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7/29/2024 Ms. Tarah Mayerhofer Town of Wickenburg 155 N Tegner St., Suite A Wickenburg, AZ 85390 Dear Ms. Tarah Mayerhofer Southwest Risk Services, on behalf of the Arizona Municipal Risk Retention Pool (“AMRRP”; “the Pool”), occasionally receives inquiries about the Pool’s right to settle claims that have been made against its members without the member’s specific concurrence or consent. AMRRP understands that some AMRRP members have internal policies or ordinances requiring administrative or council approval of certain expenditures. This oftentimes raises questions about whether an AMRRP member can legally limit or prevent AMRRP from settling claims that have been tendered for handling to the Pool. AMRRP is a member-owned pool which provides a wide spectrum of insurance protection for its member municipalities, including protection against liability claims from third parties. As with any liability insurance agreement, AMRRP, as the insurer, assumes duties and obligations from its members in return for premium payments. And, as part of the insurance agreement, AMRRP members also give AMRRP the right to settle claims and agree to cooperate in the investigation or settlement of the claims which have been tendered to the Pool for handling. When a covered claim is tendered to AMRRP for handling, the rights and obligations of both AMRRP and the AMRRP member are triggered. Those rights and obligations are outlined in the various insurance coverage agreements that protect the AMRRP member from third-party liability claims. The AMRRP General Liability Coverage Agreement applies to claims for bodily injury or property damage caused by an occurrence (i.e., an accident), or for personal and advertising injury. The AMRRP Municipal Management Practices Coverage Agreement applies to claims for damages resulting from a wrongful act. The AMRRP Municipal Auto Liability Coverage Agreement applies to payments of sums the member must pay because of bodily injury or property damage caused by an accident involving a covered auto. 14902 N 73rd Street, Scottsdale, AZ 85260 602-996-8810 | fax 602-996-9045 | 14902 N 73rd Street, Scottsdale, AZ 85260 602-996-8810 | fax 602-996-9045 | While there a numerous terms, conditions, limitations and exclusions in the Pool’s coverage forms, the following language is included in both the General Liability Coverage Agreement and the Municipal Management Practices Liability Coverage Agreement, and it includes provisions relevant to AMRRP’s right to settle a claim at its discretion, and without the specific concurrence or consent of the AMRRP member: “The Pool has the right and duty to defend the ‘member’ against any ‘suit’ seeking covered ‘damages’. The Pool may, at the Pool's discretion, investigate any ‘claim’ and settle any ‘claim’ or ‘suit.’ “ Additionally, both of the aforementioned coverage agreements include the following language: “The ‘member’ must…cooperate with the Pool in the investigation or settlement of the ‘claim’ or defense against the ‘suit’ “. Similarly, the Municipal Auto Liability Coverage Agreement includes the following relevant language: “The Pool as the right and duty to defend a ‘member’ against any ‘suit’ seeking covered ‘damages’. The Pool may, at the Pool’s discretion, investigate any ‘claim’ and settle any ‘claim’ or ‘suit’ ”. “…The ‘member’ must…cooperate with the Pool in the investigation or settlement of the ‘claim’ or defense against the ‘suit’…” As noted in the coverage agreement language cited above, once an AMRRP member tenders a claim to the Pool for handling, the Pool is granted the discretion to settle any claim or suit and the AMRRP member assumes the obligation to cooperate with the Pool its investigation, defense or settlement of the claim. Please feel free to contact me if you’d like to discuss further. Best Regards, Jim Gill Vice President – Claims Southwest Risk Services 602-368-6656 Jgill@berkleyrisk.com