September 2018 - Issue 79

Meet Our Newest Member - Alhambra

California JPIA: Serving Public Agencies for 40 Years

(Nearly) Every Minute Counts for Non-Exempt Employees in California Following the State Supreme Court’s Ruling in Troester v. Starbucks

New Faces at the Authority - Lilian Salcedo and Veronica Ruiz

Capital Projects Risk Management

Tree Trimming Safety – Know the Risks

Revised Resource Available: Tree Inspection and Maintenance Policy Template

Changes to the Memorandum of Coverage – Property Program

Coverage and Insurance Services

News: Worthy

Meet Our Newest Member - Alhambra

The Authority is pleased to welcome its newest member, the City of Alhambra.  The city joined the Authority’s Excess Liability Program and Excess Workers’ Compensation Program.  Alhambra was formerly a member of the Independent Cities Risk Management Authority risk management pool. 

The city’s motto is "Gateway to San Gabriel Valley." Alhambra is bordered by South01a City of Alhambra Seal Pasadena on the northwest, San Marino on the north, San Gabriel on the east, Monterey Park on the south, and the Los Angeles districts of Monterey Hills and El Sereno on the west.  With a population of over 85,000 residents, the city spans approximately 7.6 square miles.  The city’s mission statement exemplifies its commitment to the community: “The City of Alhambra is dedicated to responsive and creative leadership and quality services, ensuring desirable neighborhoods and a supportive business environment, while being sensitive to the diversity of our community.”

Alhambra has its own police department and fire department.  The city has five parks, a library and museum, a golf course, a senior center, and its own water department.  Alhambra 's parks are comprised of more than 200 acres that often are used in television and motion picture productions. The city operates a broad recreational program not only for adults but also for children in parks and on school playgrounds after school. The city hosts several special events including a weekly farmers market, Alhambra Lunar New Year Festival, Alhambra Night Out, and the Alhambra Pumpkin Run and Halloween Fest.

“The City of Alhambra is proud to have been recently selected to join the California JPIA.  After considering the various options available to the City, we determined that the California JPIA provides the best value in terms of mitigating the City’s level of risk and liability, while delivering high quality services at an affordable rate. The City of Alhambra is excited to begin this new, mutually beneficial partnership and looks forward to being an active member that contributes positively towards the future of the organization,” conveyed Jessica Binnquist, City Manager.

The Authority’s Underwriting Committee reviewed the city’s membership application and initial risk management evaluation report and recommended Executive Committee approval.  Following input from members of the Board of Directors, the Executive Committee approved membership for the City of Alhambra beginning July 1, 2018. 

The Authority’s membership is composed of 116 municipal agencies throughout California: 91 cities, 19 joint powers authorities, and six special districts.

Welcome, City of Alhambra!

News: Worthy

California JPIA: Serving Public Agencies for 40 Years

Remember when gas was 62 cents a gallon and it cost 13 cents to mail a letter? And the average cost for a new home in Southern California was just over $50,000? It was the early 1970s, and cities were able to obtain insurance for their operations at reasonable prices from a variety of carriers. Within a few short years, things began to change …
- Past President Larry Van Nostran

Forty years ago, on April 1, 1978, a group of 33 California cities began a plan to combat the high costs of liability insurance. The Southern California Joint Powers Insurance Authority (SCJPIA), now known as the California JPIA, was formed as more and more cities in the 1970s helplessly watched their liability insurance rates spike sharply. City managers reported that they were being charged double the risk rate for their cities’ actual loss-rate records. Recognizing the need to diffuse the strain of ever larger insurance costs, the California Contract Cities Association (CCCA) began searching for new measures to take.

LA Times history articlePrior to the CCCA’s endeavor, a number of other city and county groups had investigated the possibility of creating self-insurance programs; none, though, had come to fruition. The CCCA program was soon well under way. The plan was carried out over two years of work by committees made up of city managers, finance officers, city attorneys, and consultants.

On June 29, 1977, the SCJPIA officially came into being, with a total of 33 cities signing the Joint Powers Agreement. Through the agreement, those 33 cities joined an entity that was one of the first of its kind in the nation. 

