CHAPTER 29.1. POLITICAL SUBDIVISION CATASTROPHIC LIABILITY FUND
IC 27-1-29.1
Chapter 29.1. Political Subdivision Catastrophic Liability Fund
IC 27-1-29.1-1
"Commission" defined
Sec. 1. As used in this chapter, "commission" refers to the Indianapolitical subdivision risk management commission established byIC 27-1-29-5.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-2
"Fund" defined
Sec. 2. As used in this chapter "fund" refers to the politicalsubdivision catastrophic liability fund established by this chapter.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-3
"Liability" defined
Sec. 3. As used in this chapter, "liability" means an obligationarising from:
(1) multiple claims for the payment of money that are within thelimits set forth in IC 34-13-3-4 (or IC 34-4-16.5-4 before itsrepeal) and that arise from a single catastrophic occurrence; or
(2) any other claim for which coverage is provided for membersof the fund under rules adopted by the commission.
As added by P.L.272-1987, SEC.7. Amended by P.L.1-1998,SEC.146.
IC 27-1-29.1-4
"Member" defined
Sec. 4. As used in this chapter "member" refers to any politicalsubdivision that has a membership in the fund, as provided in section9 of this chapter.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-5
"Political subdivision" defined
Sec. 5. As used in this chapter, "political subdivision" has themeaning set forth in IC 34-6-2-110.
As added by P.L.272-1987, SEC.7. Amended by P.L.3-1989,SEC.152; P.L.1-1998, SEC.147.
IC 27-1-29.1-6
"Underlying coverage" defined
Sec. 6. As used in this chapter, "underlying coverage" refers toany liability insurance policy that names a member of the fund or itsofficials or employees as a named insured, an additional namedinsured, an insured, or an additional insured.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-7
Establishment of fund; purpose; administration; expenses;depositories; investment
Sec. 7. (a) The political subdivision catastrophic liability fund isestablished for the purpose of:
(1) paying a part of certain liabilities of members of the fundunder this chapter;
(2) receiving assessments paid by fund members to replenishthe fund and to pay the principal of the interest on bonds ornotes issued by the commission under IC 27-1-29-17(b)(1); and
(3) receiving money from any other source.
(b) The fund shall be administered by the commission, using thepowers granted in IC 27-1-29-7, as modified by this chapter.
(c) The expenses of administering the fund shall be paid frommoney in the fund.
(d) All money received by the commission under this chapter,whether as assessments, proceeds from the sale of bonds, orrevenues, are trust funds, to be held and applied solely as providedin this chapter. Current operating funds shall be kept in depositoriesselected by the commission. The commission shall deposit with thetreasurer of state the money in the fund not currently needed to meetthe obligations of the fund, and the treasurer of state shall invest suchmoney for the commission in accordance with the provisions of anyresolution or trust agreement that the commission may adopt or enterinto under this chapter or IC 27-1-29. Interest that accrues from theseinvestments shall be credited to the commission and to the fund.
(e) Money in the fund at the end of a fiscal year does not revert tothe state general fund.
As added by P.L.272-1987, SEC.7. Amended by P.L.159-1988,SEC.1.
IC 27-1-29.1-8
Reserve account; issuance of bonds to establish account; use offunds
Sec. 8. (a) The commission shall establish a reserve account in thefund. A balance of at least five million dollars ($5,000,000) mustremain in the reserve account. To provide money to establish thereserve account, the commission may issue bonds underIC 27-1-29-17(b)(1). The bonds issued to provide money for theestablishment of the reserve account may not exceed a total amountof forty million dollars ($40,000,000).
(b) Money in the reserve account shall be held and applied solelyto pay claims against the fund that cannot be paid from other moneyin the fund.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-9
Membership eligibility; rights and duties
Sec. 9. All political subdivisions that satisfy the criteria formembership under the rules of the commission are eligible for
membership in the fund. A political subdivision is not required to bea member of the political subdivision risk management fund underIC 27-1-29 to be eligible for membership in the fund established bythis chapter. Each member of the fund:
(1) shall contribute to the fund in the amount of the assessmentcharged the member under this chapter; and
(2) is entitled to the partial payment of certain liabilities fromthe fund under this chapter.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-10
Liabilities qualifying for partial payment from fund; notice ofclaim
Sec. 10. (a) The commissioner, using money from the fund, shallpay a part of every liability that qualifies for partial payment underthis chapter and under the terms of the coverage provided by thecommission according to rules adopted under this chapter.
(b) A liability of a member of the fund that has no underlyingcoverage or that has occurrence basis underlying coverage qualifiesfor partial payment under this chapter if it:
(1) is a liability covered under the coverage document issued bythe commission to the member;
(2) arises out of an act or omission that takes place while thepolitical subdivision bearing the liability is a member of thefund; and
(3) satisfies the minimum total amount requirement set forth insection 12 of this chapter.
(c) A liability of a member of the fund that has claims made basisunderlying coverage qualifies for partial payment under this chapterif it:
(1) is a liability covered under the coverage document issued bythe commission to the member;
(2) arises out of an act or omission with respect to which aclaim is made while the political subdivision bearing theliability is a member of the fund;
(3) is covered by the underlying coverage; and
(4) satisfies the minimum total amount requirement set forth insection 12 of this chapter.
