any amount billed for claims within twenty (20) days of receipt of written notice by Travelers. (c) Travelers shall continually review the adequacy of the claim fund and may require such increases or decreases in the minimum and maximum claim fund level described above as Travelers in discussion with the Client deems necessary to reserve for payment of present and future claims and allocated loss expense. In setting the minimum claim fund level Travelers does not Page 3 represent or warrant the adequacy thereof. Whenever the claim fund is less than the then minimum level described in Section C.2(a) or thereafter set by Travelers,the Client shall pay an amount sufficient to Travelers to increase the claim fund to the then maximum level described in Section C.2(a) or thereafter set by Travelers. The Client shall be obligated to pay to Travelers any amount deemed necessary to increase the claim fund within twenty (20) days of receipt of written notice by Travelers. (d) Upon termination of this Agreement pursuant to the terms of Section F, Travelers shall return any amount remaining in the claim fund to the Client after deducting the amount of any claim or allocated loss expense payable by Travelers for the settlement or adjustment of any claim that occurred prior to the termination of this Agreement. 3. Travelers has no duty under any circumstances, including but not limited to the inability to pay or insolvency of the Client,to provide funds to pay any claims or allocated loss expense with respect to claims of the Client except to the extent funds are maintained in the claim fund or as required by state law. Provided however, that Travelers, without waiving its rights or excusing performance by the Client, may from time to time elect to advance its own funds for the payment of such amounts in which case the Client shall immediately reimburse the claims fund pursuant to Section C.2.(c) above. If the Client fails to make funds available for Travelers to pay claims and allocated loss expense under the self-insured retention, Travelers will have the right to suspend payment of claims and allocated loss expense without prior notice to the Client until such funds are available and Travelers may refuse to render any of the services provided for under this Agreement,to the extent permitted by state law. Travelers may also bring suit against the Client seeking specific performance of the Client's obligations or to recover any amount due Travelers under the terms of this Agreement. Travelers will not be liable for any penalties, fees, assessments or legal judgments rendered for, or based upon the failure to pay claims or allocated loss expenses when the necessary funds were not deposited in the claim fund, except to the extent required by state law. Any election of Travelers to continue to service claims,to advance its own funds to pay claims or allocated loss expense, or to pursue a remedy provided for in this section shall not operate as a waiver or estop Travelers from asserting any right under the terms of this Agreement or otherwise provided by law. D. Claim Service Fee Payment As consideration for the claims services provided under this Agreement, client shall pay to Travelers an annual claims service fee, which had been included in the policy premium. E. Additional Duties of the Client Page 4 1. Client agrees to timely refer to Travelers, for servicing under this Agreement, all claims as defined herein. 2. Client agrees to provide Travelers with its every assistance and full cooperation in the services to be provided by Travelers. 3. Client agrees to indemnify and hold harmless Travelers and any affiliate, officer, employee and agent of Travelers or its affiliates from and against all costs, including the amount of any judgments (including interest thereon), settlements, fines or penalties, expenses and damages incurred by Travelers in connection with any action or threatened action, suit, or proceeding arising out of any act, error or omission of Travelers in the conduct of its duties or obligations under this Agreement. However, any act, error or omission of Travelers which is negligent, or a knowing and willful misfeasance, or a reckless disregard of the duties and obligations imposed on Travelers by this Agreement are excluded from this indemnity. F. Termination 1. This Agreement shall terminate pursuant to one of the following. a. By the mutual, written agreement of Client and Travelers, or with sixty (60) days advance written notice by the terminating party. b. If there is a material breach of this Agreement by either party that has not been cured within sixty (60) days written notice thereof, then the party not in breach may, at their option,terminate this Agreement by giving at least sixty (60) days prior written notice of their intention to terminate and the effective date thereof. c. If this Agreement has not terminated pursuant to either(a.) or(b.) above then it shall terminate at the earlier of the following: (i)the date all claims are paid, dismissed or otherwise discharged; or(ii) if no claim or claims have been paid during any period of seven (7)years,then the date such seven-year period expires (whether or not all claims have been paid, dismissed or otherwise discharged or closed). d. If this Agreement is terminated pursuant to either Section F.1.(a) or F.1.