Over the next few months, as we commemorate our 40th anniversary, we’ll be sharing milestones from the Authority’s history.

Read the full Los Angeles Times’ article from 1977 on the formation of the SCJPIA.

Photo: Los Angeles times article from December 4, 1977 on the formation of the SCJPIA, the precursor to the California JPIA

News: Worthy

(Nearly) Every Minute Counts for Non-Exempt Employees in California Following the State Supreme Court’s Ruling in Troester v. Starbucks

By Katy A. Suttorp and Pooja V. Patel, Burke, Williams & Sorensen, LLP

On June 2016, using a procedure permitting a federal court to request a ruling from the California Supreme Court regarding the meaning of California law,[1] the Ninth Circuit Court of Appeals requested certification for the following question in the case of Troester v. Starbucks Corporation:

Does the federal Fair Labor Standards Act’s de minimis doctrine, as stated in Anderson v. Mt. Clemens Pottery Co. (1946) 328 U.S. 680, 692, and Lindow v. United States (9th Cir. 1984) 723 F.2d 1057, 1063, apply to claims for unpaid wages under California Labor Code sections 510, 1194, and 1197?[2]

The California Supreme Court granted the certification and issued its ruling in July 2018.[3]   As we explain further, the Court ruled that the identified sections of California’s overtime and minimum wage laws do not contain or incorporate the de minimis doctrine in a form that excused Starbucks from paying for the time challenged by the plaintiff.  Yet, the Court did not rule out the possibility that some type of de minimis principle could apply under different facts in another case under California wage and hour laws.

As a result, although employers may act lawfully under the federal Fair Labor Standards Act (“FLSA”) when excluding certain de minimis time from a non-exempt employee’s compensable hours worked, California employers, including public agency employers, should proceed with extreme caution before doing so.  In closing this article, we identify a number of recommended steps for employers to evaluate and potentially modify practices in light of the Court’s ruling in Troester.

I.        Overview

In August 2012, Douglas Troester brought suit on behalf of himself and a claimed class of all non-managerial California employees of Starbucks who performed store closing tasks from mid-2009 through October 2010.  As a shift supervisor, Troester was responsible for activating the alarm at his assigned store, locking the door, and walking coworkers to their cars.  Troester also occasionally reopened the store if an employee left an item behind, or to bring in store patio furniture that had been left outside mistakenly.  Troester argued that he and the other employees should have been paid for these store closing tasks, which they completed regularly but not until they had already clocked out using software located inside the store.  

It was undisputed that over the course of a 17-month period, Troester had spent a combined total of approximately 12 hours and 50 minutes performing these tasks and that the tasks involved would ordinarily be compensable.  However, Starbucks defended its actions on the grounds that the individual increments of time were de minimis and so were appropriately excluded in determining the compensable hours worked by Troester and the other class members.  In support of its argument, Starbucks relied upon the existing de minimis test in the Ninth Circuit under the FLSA, which requires consideration of (1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work.”  Based on this test, Starbucks argued that although the time was worked regularly, it was not compensable due to the other two factors.[4]

The district court agreed and granted Starbucks’ motion for summary judgment based on its determination that the de minimis doctrine under the FLSA also applied to the claims under California law.  On appeal, after determining that the California Supreme Court had never addressed this question of California state law, the Ninth Circuit certified that question to the Court.  The Court responded with the following multi-part ruling:

  • de minimis doctrine has been recognized under some aspects of California law, such as under the free speech clause of the California Constitution, and also as one of the “maxims of jurisprudence” in the California Civil Code.A decision from the California Court of Appeal had used the FLSA standard in a wage and hour decision, without considering whether it applies to claims under California law.[5]   Also, the doctrine had been included in the Policies and Interpretations Manual published by the Division of Labor Standards Enforcement (“DLSE”) and in various opinion letters by the DLSE, but they were “advisory opinions” and not binding on the Court.[6]
  • None of the Labor Code Sections at issue, nor the Wage Orders, have incorporated the de minimis doctrine as it has been defined and applied under the FLSA.
  • As a result, Starbucks violated these provisions of California law when it permitted or required employees to “routinely work for minutes off the clock without compensation.”