(d) For the purposes of subsection (c)(2) and section 11 of thischapter, the question of when and how a claim is made shall bedetermined by the provisions of the insurance policy providing theunderlying coverage. However, if the underlying coverage is notapplicable to a liability, a claim is considered to have been made forpurposes of subsection (c)(2) when notice of a claim giving rise tothe liability is received by the fund member from the claimant or theclaimant's representative.
As added by P.L.272-1987, SEC.7. Amended by P.L.159-1988,SEC.2.
IC 27-1-29.1-11 Preexisting liabilities qualifying for partial payment
Sec. 11. A liability that arises out of an act or omission that takesplace before the political subdivision bearing the liability becomesa member of the fund does not qualify for partial payment under thischapter unless the liability:
(1) is expressly covered by the provisions of a coveragedocument that:
(A) is issued to the fund member; and
(B) is in effect when the claim is made; and
(2) is also covered by the underlying coverage that is claimsmade basis coverage.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-12
Liabilities of members that are or are not also members of politicalsubdivision risk management fund; conditional payment
Sec. 12. (a) A liability of a member of the fund that is not amember of the political subdivision risk management fund underIC 27-1-29 does not qualify for partial payment under this chapterunless the total amount of the liability exceeds:
(1) one million dollars ($1,000,000); or
(2) another sum that is:
(A) greater than one million dollars ($1,000,000); and
(B) approved by the commission as a provision of the fundmember's coverage because the fund member has underlyingcoverage with limits of liability that exceed one milliondollars ($1,000,000).
(b) A liability of a member of the fund that is also a member ofthe political subdivision risk management fund under IC 27-1-29does not qualify for partial payment under this chapter unless theamount of the liability exceeds the amount of liability payable by thecommission under IC 27-1-29 under the terms of the coveragedocument that is issued to the fund member and applicable to theliability.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-13
Liability partial payment determination; formula
Sec. 13. The amount that is to be paid by the commission towardthe satisfaction of a liability qualifying for partial payment under thischapter is determined in STEP FOUR of the following formula:
STEP ONE: If the total amount of the liability exceeds fivemillion dollars ($5,000,000), subtract five million dollars($5,000,000) from the total amount of the liability.
STEP TWO: Add the remainder under STEP ONE to theminimum total amount figure that applies to the liability undersection 12 of this chapter.
STEP THREE: Add to the sum determined under STEP TWOthe total amount expended by the commission under section 16of this chapter in defending the member of the fund against
claims giving rise to the liability.
STEP FOUR: Subtract the sum determined under STEPTHREE from the total amount of the liability.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-14
Excess coverage provided
Sec. 14. The coverage of a liability under this chapter is excess ofany and all other valid and collectible insurance and coverage underliability risk management, risk sharing, and risk financing pools orfunds.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-15
Single or installment payments; limits
Sec. 15. An amount payable under section 13 of this chapter thatis no more than ten thousand dollars ($10,000) may be paid in asingle, immediate payment. An amount payable under section 13 ofthis chapter that is greater than ten thousand dollars ($10,000) shallbe paid:
(1) in installments under section 18(c) of this chapter; or
(2) under a structured settlement negotiated under section 18(d)of this chapter.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-16
Defense of claims; expenses
Sec. 16. The commission may associate with a member of thefund in the defense of a claim and, if no defense is provided by theinsurer providing the fund member's underlying coverage, thecommission may defend the member and control that defense.Amounts expended by the commission from the fund under thissection must be deducted under section 13 of this chapter from theamount to be paid by the commission toward the satisfaction of aliability.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-17
Biannual recognition of liabilities; payment; proration in event ofinsufficient funds
Sec. 17. On June 30 and December 31 of every year, thecommission shall recognize every liability that has qualified forpartial payment under this section during the six (6) month periodthat ended on that day. The commission shall pay the part of eachliability that is payable under section 13 of this chapter within fifteen(15) days after the liability is recognized as qualifying for partialpayment. However, if the balance in the fund is insufficient to paythe full payable amount of every liability that has qualified for partialpayment during a six (6) month period, the commission shall pay aprorated portion of each liability that qualified for partial payment
during the period. Any part of the payable amount of a liability leftunpaid due to the prorating of payments under this subsection mustbe paid before the payment of liabilities that qualify for partialpayment during any of the following six (6) month periods.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-18
Punitive damages; bodily injury or property damage; installmentpayments; structured settlements
Sec. 18. (a) No amount may be paid from the fund in respect ofpunitive damages paid by or assessed against a member of the fund.
