1. NEW JERSEY MUNICIPAL ENVIRONMENTAL RISK MANAGEMENT FUND November 19, 2014

2. THE TEAM These individuals contributed to the crafting of the proposed policy form Chris Swayze, LIU Environmental Steven Urgo, Esquire – White & Williams Charles Casagrande, Underwriting Manager – Danskin Insurance Agency Michael Avalone, Underwriting Manager – Conner Strong & Buckelew Joseph Hrubash, Underwriting Manager – Conner Strong & Buckelew Cynthia Lisa, Public Entity Manager – Danskin Insurance Agency

3. PURPOSE Simplify policy form – easier to understand coverage Contemporary marketplace policy forms – utilized LIU’s suite of environmental policy forms as models Changed form from ‘named perils’ to broad form coverage grant

4. CURRENT INSURING AGREEMENT Includes seven named perils under Coverage A - THIRD PARTY LIABILITY: Emergency duties Water Service Stormwater System and Waste Water System Herbicide/Pesticide Application DPW Centers, Foreclosed Properties, and Recycling Centers Municipally Owned and Controlled Compost Facilities Owned Salt Storage Facilities

5. PROPOSED INSURING AGREEMENT Coverage A – Third Party Liability To pay on behalf of the LOCAL UNIT, CLAIM(S) for LOSS in excess of the Deductible that the LOCAL UNIT is legally obligated to pay as a result of POLLUTION CONDITIONS: (i) on, at, under or emanating from a COVERED LOCATION; or (ii) arising from COVERED OPERATIONS, provided that the POLLUTION CONDITIONS first commence on or after the retroactive date listed in the Declarations. The CLAIM must first be made against the LOCAL UNIT and reported to the FUND, in writing, during the POLICY PERIOD, or the EXTENDED REPORTING PERIOD, if applicable.

6. PROPOSED INSURING AGREEMENT Coverage B – On-site cleanup Costs  Simplified language  foreclosed property now included under ‘covered location’, subject to scheduling and underwriting Refer to Environmental Engineer’s bulletin from December 2013 “The Hidden Cost of Free Property” Coverage C - Public Officials Pollution Liability  previously Public Officials Liability Coverage D - de minimis abandoned waste sites  condensed and consistent with other insuring agreements Coverage E - Defense Costs  clarifies that defense costs are strictly tied to coverage; eliminates ambiguity

7. DEFINITIONS Reduced number of definitions from 38 to 26 Some definitions were eliminated due to revised insuring agreement, and included definitions relevant to covered locations and covered operations

8. DEFINITIONS Covered Location(s) – means any location(s) listed in the Declarations and/or specifically scheduled in this policy by endorsement Covered Operations – means those operations that are usual and customary to a municipality or municipal owned or operated utility authority; or independent utility authority.

9. EXCLUSIONS “Pollution Conditions” replaces “Environmental Impairments” throughout Contractual Liability contemporary wording – grants coverage that would have been covered in absence of contract Non-pecuniary includes Injunctive Relief Workers Compensation Exclusion is clarified and consistent with MEL Casualty document Employment Practices Liability Exclusion is consistent with MEL Casualty document

10. EXCLUSIONS Exclusion I – aka ‘Kickham’ exclusion – strengthens and clarifies notification and approval of cleanup costs Exclusion O - Property Damage to Owned Property Exclusion Exclusion P - Naturally Occurring Materials (i.e. Radon) Exclusion Q – added mold exclusion Exclusion R – change in use and operations Exclusion BB 4 – exception to professional exclusion to include Employed Attorneys, in addition to previously included Engineers Exclusion BB 10 – inserted Employment Liability wording Exclusion FF – Owned Property Improvement Exclusion Exclusion GG – clarifies intent of giveback for Recycling Centers

11. LIMITS OF LIABILITY Total limit of liability now referred to as Aggregate Limit of Liability Multiple claims, losses, claimants, pollution conditions and policy periods expanded Coverage afforded under one coverage part with the exception of Coverage E – Defense Costs Claim covered under more than one insuring agreement – claim will not exceed the highest limit available under any one applicable coverage

12. EXTENDED REPORTING PERIOD Re-named from Extended Discovery Period to Extended Reporting Period Re-written to reflect more modern industry practices Previously two times premium for 90 day extension; now automatic 60 days cover with option to purchase up to 36 months for not more than two times premium

13. CONDITIONS Formerly Inspection and Audit Now named Inspection, Audit and Suspension of Coverage Whenever COVERED OPERATIONS are found to be in, or exposed to, a dangerous condition, the FUND’S Environmental Engineer(s) may immediately suspend the insurance against loss from a POLLUTION CONDITION to that COVERED OPERATION. This can be done by delivering or mailing a written notice of suspension to: a. Your last known address; or b. The address where the COVERED OPERATION is located. Once suspended in this way, your insurance can be reinstated only by an endorsement for that COVERED OPERATION.

14. QUESTIONS?