Notably, the Court expressly left open “whether there are wage claims involving employee activities that are so irregular or brief in duration that employers may not be reasonably required to compensate employees for the time spent on them.”  Despite doing so, the Court observed that there had been significant technological developments in timekeeping in the decades since the seminal decisions were issued regarding de minimis time under the FLSA.  

II.         Significance of Troester for Public Agency Employers

It is important to keep in mind that Troester’s claims were based on violations of Section 510 [overtime] and also Sections 1194 and 1197 [minimum wage] of the California Labor Code.  Although the California Court of Appeal has ruled expressly that Section 510 of the Labor Code does not apply to a public agency,[7]  the minimum wage requirements under the Labor Code do apply expressly to “the state, political subdivisions of the state, and municipalities.”[8]  

Similarly, while the overtime provisions of the wage orders generally do not apply to any “employees directly employed by the State or any political subdivision thereof, including any city, county, or special district,” the Wage Orders do not completely exclude these types of public employees.  For example, the Wage Order that covers the positions held by many public sector employees is Wage Order 4, which addresses wages, hours and working conditions in “Professional Technical, Clerical, Mechanical and Similar Occupations.”[9]   Wage Order 4 specifies that provisions such as daily overtime and double pay; meal and rest periods; reporting time pay; and uniforms and equipment, among others do not apply to those public employees:  However, Wage Order 4 specifies that provisions related to determining entitlement to minimum wage and various definitions that affect compensability of time worked do apply to those employees.  Notably, those provisions include the test for exempt/non-exempt status and definitions for key terms such as “hours worked” and “primarily.”

The “hours worked” principle is particularly significant, because it not only influences time for which employees are entitled to compensation but may affect other time-based rights for employees under California law, such as accrual of sick leave under the Healthy Workplaces, Healthy Families Act or accumulation of the minimum 1250 hours for eligibility under the California Family Rights Act and New Parent Leave Act.

III.        Recommended Next Steps

The key takeaway from the Court’s Troester ruling is that employers need to be aware of all of the time that employees are working, keeping in mind that this includes any time that employees are “suffered or permitted” to work, including time “off the clock.”  The Court emphasized that employers are in the best position to develop methods that would allow them to capture all time worked by employees, especially work that is regularly occurring.  Managers and supervisors will play a particularly critical role in helping Human Resources/Personnel and Finance/Payroll to identify the types of tasks that employees may be performing “off the clock” without compensation.

Based on that review, an employer may determine that there are, in the words of the Court, periods of time worked “off the clock” that are “so irregular or brief in duration that employers may not be reasonably required to compensate employees for the time spent on them.”  However, in light of the Court’s recognition of modern advances in tracking employee time, employers would benefit from an extremely careful evaluation of their existing timekeeping methods and consideration of potential alternatives before making such a determination. 

In particular, employers should carefully consider the wide range of potential resources that may affect the likelihood of establishing the “administrative difficulty” in tracking and compensating employees for all time worked.  For example, in Troester, the Court suggested that employers could restructure duties to ensure that employees do not work before or after clocking out, use technology to help accurately record all time worked, and identify methods to reasonably estimate work time that can’t be tracked readily.  Again, managers and supervisors will play a critical role in helping to ensure that employees either stop performing reoccurring “off the clock” tasks or else are compensated appropriately for them.

As a further consideration, it will be important to determine whether new or updated policies are needed to document new or changed practices and expectations.  Employers may also wish to consider providing training for employees in HR/Personnel, Finance/Payroll, as well as educating supervisors and managers regarding their expected roles.

Finally, we note that employers should also evaluate any potentially applicable obligations under labor relations laws regarding any decisions made related to represented employees’ wages, hours, and working conditions or the effects of those decisions.