(b) No amount may be paid from the fund in the case of a liabilitybased upon bodily injury or property damage arising out of thedischarge, dispersal, release, or escape of smoke, vapors, soot, fumes,acids, alkalis, toxic chemicals, liquids, gases, waste materials, orother irritants, contaminants, or pollutants into or upon land, theatmosphere, or any watercourse or body of water unless thedischarge, dispersal, release, or escape:
(1) is caused by an act or omission of a political subdivisionthat is a member of the fund; and
(2) occurs as a result of:
(A) a household hazardous waste; or
(B) a conditionally exempt small quantity generator (asdescribed in 40 CFR 261.5(a);
collection, disposal, or recycling project conducted by orcontrolled by the political subdivision.
(c) The commissioner may pay a liability of a member of the fundin a series of annual payments. The amount of any annual paymentunder this subsection based upon the injury to or death of one (1)person in any one (1) occurrence must be one hundred thousanddollars ($100,000) or more, except for the final payment in a seriesof payments.
(d) The commission may negotiate a structured settlement of anyclaim.
(e) As used in this section, "household hazardous waste" meanssolid waste generated by households that consists of or contains amaterial that is:
(1) ignitable, as described in 40 CFR 261.21;
(2) corrosive, as described in 40 CFR 261.22;
(3) reactive, as described in 40 CFR 261.23; or
(4) toxic, as described in 40 CFR 261.24.
As added by P.L.272-1987, SEC.7. Amended by P.L.256-1995,SEC.2.
IC 27-1-29.1-19
Notice of intent to become member of fund
Sec. 19. (a) A political subdivision may become a member of thefund by filing a written notice of its intent to become a member withthe commission by the latter of the following dates:
(1) December 31, 1987. (2) The date exactly six (6) months before the expiration dateof the liability insurance policy covering the politicalsubdivision on December 31, 1987.
(b) Each political subdivision that files a notice of intent tobecome a member by the latter of the two (2) dates set forth insubsection (a) shall be granted membership in the fund. A politicalsubdivision that files a notice of intent to become a member after thelatter of the two (2) dates set forth in subsection (a) may be admittedto or rejected for membership in the fund at the discretion of thecommission.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-20
Implementing rules; coverage limitations; commission powers;rules governing relinquishment of membership in fund
Sec. 20. (a) The commission shall adopt rules under IC 4-22-2 toimplement this chapter.
(b) The commission, in accordance with the rules adopted undersubsection (a), may, in whole or in part, conform or limit thecoverage provided to a member of the fund under this chapter (asdescribed in the coverage document issued to the member by thecommission) with the provisions of insurance policies providingunderlying coverage to the fund member.
(c) In accordance with the rules adopted under subsection (a), thecommission may provide, to a member of the fund that is not amember of the political subdivision risk management fund underIC 27-1-29, coverage of a liability that exceeds the amount of onemillion dollars ($1,000,000) but that is subject to reduction byexhaustion of the aggregate limits of liability in the fund member'sunderlying coverage.
(d) In accordance with the rules adopted under subsection (a), thecommission may provide, to a member of the fund that is also amember of the political subdivision risk management fund underIC 27-1-29, coverage of liabilities for which no coverage is providedunder IC 27-1-29.
(e) Except as otherwise specifically provided in this chapter, thecommission has the same powers in the administration of the fund asit has in the administration of the political subdivision riskmanagement fund under IC 27-1-29-7(b). A rule adopted by thecommission to establish the procedure by which a politicalsubdivision can withdraw from membership in the fund may notprovide that a political subdivision continues to be a member of thefund more than twelve (12) months after the political subdivisiongives notice to the commissioner of its intention to relinquish itsmembership.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-21
Relinquishment of membership in fund; prerelinquishmentliabilities; assessments Sec. 21. After relinquishing its membership in the fund, a politicalsubdivision remains liable for its pro rata share of assessments to payfor liabilities of fund members that arose out of claims based uponacts or omissions that took place while the political subdivision wasa member of the fund. If a political subdivision fails to pay anassessment to which it is subject under this chapter, the commissionmay give notice to any department or agency of the state (includingthe treasurer of state or the auditor of state) that is the custodian ofmoney payable to the delinquent political subdivision after the dateof the notice, that the political subdivision is in default on thepayment of an assessment under this chapter. After receiving thisnotice, the department or agency shall withhold the delinquentamount from the money payable to the political subdivision and payover the money to the commission to be applied against thedelinquent assessment.
As added by P.L.272-1987, SEC.7.
IC 27-1-29.1-22
Assessments on members of fund
Sec. 22. (a) The commission shall impose an assessment to bepaid by each member of the fund. The assessments to be paid bymembers of the fund shall be determined by the commission andmust be fair to all members, in consideration of the uniformapplication of actuarial principles and underwriters' rating principlesand in consideration of the need to pay the principal of and intereston bonds or notes issued under IC 27-1-29-17(b)(1). A member shallpay its assessment in accordance with rules of the commission.
(b) The assessment for the first twelve (12) months of a politicalsubdivision's membership in the fund shall be no greater than thepayment made by the political subdivision to a commercial insurerfor like coverage for the twelve (12) month period immediatelypreceding the political subdivision's application to become amember. In the case of an applicant not insured by a commercialinsurer, the department shall set the amount of the assessment for thefirst twelve (12) months of membership in accordance withsubsection (a).
As added by P.L.272-1987, SEC.7.