(b) above,then any unearned portions of the claims service fee paid to Travelers shall be refunded to the Client within sixty (60)days. G. Arbitration 1. All matters in dispute between the Client and Travelers in relation to this Agreement, and whether arising during or after the period of this Agreement, shall be referred for arbitration in the following manner: Page 5 a. Unless the Client and Travelers agree upon a single arbitrator within thirty (30) days of one receiving a written request from the other for arbitration, the claimant(the party requesting arbitration) shall appoint its arbitrator and give written notice thereof to the respondent(the other party). Within thirty (30) days of receiving such notice the respondent shall appoint its arbitrator and give written notice thereof to the claimant, failing which the claimant may appoint an arbitrator on behalf of the respondent. b. If the two arbitrators fail to agree in the selection of a third arbitrator within thirty (30) days of their appointment,then either of them may apply to the American Arbitration Association for the appointment of a third arbitrator which shall be accomplished in accordance with the Rules of the American Arbitration Association in effect at that time. c. The matter shall be determined by arbitration conducted in Kane County, State of Illinois in accordance with the Commercial Arbitration Rules of the American Arbitration Association in effect at that time. The arbitrator(s) shall apply the substantive law of the State of Illinois as the proper law of this Agreement. d. Notwithstanding any provisions of law or rule of arbitration to the contrary any party to the arbitration may avail itself of discovery procedures, including depositions, interrogatories,requests for production and inspection of documents and reports as provided for in the Federal Rules of Civil Procedure then prevailing. Rules disputes are to be enforced by the Court which would have had jurisdiction to issue an order compelling the parties to arbitrate. No hearing records may be kept. Either party may, however, at its own expense, employ whatever reasonable means it may choose in order to keep a record of the proceedings. Provided, however, if the matters in difference total less than $50,000,the arbitrator(s) shall decide all such matters in difference upon written presentation only. Written presentation may include documentary exhibits and testimonial affidavits; there shall be no hearing and no discovery permitted in such cases. e. The determination of the arbitrator(s) shall be delivered to the parties in writing, said award shall be conclusive and binding upon the parties who covenant to carry out the same. f. If either party fails to carry out any award the other party may apply for enforcement to a court of competent jurisdiction. The judgment entered pursuant to such findings, conclusions and award shall only be appealable to the highest appellate court of the State of Minnesota in the same manner and subject to the same rules as are provided for appeals from the court from which such judgment is entered without restriction, however, upon the scope of review which would otherwise be applicable to arbitration awards. H. Miscellaneous Page 6 1. This Agreement shall supersede and replace any previous claims services or other similar Agreements with respect to claims that the parties intend to be covered by this Agreement. including, but not limited to,that certain Claim Service Agreement dated October 1, 1995, and all amendments thereto. 2. All notices, or time periods applicable thereto,required or permitted under this Agreement shall be effective as to Travelers upon the mailing thereof in a stamped or postage paid envelope to the following address: Travelers 385 Washington Street MC: 9275-SB05P St. Paul, MN 55102 Attn: Ronda L. Wescott, President- Public Sector Services and as to Client, to the following address: City of Elgin 150 Dexter Ct. Elgin, IL 60120 Attn: Ms. Kelly Wasilewski with a copy to: City of Elgin 150 Dexter Ct. Elgin, IL 60120 Attn: William A. Cogley, Corporation Counsel 3. The provisions of this Agreement are for the sole benefit of the Client and Travelers and are not intended to benefit any third party other than Travelers affiliates. Travelers shall not be liable to any third party for any loss, liability, damage, or expense. Any modification or extension of this Agreement shall not be binding on either party unless the same be in writing duly executed by both parties. 4. Neither this Agreement, nor any of the rights, duties or obligations of the parties hereunder, may be transferred or assigned, (by operation of law or otherwise) by any party hereto except as otherwise provided for in this Agreement or with the prior written consent of the other party. This Agreement shall be binding upon the parties hereto and their respective successors in interest and assigns. 5. This Agreement shall be governed by the laws of the State of Illinois. Page 7 6. Nothing in this Agreement is intended to nor shall amend,modify, elaborate or in any way be used to interpret that there is any coverage under any Travelers Policy or any related insurance policy; nor shall the handling of any claim or report of a claim under this Agreement constitute acceptance of the reports or losses for coverage under any insurance agreement between Client and Travelers. 7. The terms of the Agreement shall not be waived or changed, except in writing. No failure or delay by Travelers in exercising any right, power or privilege under this Agreement or any related agreement shall operate as a waiver thereof nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise or the exercise of any other right,power or privilege. The rights and remedies provided in this Agreement shall be cumulative and not exclusive of any rights or remedies provided by law. IN WITNESS WHEREOF,the parties have caused the execution of this Agreement in their behalf by the undersigned duly authorized. CITY OF ELGIN THE TRAVELERS INDEMNITY COMPANY "CLIENT" "TRAVELERS" /1 By: 4'7 . 4 � By: .° lean Stegall / 1 Title: City Manager Title: SS - , ,,, // Date: June 22, 2011 Date: aa Witness: k "SVL) Witness- aatel.4 Date: June 22, 2011 Date: < 2// Page 8