Overall, given the nuanced and fact-specific nature of the legal issues involved, employers are reminded to raise concerns regarding specific state or federal wage and hour issues with legal counsel or the agency’s Regional Risk Manager.

[1] On occasion, federal courts are required to decide cases that require an interpretation of state law related to an issue that has not yet been decided by the highest court in the state in which the case is filed.  The federal court may then certify specific questions to that highest state court to assist in the federal court’s analysis.  For example, when this situation arises in California, Rule 8.548 of the California Rules of Court permits the federal court to request that the California Supreme Court answer specific questions regarding the meaning of California law. 
[2] Troester v. Starbucks Corp. (9th Cir. 2016) 680 Fed.Appx. 511.
[3] Troester v. Starbucks Corp. (2018) 5 Cal.5th 829 (modified on denial of rehearing August 2018).
[4] Lindow v. United States, (9th Cir. 1984) 738 F.2d 1057, 1063.
[5] Gomez v. Lincare (2009) 173 Cal.App.4th 508.
[6] See Sections 47.2.1. and
[7] See e.g. Johnson v. Arvin-Edison Water Storage District (2009) 174 Cal.App.4th 729.
[8] See Cal. Labor Code
 § 1182.12(b)(3).
[9] See generally 8 Cal. Code Regs. § 11040.

Pro: Files

New Faces at the Authority - Lilian Salcedo and Veronica Ruiz

Lilian Salcedo

The Authority is pleased to announce the appointment of Lilian Salcedo as Office Assistant.  Lilian previously worked at the Authority from 2000 to 2002 as Assistant Executive Secretary to then Executive Director, Bill Holt.

A lot has changed since Lilian’s last stint with the Authority. When asked about05a Lilian Salcedo returning to the Authority, Lilian said, “The most significant change is the evolution of technology and communication to members.” Lilian fondly remembers that communication to members including committee agendas, coverage documents, training information, and correspondence were accomplished “old school” – hard-copy documents that were snail mailed to members.

Supporting the Administration Division and Chief Executive Officer, Jon Shull, Lilian’s responsibilities are focused on the Authority’s day-to-day operations. "I am a very organized person. My work maintaining the Authority’s files and documents fits well with my personality” reflects Lilian, who began her career in local government at City of Paramount.

Lilian enjoys reading and spending time with her husband and two teenage children. 

Veronica Ruiz

Veronica Ruiz joined the Authority in August.  Veronica has eight years of experience as city clerk, most recently as City Clerk with San Marino.  She holds a Certified Municipal Clerk designation from the International Institute of City Clerks and   she is an active member of the International Institute of City Clerks, City Clerks Association of California, and National Notary Association.

05b Veronica RuizAs Agency Clerk for the Authority, Veronica oversees the agenda review process and preparation of agendas, attendance at meetings, and preparation of minutes for the Authority’s governing bodies and various committees.  Additionally, she is responsible for the Authority’s document and records management program, responding to public records requests, and serving as Filing Officer for the Authority’s Statements of Economic Interests. 

When asked about joining the Authority, “Before coming to the Authority, my experience with the Authority was limited to receiving claims.  Now I have the opportunity to learn about the claims process and how claims are handled. I am impressed with the proactive approach the Authority takes in risk management and the importance they place on training.” 

Veronica is looking forward to working with the Authority’s Board of Directors, Executive Committee, and members.

Veronica and her daughter enjoy weekend get-a-ways and discovering California’s history.

Risk Solutions

Capital Projects Risk Management

By Alex Mellor, Risk Manager

Creation and implementation of a Capital Improvement Plan (CIP) is a critical function of nearly every public agency. A successful CIP offers many benefits, including evaluation and comparison of individual capital projects, synchronization of capital and operating budgets, and provides information to stakeholders and the public about the agency’s short to intermediate plans for infrastructure investment.

A key and frequently overlooked element of a successful CIP is identification and analysis of the risks involved with each individual project. Since capital projects are often highly complex and involve a variety of stakeholders, failure to manage associated risk, or failure to manage risk appropriately, can result in a project being delayed or derailed.

