COMPREHENSIVE GENERAL LIABILITY

Policy Comparison including CPG analysis

The following is the comparison of policies for ABCSC and BCSF, based on the policies provided:

COMPREHENSIVE GENERAL LIABILITY

INSURED

ABCSC

BCSF

COMMENTS

COVERAGE GENERAL LIABILITY GENERAL LIABILITY Includes member clubs listed which may not be accurate

INSURER(S) Lloyd’s

Underwriters

Intact for primary BCSF have following form excess through Lloyds for $ 4,000,000

POLICY PERIOD October 31, 2013 October 1, 2013 DESCRIPTION OF

OPERATIONS

Sports Association Not for Profit Association LIMITS Bodily Injury and/or Property Damage to Third Parties $ 5,000,000 under one policy, one underwriter

$ 1,000,000 primary except what is provided for those clubs with the government insurance program

Could be quite a mess sorting out with different underwriters, different adjusters

Personal and Advertising Injury $ 5,000,000 $ 1,000,000 Medical Expenses $ 50,000 $ 10,000 General Aggregate

$ 5.000,000 Aggregate is per club Tenants Legal Liability $ 2,000,000 $ 500,000 Products-Completed Operations Aggregate $ 5,000,000 $ 1,000,000 aggregate Non Owned Automobile SEF6 $ 5,000,000 $ 1,000,000 Legal Liability for

Damage to Hired Automobiles

$ 50,000 none Nothing shown on BCSF policy

Forest Fire

Fighting Expenses

$ 2,000,000 $ 250,000 Incorrect on CPG report as they show

$ 10,000 Employee Benefit

Program Liability

No coverage $ 1,000,000 Not applicable to ABCSC as they have no employees therefor no plan needed Government

Insurance Endorsement

Not applicable, no exclusion

Applicable, provides excess only to operations funded in whole or part by selected Ministries

Could have the government plan, Intact primary and Lloyds excess all involved in a serious claim against BCSF

Deletion of Snowmobile Exclusion

Deletes the exclusion of machinery or apparatus mounted or attached

Events Limitation Endorsement

Includes (4) practice or preparation exclusion

CPG report incorrect, does exclude practice or preparation. Comment on groomer preparing a trail not accurate, not preparing for participation in the event.

Liquor Liability Exclusion Excludes the selling, serving or offering of alcohol by the Insured

Excludes coverage if a license is required

ABCSC provides coverage unless selling, serving or offering alcohol by the INSURED, separate policy is required if doing so Personal Injury and Advertising Injury Liability Exclusion No limitation beyond standard exclusion

Excludes arising out of the printing or publication of Snoscene Magazine or any other magazine

Additional Insureds Also extends to cover volunteers and others requested

Extends coverage to Additional Insureds as evidenced by a document request on file for vicarious liability Snowmobile

Endorsement

No clause Extends “compensatory damages” and medical payments to Designated Member Club(s) and shall reduce the

Designated Member Club General Aggregate Limit for that club, but not

reduce the limit for any other club Premium Reported Adjustment Not applicable, no retroactive adjustment $ 10,000 deposit to be adjusted retroactively at $ 2.00 for Class I members, $ 4.73 for Class II members and $ 8.10 for Class III members

According to June financials, paid

approximately $ 32,000 to date for liability insurance

SEF94 included Not on BCSF copy provided

Contractual Liability SEF96

Included Not on BCSF copy provided SEF99, Long Term

Leased Vehicle

Excluded excluded

Road Restriction As a FSR is under Forest Services Act,

interpretation not applicable

Other Insurance Due to possibility of government

insurance and/or excess

Potentially have 3 different insurers who could be involved in a claim, messy? Signed Waivers Required by

Insured and clubs

ATV Definition Incorrect as atv is defined by legislation as “a

vehicle that is propelled by motorized power and capable of travel on or off a highway as defined in the Transportation Act” therefor groomers, graders and tractors cannot be considered an atv

CPG General Liability Findings:

Events Limitation:

is not correct, as the BCSF Events Limitation |Endorsement, item 3 Exclusions, (4) excludes practice or preparation for any such contest or activity.

Groomer preparing a trail is not correct, as a groomer is not a snowmobile by definition. Same as their reference to a groomer on a trail during a restricted event, not correct.

Road Restriction:

incorrect as trails and Forest Services Roads are not defined or subject to the Highways Act, but FSR’s are under the Forest Services Act

Other Insurance

: the reference to ABCSC policy requiring each owner to carry liability insurance is not totally accurate. ABCSC policy requires any volunteer while acting in their capacity must carry a minimum $ 200,000 liability insurance. It is not mandatory every member carry liability insurance.

Signed Waivers:

they are correct, ABCSC policy does require signed waivers, as discussed and requested by Terry Watt in our initial discussions.

ATV Definition:

as noted earlier, incorrect due to legislated definition in the chart above

CPG do not address the issue that in the event of a claim, the BCSF or club involved has a claw-back on all additional claims during the policy period. This could leave a gap between the 2 policies if a club had another claim during the policy period, which, if the primary limit had been reached, could be as high as $ 1,000,000 of no insurance for the club involved.

