In This Issue

2016 Policy Announcements

Grant and Scholarship Update

Tennessee Trivia

Q. Which eight states border Tennessee?

Click Here for the Answer

Message from the President


We have some exciting news to share regarding our rates, dividends and coverages!


Each year, we work with independent actuaries to ensure that base rates are adequate for covering anticipated future losses. Based upon PE Partner membership historical losses and industry trends, the actuaries provide us with rate indications to evaluate. Although these rates are statistically sound, we all know that predicting the future is not an exact science. This year, the overall rate indications are favorable.

On Feb. 12, 2016, Public Entity Partners’s board of directors authorized the following base rate changes for policy effective dates beginning July 1, 2016.


Another financial benefit of PE Partner membership is the return of excess dividends to members. While base rates impact premiums based on future anticipated losses, dividends are based on past performance.

Any surplus in excess of calculated thresholds is recommended to be returned to the membership in the form of a dividend credit, applied to the renewal invoices of qualifying members. It is important to note that since the dividends vary from year to year and are not part of the premiums charged for renewing coverage, they should not be counted as part of your entity’s budgeted insurance costs.

For the 2016-2017 fund year, Public Entity Partners’s board of directors authorized a $4 million total dividend, which includes $1,650,000 in workers’ compensation dividends; $1,550,000 in liability dividends; and $800,000 in property dividends.


Beginning with the July 1, 2016 renewal cycle, we will be providing new coverages and enhancements to our policies. These include six additions/expansions to our liability form and one to property. Most of these are the result of member requests and relevance to governmental risk. (Refer to the 2016 Policy Announcements article in this newsletter for more details about the coverage items and a brief explanation of what they provide.)

The coverage elements include:

  • Premises exposure for medical clinics;
  • Freezing of certain fire equipment under particular conditions;
  • Use of prisoners on municipal work programs;
  • An optional endorsement for unmanned aerial systems (drones);
  • An additional endorsement option for sewer backups/water main breaks, excluding weather-related events (in addition to the current option that includes weather-related events); and
  • Optional coverage for punitive/exemplary damages, subject to a sub-limit.

Thank you for your input in making your desired coverages known to us, and for our decades of stability and partnership together.

Dawn R. Crawford


2016 Policy Announcements

Medical Clinics — Liability Coverage

In the past, Public Entity Partners’s policy excluded any liability arising from the operation of a medical facility, including clinics. As more members are developing clinics to serve employees and their families, we are amending the policy, which will cover the premises exposure related to outpatient medical clinics when medical services are provided by third-party providers. The policy continues to exclude the medical professional exposure of these clinics, so we suggest that you take measures to make sure the third-party provider indemnifies your entity for any losses they incur in the providing of professional services. This coverage will be automatically included in your liability coverage at no additional charge.

Freezing of Firefighting Equipment ― Liability Coverage

In the past, Public Entity Partners’s auto physical damage coverage excluded damage to vehicles resulting from freezing. We are pleased to announce that, effective with our July 1, 2016 liability policy, we now provide an exception to that exclusion. Damage to firefighting equipment from freezing will be covered if the damage occurs while using the equipment to fight fires, or during firefighting training, or within 24 hours of the cessation of either such activity. This coverage will apply automatically at no additional charge.

Use of Prisoners on Municipal Work Programs — Liability Coverage

Effective with the 2014 revisions to TCA 41-2-123, the law related to the use of state and county prisoners on municipal work programs has changed. The new statute provides:

  • With the use of a proper interlocal agreement, municipalities are immune from liability for injury to state and county prisoners while working on municipal work projects. This does not apply to persons on probation who are required to provide public service, or persons sentenced to public service, so the immunity provisions do not apply to such situations.

  • Within the interlocal agreement, a municipal entity may assume the responsibility for medical expenses arising from injury to prisoners while on work detail. It is important to note that this covers injury only and not all sickness. It is also important to note that this liability is statutory and not dependent on the negligence of the municipality. For probationers and those sentenced to service who are not incarcerated, liability for injury remains negligence based under Tennessee Governmental Tort Liability Act (TGTLA). 