But how can effective management of capital project risk be achieved? As with any risk management effort, the first step is always to complete an assessment to identify risks that have the potential to cause a loss. For public agencies, most capital project risks fall into the following four categories:

  • Hazard Risk – including fire damage to projects under construction, injuries to contractor employees.
  • Operational Risk – including schedule overruns due to failure to identify appropriate design elements.
  • Financial Risk – including economic loss due to excessive change orders.
  • Reputational Risk – including damage to an agency’s good name or standing due to projects not being completed on schedule.

Once individual risks have been identified, categorized, and analyzed, they should then be prioritized based upon their significance (if a loss occurs, how bad could it be?) and likelihood. The agency should then implement a plan for management of each identified risk. Risk management actions may include, but are not limited to, avoiding, controlling, transferring, or accepting the risk.

According to Isaac Etchamendy, Senior Civil Engineer with City of San Marcos, and California JPIA 2017 Capstone Award winner, creation of a formal process for the identification, analysis, and mitigation of risk is critical. In response to his agency’s lack of such a formal process, Etchamendy developed a mechanism for conducting and documenting risk assessments for each capital project.

“Assessment of risk should begin during development of the scope of work”, said Etchamendy.

“In this phase of the project, we focus on identifying risks at a very high level. This includes analyzing how identified risks might affect the scope, cost, and schedule of the project. We also focus on ensuring that by responding to one risk, we aren’t unintentionally creating another.”

“As we proceed through the phases of the project and it becomes more defined, we attempt to identify risks on a more granular level. We achieve this by preparing and maintain a risk register for each project. The risk register serves as documentation of identified risks as well as actions that will be taken to mitigate those risks.”

“Specific actions that we take to address each risk vary greatly. Sometimes we realize that we don’t have any choice but to accept the risk. In contrast, we may be able to mitigate the risk, or even transfer it to a contractor or insurance carrier.”

While conducting a risk assessment at the outset of any project is vital, it is important to understand that identification and analysis of risk is not a static process. As the project progresses, new risks may emerge and need to be analyzed and treated; while specific risk management techniques selected at the beginning of the project may turn out to be ineffective and should be reevaluated.

Member agencies are also encouraged to consider the differing roles of the governing body and staff in management of capital projects. While the governing body is responsible for funding projects, and staff are responsible for managing them, success will be more likely if staff communicates sufficiently with the governing body regarding the expectations and risks associated with each project. This is especially true for large and/or high-profile projects which are more susceptible to cost and schedule overruns and may pose a significant risk to the agency’s reputation.

As an illustration, the county council King County in Washington state asked in 2006 for the auditor’s office to develop a program that would keep the council better informed, especially regarding larger, high-profile projects. This request resulted in development of a Capital Project Risk Scoring Instrument. Launched in 2010, the resulting process has substantively changed how the County delivers major infrastructure projects.

“If deemed high risk, a project won’t get funding all at once, only in phases; and more information will have to be submitted to obtain individual phase funding,” says Tina Rogers, King County Capital Projects Oversight Manager. “For example, a formal assessment must be completed, an up-to-date risk register maintained; and during construction, a quarterly report submitted to the council.”

More information regarding King County’s efforts in this regard can be found in the following article from Public Works magazine:

In conclusion, California JPIA members are encouraged to develop a formal process for the identification, analysis, and mitigation of risk associated with capital projects. Implementation of such a process will result in fewer unexpected events and losses that have the potential to negatively affect the agency.

For further information on this topic, or if you have any questions, please contact your assigned regional Risk Manager.

Risk Solutions

Tree Trimming Safety – Know the Risks

By Melaina Francis, Risk Manager 

Trees beautify the landscape and enhance quality of life for residents.  They also provide shade and reduce energy consumption, improve air and water quality, provide habitat value, attract tourists, businesses, and customers, and impart a distinct character to many municipalities.  Many member agencies own trees and urban forests.  Along with all the beauty, natural habitat, and shade that trees provide comes the significant responsibility of ongoing care and maintenance.  