EXCESS LIABILITY POLICY

The BCSF have a following form excess liability policy with a limit of $ 4,000,000. We do not have a complete copy of the policy including wordings, however can make the following comments:

1. The policy has a $ 4,000,000 ANNUAL GENERAL AGGREGATE shown under Item 5, which suggests the policy will only pay up to this limit, regardless of the number of claims or source under the Intact policy. 2. The policy shows the Intact policy has limits of a $ 5,000,000 ANNUAL GENERAL AGGREGATE each and

every individual club under Item 6 however the primary policy only has a limit of $ 1,000,000 per club. As mentioned, we do not have a complete copy of the entire policy, however this leads to the following questions:

1. Do all clubs share in the limit of $ 4,000,000 on a first come, first serve basis?

2. If this policy is based on the $ 5,000,000 annual general aggregate each and every individual club, what happens in the event it is $ 1,000,000? Does this affect the coverage, rating or have no effect?

3. What happens if a club has a claim, which automatically reduces their limit of $ 1,000,000 minus the claim, is there a gap with the excess policy having excess of $ 1,000,000 which may not be available in its entirety?

Premiums: based on the BCSF financial statements of June, 2013 they are paying $ 16,756 for their primary $ 1,000,000 liability policy plus $ 14,659 for their excess $ 4,000,000, plus Gold Rush Snowmobile Trail

insurance of $ 642.64 for a total that is in excess of $ 32,000. I will make the assumption there are no further adjustments based on membership. This provides them with two different insurers to provide their version of $ 5,000,000 of liability insurance plus the potential of the government insurance program involvement under some circumstances. In the event of a serious claim, the BCSF would probably be dealing with two different adjusters and face the possibility of gaps in limits and potentially a 3rd.

As you are aware, the ABCSC premium for a limit of $ 5,000,000 with one underwriter, dealing with one adjuster in the event of a claim, is under 50% of the BCSF premium.

Your underwriters at Lloyds, upon reviewing the BCSF policy and CPG report, have agreed upon renewal: To remove the aggregate limit completely (except for products) giving ABCSC and their clubs NO AGGREGATE, subject to an additional premium to be agreed

To review each clause in each section in the existing wording with respect to comments made for clarification, addressing any other changes that may be required

To amend the requirement of volunteers own vehicle insurance to “must be in compliance with Provincial Statue and Regulations”

DIRECTORS’ & OFFICERS’

As mentioned by CPG, the majority of the differences in the wordings are as a result of each underwriter using their own forms. Certain Underwriters at Lloyds have agreed to review their wording, item by item noted in the report, and will amend accordingly if required. They do not concede some of the comments with respect to ambiguity.

A crucial item in the BCSF policy is the fact that they are certificate 519, so it is logical to assume there are an unknown number of participants beyond BCSF and their clubs sharing in this program.

Another key issue is the Multi-Certificate Capping of Limits Limitation – Common Claims, limiting the maximum liability of the INSURER under this Policy, or any renewal or replacement thereof, that trigger coverage under more than one certificate and that have as a common nexus any fact, circumstance, situation, transaction or event or series of related facts, circumstances, situations, transactions or events shall be $ 5,000,000. Does this mean if there were any previous claims against the BCSF or any of their clubs insured through this underwriter or any of their affiliates may have reduced the limit of $ 5,000,000?

Undiscussed or unaddressed other insurance issues

The analysis done, as requested by the BCSF, only addresses the general liability and directors’ and officers’. We believe another important issue is the benefit of personal insurance to the club members which was not addressed and should be. Capri call their program Sled Safe, while Oasis call theirs Open Skies (name change pending).

The Sled Safe program offers one policy with a limit up to $ 1,000,000, available only to BCSF members. They offer no optional limits, while Open Skies offers a choice of $ 200,000, $ 1,000,000 or $ 2,000,000. The Sled Safe program has a $ 500 property damage deductible, while Open Skies has no deductible. The Sled Safe premium is $ 59 plus an $ 11 administration fee for a total of $ 70. The Open Skies premium for $ 1,000,000 is only $ 52, and if you have a safe operators certificate, reduces to $ 47. The Open Skies program has NO

administration fee. In addition, the Sled Safe policy has limitations that are not part of Open Skies with respect to their definition of operators insured and other issues putting the onus on the Insured to make sure this coverage is in force for anyone operating the unit. In addition, the Sled Safe policy will only provide the liability insurance. If your members want physical damage, it is with another insurer. Again, BCSF members may be dealing with 2 different adjusters in the event of a claim involving both coverages.

If your member wants accident benefits, it is not even available through Sled Safe.

With respect to physical damage to your members units, coverage being offered is similar, however Sled Safe premiums are consistently higher with restrictions on who can operate the unit and keep the coverage in force. In addition, if you do have a claim, your deductible automatically increases from the standard $ 500 up to $ 1,000 on renewal. Open Skies has no mandatory increased deductible. We do not know the Sled Safe limit available on physical damage, however the Open Skies has a limit of $ 60,000 available on physical damage. The Sled Safe program is also supported by the Capri program paying dealers $ 25 for successful referrals to the program. Open Skies and Oasis will not participate in a similar program.

The Sled Safe program is available directly through Capri and a small number of local brokers. The Open Skies program is available directly through Oasis, and over 125 local brokers providing local service and support within their communities.