Public Entity Partners liability policy will provide coverage for the statutory medical expenses incurred by state and county prisoners, assumed by a municipality under an interlocal agreement, if that interlocal agreement is added to the policy on the additional named insured endorsement. If the agreement does not exist or is not listed on the policy, then no coverage is provided. Liability policy coverage for persons who are not incarcerated, but are doing sentenced public service, will apply under the TGTLA negligence standard.

It is important to remember to execute a proper interlocal agreement on the use of state or county prisoners, indicating who will be responsible for the medical care for injury to these prisoners, and inform Public Entity Partners as to the existence of the agreement. Your underwriter will be requesting a copy of the interlocal agreement.

Unmanned Aerial Systems (Drones) ― Liability and Property Coverage

Public Entity Partners is pleased to announce the availability of optional coverage on aerial drones for both liability and property coverage on policies effective July 1, 2016, and later. Both coverages will be offered on a scheduled basis, and require that the drones be used by operators who are designated by the member, and who are trained in proper operation and regulations related to drone use. 

As you may already be aware, there is a complex array of loss exposures related to drone use, such as accidental injury, interference with other air operations, privacy issues, and workers’ compensation injury. We urge you to develop appropriate policy on the use of drones and compliance with proper FAA regulations. Public Entity Partners has developed a supplemental application to support your request for coverage. This supplemental application will be made available to PE Partner members soon.

Qualifications for PE Partner Unmanned Aerial Vehicle (UAV) Coverage:

  • Less than 55 lbs. gross weight, including attached equipment;
  • Operated by designated persons who meet all current FAA requirements and are trained in operation/regulations;
  • Formal written policy for the operation of UAVs;
  • Operated during daylight hours and only within line of human sight; and
  • Operated under 400-foot altitude and not within 5 miles of an airport.

Since drone regulation is the domain of the Federal Aviation Administration (FAA),  we suggest that members not attempt to regulate the use of drones in your communities, but refer to the FAA regulations for guidance.

More information on this topic will be made available to members in the near future.

Sewer Backup/Water Main Break No-Fault Endorsement — Liability Coverage

Public Entity Partners has had a no-fault sewer backup endorsement for some time, and this was recently expanded to cover water main breaks. The no-fault option waives the negligence aspects of the Tennessee Governmental Tort Liability Act (TGTLA), and pays for damage caused by any sewer backup or water main break, regardless of the member’s negligence. For some cities, having this coverage can create a commitment to cover all sewer backups that occur after a large weather event, including floods resulting from heavy rain. In these cases, it is possible for a member to incur expenses in excess of the $100,000 limit on the policy.

Effective July 1, 2016, there will be a second no-fault endorsement option that is identical to the original, except that it excludes backup related to a weather event. This option can help the member avoid commitments to large numbers of claims resulting from unusual weather. Ask your underwriter about this option, or check the block for excluding weather on your liability renewal application.

Punitive/Exemplary Damages Option ― Liability Coverage

Municipalities in Tennessee under the Tennessee Governmental Tort Liability Act (TGTLA) are not subject to punitive damage awards, but for cases that fall outside the realm of TGTLA, there is some exposure to such damages. This can include federal and out-of-state cases.

Public Entity Partners liability policy has historically excluded punitive damages awarded as a result of gross negligence of member personnel. In 2013, we added this coverage to the employment practices liability endorsement. 

We now offer an option to add this coverage to the remainder of the liability coverage. The punitive/exemplary damages endorsement will change the definition of damages to include “punitive or exemplary damages, or the multiple portion of any multiplied damage award, to the extent such damages are deemed insurable in the jurisdiction applicable to coverage under this policy.”

The endorsement will broaden coverage to include such damages within the limits of the policy. The punitive/exemplary damage portion of any award will be limited to a sub-limit of $500,000.



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Grant and Scholarship Update

Public Entity Partners’s first Property Conservation Matching Grant Program wrapped up its successful campaign on Feb. 19 with more than 40 applicants. Grant notifications will be distributed the week of March 8, 2016.

Public Entity Partners’s Excellence in Risk Management Scholarship to the national Public Risk Management Association (PRIMA) Conference, to be held June 5-8 in Atlanta, Georgia, has an application deadline of March 1. PE Partner members may apply here. Be sure to get your application in soon!



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Tennessee Trivia

Q. Which eight states border Tennessee?

A. Alabama, Arkansas, Georgia, Kentucky, Mississippi, Missouri, North Carolina and Virginia.