Tree inspection and maintenance is considered a hazardous operation and involves many risk exposures from trees falling, to traffic control hazards that can lead to significant bodily injury and property damage.  While some member agencies have dedicated tree divisions and arborists on staff, others contract some or all tree inspection and maintenance services.

When transferring this risk to a contractor, make sure the agreement provides that “qualified tree workers” will be used for all work. the California JPIA also recommends requiring a minimum of $5,000,000 per occurrence in commercial general liability insurance (including an endorsement to the policy naming your agency as an additional insured), $5,000,000 in auto liability combined single limit, $1,000,000 in Professional Liability insurance (for professional services provided by arborists), Workers’ Compensation (statutory limits) and Employer’s Liability Insurance (with limits of at least $1,000,000), and require a waiver of subrogation endorsement in favor of the member, its officers, agents, employees, and volunteers. In addition, coverage provided by contractor shall be primary and any insurance or self-insurance procured or maintained by agency shall not be required to contribute with it. Sample agreement templates are available in the Authority’s Resources and Documents library on

Tree worker

For members that retain tree inspection and maintenance services in house, this specialized field requires knowledgeable and skilled professionals that possess an in-depth understanding of tree species, structural growth, pests and diseases, and can identify dead, dying, diseased, or decaying trees.  Tree care inspection and maintenance requires climbing, the use of extension ladders, working at heights, using hand and portable power tools (including chainsaws), working near energized overhead and downed powerlines, feeding chippers, and other hazardous tasks.

Tree work accidents can result in severe traumatic injuries and deaths including electrocution, being struck by falling objects, and chain saw lacerations. Recently there has been an increase in fatalities of tree service workers.

 Tree work injuries can be fatal:
  • Crushing injuries, internal bleeding, and skull fractures after falling from trees or ladders or being struck by falling objects or tree branches
  • Electric shock and arc flash burns from contacting overhead energized electrical lines
  • Lacerations and major blood loss from chainsaw accidents
  • Suffocation from collapsed palm tree skirt
  • Dismemberment or decapitation from being pulled into a wood or brush chipper
  • Anaphylaxis from bee stings and other harmful animals
  • Heat stroke and organ failure from exposure to hot environments.  *(information from Cal/OSHA Department of Industrial Relations)

Tree work is a high-risk industry, and safety requirements are in place to protect workers from known hazards,” said Cal/OSHA Chief Juliann Sum. “Employers must ensure that workers are effectively trained to use brush chippers and other dangerous machinery safely.”  Cal/OSHA has developed various tools to assist agencies develop and improve the safe operations of tree work.

Improving Tree Work Safety

To ensure tree worker safety, employers should:

  • Develop, implement, and enforce a comprehensive health and safety program that includes written safety rules, safe work procedures for all tasks performed, and that outline the proper personal protective requirement required (PPE).
  • Ensure that qualified tree workers direct tree trimming/removal/repair operations, and immediately correct any hazards or improper work practices identified.
  • Create a safety culture that encourages workers to establish safe habits, emphasizing the importance of safety and not taking risks or shortcuts.
  • Provide safety training to employees to improve their knowledge and awareness of workplace hazards to help them perform their work more efficiently and safely.

Safety training must be:

  • Practical and include a requirement for employees to demonstrate the ability to safely perform work on their own.
  • Completed prior to a job assignment.
  • Provided in language(s) workers understand.
  • Documented to establish proof of training.

Safety training must cover the following topics at a minimum:

  • The job-specific hazards associated with tree work including electrical hazards.
  • Safe work procedures and special techniques for performing tree pruning, trimming, and felling.
  • Fall prevention equipment and practices.
  • Methods of communication.
  • First aid and CPR.
  • Roadway safety.

It is important that member agency tree divisions ensure that they retain qualified tree workers.  A “qualified tree worker” is an employee who, through related training and on-the-job experience, has demonstrated familiarity with the techniques and hazards involved in tree maintenance, and removal, and the use of special equipment.

