Insurance Report – March 2007

LLE Insurance Overview

At the upcoming AGM, we will be asking owners to vote on the level of insurance they wish the LLE Board to obtain for the Company.  The three basic types of insurance we are considering are Directors’ Liability Insurance, Insurance for LLE Property, and General Liability Insurance, covering claims arising from third parties related to common property activities.  Because of the increasing cost and increasingly restrictive exemptions on these policies, we thought it appropriate to get guidance from you, the owners before proceeding.  (In the interim, some of this coverage has expired).  Please review these options, including the note about individual lot liability insurance, below:

LLE currently has insurance for Directors’ errors and omissions

Through Metrix Professional Insurance Brokers Inc. and St. Paul Guarantee Insurance Company.  This covers us up to $500,000 for:

“Any error, misstatement, misleading statement, act, omission, neglect or breach of duty of a Director in carrying out his/her duties as a Director, including claims arising out of Employment Standards legislation“

Coverage includes:

“Acts carried out by Directors or Officers in their capacity as such for matters relating to the management of the company, including financial decision making…”

But this coverage excludes damage to persons or property, for example, damage caused to lots or cabins as a result of a burst water tank at the top of Gate 2, damage caused by falling trees as a result of road widening etc.

Current annual premium: $2875

Note:Without insurance of this type, it would be virtually impossible to find anyone to volunteer to help run LLE on behalf of the other owners.

At this time, LLE has NO insurance coverage for damage to LLE property.

We have no coverage for damage to LLE property, such as the components and buildings of the water system.  In the event of damage, we have no coverage.  Policies of this type would be dependent largely on the construction and structure of our new water system.  The Water Committee will be investigating the cost of this type of insurance as compared to building up a contingency fund.

LLE has NO General Liability Insurance Coverage

Our liability coverage expired June 21, 2006.  The premium for the previous policy, which was going to be placed through Vanguard Insurance in Vancouver, was going to increase to $10,000.

Coverage for the policy quoted by Vanguard:

Personal injury and damage to property as a result of a negligent act or omission of Lillooet Lake Estates, or its employees.  Examples would be injuries suffered by an owner’s guest as a result of a falling tree on the common property or someone’s guest suffering damages due to illness caused by contamination in the water system.

Coverage only applies to common areas such as roads, the common lots, and the water system because each member does not have coverage as explained below.  In the case of individual members, they have to rely on their own individual liability coverage.  In addition, there are so many exclusions from coverage that the Directors have seriously questioned the wisdom of paying $10,000 for such liability insurance coverage.

Exclusions:

• Any injury due to snow removal operations
• Any injury or property damage due to fire protection services (or the lack of them)
• The policy will only be placed if the insurer has approved “full details of water testing and purification measures, and the details of an emergency plan in the event of problems with water quality
• Any injury that is otherwise covered by Workers Compensation legislation (e.g. an LLE employee injured by another LLE employee if both were carrying out their employment duties for LLE)
• Any vehicle damage or injury as a result of the operation of a motor vehicle
• Bodily injury to an employee of LLE who is injured in the course of her/his employment duties with LLE
• LLE’s own property (hence the need for insurance #2 above) or any property owned by any LLE members.  Therefore, if a water tank ruptures and a flood destroys an LLE owners’ cabin, LLE would not have any insurance coverage for that type of loss even if the owner had a valid claim against LLE for negligence, even if this insurance policy is purchased.
• Injury as a result of the escape of pollutants (e.g. diesel fuel?)
• Injury to property or bodily injury to a shareholder of LLE. This is an important exclusion to understand, as it is based upon the principle that an insured cannot sue itself.  Therefore, we would only be covered for claims by the “third parties”

Personal Owner Liability Insurance

Each lot owner should have liability insurance on his or her own property.  This protects you from claims arising around use of your own lot.  It is extremely important that you maintain such coverage.  Even if LLE proceeds with full insurance coverage as described above, it cannot cover individual lot owners and their property.  Contact your insurance broker.

Submitted by Lorne Craig, Section 4 Director