The following regulations, found in the Title 8 California Code of Regulations, specifically apply to tree work. Please note, this is not a comprehensive list: 

Title 8 California Code of Regulations - Tree Work, Maintenance or Removal

2940.2            Clearances from high-voltage power lines

3203               Injury and Illness Prevention Program

3328               Requirements for machinery and equipment

3380               Personal protective devices

3395               Heat illness prevention

3420               Scope and definition

3421               General requirements

3422               Tree workers' saddles

3423               General electrical hazards

3424               Mobile equipment

3425               Portable power hand tools

3426               Hand tools

3427               Safe work procedures

3458               Fall protections for date palm operations

3648               Fall protections while working with aerial devices

Additionally, members are encouraged to review the Cal/OSHA website to determine applicable training requirements. Should you have any questions, please contact your regional Risk Manager for assistance. 

Risk Solutions

Revised Resource Available: Tree Inspection and Maintenance Policy Template

By Maria Galvan, Risk Manager

The Authority has recently revised its Tree Inspection and Maintenance Policy template. The template was last revised in January 2011.

The policy template establishes guidelines to reduce public agency exposure to liability associated with trees. Additionally, it contains guidelines for protecting trees and maintaining their public benefit, including improved air quality, reduced storm water flow, habitat for wildlife, and a reduced heat island effect.

Template revisions include:

  • An expanded list of definitions
  • Greater tree inspection protocols
  • A revised Wildlife Avoidance/Migratory Bird Treaty Act Compliance section
  • Local weather and environmental factors pertaining to watering
  • Insect and disease control
  • Tree removal, replacement, and planting

In addition, the template contains references to International Society of Arboriculture (ISA) and the American National Standards Institute (ANSI).

The revised Tree Inspection and Maintenance policy template is available electronically via the Authority's website and is accessible in Microsoft Word format, so that members can make agency specific modifications, if necessary.

For questions regarding the tree inspection and maintenance policy template, please contact your assigned Risk Manager.

Coverage Matters

Changes to the Memorandum of Coverage – Property Program

By Jim Thyden, Insured Programs Manager

Coverage for the Property Program is provided through a Memorandum of Coverage (MOC).  Every year, the MOC is revised based on losses from prior years and the lessons learned from them, as well as requests by the Authority’s reinsurance carrier and conditions of the overall insurance marketplace.

Historically, the program has been fully-insured, meaning that all or most of the risk was transferred to commercial insurance markets.  As a result, the program was designed to provide as much coverage as possible for the least amount of premium. 

One of the strategic objectives over the last three years has been to change this, and incrementally take more operational control of the program while also recognizing greater purview by the reinsurance and excess insurance carriers over coverage that might be so broad that it becomes cost prohibitive.

This has resulted in coverage changes for unscheduled items and vacant buildings.  New coverage restrictions on vacant buildings became effective July 1, 2018 and are itemized below.

As mentioned above, these changes were requested by the reinsurance and excess insurance carriers as a condition for renewing the program this year without special premium riders to account for the risk exposure of vacant buildings.  Staff, in conjunction with the Property Program Ad Hoc Committee and the Coverage Committee saw these changes as prudent from a member cost allocation perspective because they better allow for a limited amount of coverage for members who need it, without providing full access to the policy limits for this class of high-risk structures which have proven to be problematic in recent years.  Vacant buildings are high risk because they are often not monitored or inspected, and they are more susceptible to break-ins, vandalism, theft of contents, fixtures and equipment, as well as fire.  It is noteworthy that members may still choose to purchase higher limits for their vacant buildings if they pro-actively make the request.

More information on the Property Program is available on the Authority’s website.  If you have any questions please contact Jim Thyden, Insurance Programs Manager.

Coverage Matters

Coverage and Insurance Services

By Jim Thyden, Insured Programs Manager 

The Authority offers coverage in 12 separate program areas. In addition to liability and workers’ compensation, the Authority offers coverage for property owned or controlled by the member; pollution (both first- and third-party); cyber and privacy breaches; crime that includes public officials, fidelity, and faithful performance bonds; foreign travel; special events; railroad quiet zones; property damage recovery; continuity of operations; and vendors/contractors liability.  Each of these programs provide members with an added measure of protection for exposures that may be unique to that member’s operations. 

The Authority’s property program includes all-risk coverage for real and personal property, including buildings, office furniture and equipment, fine art, contractor’s equipment, mobile and unlicensed equipment, vehicles, property of others while in the member's care, and buildings under construction.  Optional coverage is available for earthquake and flood, high-value emergency vehicles, and mechanical breakdown.  Members report all the property they would like to be covered under the program and rates are competitively priced based upon member exposures and experience.

The pollution program covers both first- and third-party damages, including certain types of cleanups, listed non-owned disposal sites, and above-ground and underground storage tanks.  Participating members have the option to obtain coverage to meet California’s Financial Assurance for Underground Storage Tanks.

The cyber liability program provides coverage for both first and third-party claims.  First-party coverage includes privacy regulatory claims, security breach response, business income loss, dependent business income loss, digital asset restoration costs, and cyber-extortion threats, while third-party coverage includes privacy liability, network security liability, and multimedia liability.  Members work directly with the reinsurer, Brit, to investigate and respond to claims.  There is also a hotline for members to call in the event of a claim or incident.  Members should contact the Data Incident Reporting Hotline at 855-440-3400 to coordinate incident response resources.

Many years ago, public entities were required to buy bonds for certain officers and officials.  When the California legislature changed the law to allow insurance to cover the same exposures bonds previously had, crime coverage was offered.  This coverage is provided for the following exposures:

  • Faithful performance
  • Depositor’s forgery
  • Crime - money and securities 
  • Computer fraud

Travel to foreign countries brings a number of challenges, including unfamiliar laws, languages and customs, corrupt officials, and crime.  Some risks are greater than others and will vary based on the destination country, the number and age of travelers, the types of activities they will be participating in, and length of stay, among other things.  The Authority’s liability program does not cover members for legal expenses and lawsuits brought in overseas courts.  To offset those risks, a foreign liability policy is available to protect all members when foreign trips are reported to the Authority prior to travel using the Foreign Travel Log on our website.

Special Events coverage provides liability insurance when member-owned premises are used for special events or short-term activities.  Examples include weddings, art festivals, parades, block parties, yoga classes, and member-sponsored events such as job fairs, carnivals, and swap meets.  Members administer the program, accept funds, and issue certificates of insurance online with Alliant Insurance Services, with whom the California JPIA contracts for this program.  Because it is automatic, members do not need to obtain an additional insured endorsement.

The railroad “Quiet Zone” liability program provides coverage for bodily injury and property damage claims arising out of the acts or omissions of the insured at the Designated Quiet Zone noted in the declarations or by endorsement.  Coverage is also provided for indemnification to the railroad when required by written contract.

When a member suffers damage to property and the claim is either not covered or the damage is below the deductible amount if participating in the California JPIA property program, the Authority provides a choice between two claim administrators to assist members that wish to recover these monies from those parties responsible for the damage.  This provides a means to hire professionals who have the expertise to determine fault, work with insurance adjusters, navigate the negotiation process, and obtain collection of monetary losses.

The continuity of operations program assists members when planned or unplanned events occur that would otherwise shut down operations.  The program uses two strategic partners working together with members to maintain and restore operations. Agility Recovery provides power, space, communications, and technology.  VeriClaim is available to coordinate all activities and determines applicable coverage through the Authority’s property program.  Program services are triggered at the time of the event and when a member contacts Agility or VeriClaim.  Agility will immediately begin mobilizing to restore or maintain member operations.

The vendors/contractors program was developed to meet the needs of the member in assuring that there is insurance coverage in place for those situations where members enter into a contract with a contractor or vendor.  By offering this coverage, the member has the advantage of being able to contract with qualified bidders.  Previously, these contractors could not participate as they often could not meet the member’s minimum insurance requirements.  Coverage is provided for general liability only.

More information on each of these programs is available on the Authority’s website.   If you have any questions please contact Jim Thyden, Insurance Programs Manager.