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13 GCMUD NO. 6 ENGINEERING REPORT Meeting Date: November 5, 2018 Time: 7:00 p.m. Location: The Landing Office 1109 Landing Boulevard League City, Texas Engineering Representative: Scott Novosad, P.E. Directors: Wayde Shipman - President Mark Domma Vice President Mickey Baldwin-Secretary Gary Burt - Director Tye Max Cowan - Director I. District Action Items: A. None at this time. II. District Pay Items: A. None at this time. III. Developer Pay Items: A. None at this time. IV. District Projects: A. Willow Pond Erosion Control Measures 1. Contract closed out. B. Bond Issue Series Awaiting Bond Sale. C. Bond Issue Series 2019-Final Bond Issue 1. Preparing report and attachments. 2. Received professional fees and back-up information from developer s * Action Items **Board Concurrence/Consideration

14 GCMUD NO. 6 ENGINEERING REPORT representative to finalize Developer Interest and Section 4: Cost Summary. 3. Draft report will be provided to consultants for review and comment this week. V. Developer Projects: A. None at this time. * Action Items **Board Concurrence/Consideration

15 Insurance Proposal Prepared for Galveston Co. MUD No. 6

16 McDonald & Wessendorff Insurance Welcome! Thank you for choosing us for your insurance needs. Finding the right people for the right job can be difficult, especially when dealing with insurance. We at McDonald & Wessendorff Insurance are dedicated to Growing Relationships with our clients. The following material about this insurance program is designed specifically for you. Please contact us at with any questions, comments or concerns. McDonald & Wessendorff Insurance: Dan McDonald, CEO Peggy Bohn, COO Direct # Direct # dan.mcdonald@mcwess-insurance.com peggy.bohn@mcwess-insurance.com Katrina Thornhill, Account Executive Kathryn Williams, Account Executive Direct # Direct # katrina.thornhill@mcwess-insurance.com kathryn.williams@mcwess-insurance.com Carrie Hitchcock Waterworks CSR Direct # carrie.hitchcock@mcwess-insurance.com McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS) 2

17 Plan Coverages Property Real and Personal Property Coverage based on Replacement Cost Valuation Contractors Equipment based on Actual Cash Value Boiler & Machinery Coverage based on repair or replacement cost valuation Comprehensive General Liability Duty to Defend Defense is in addition to the policy limit Sewer Back-Up coverage provided by specific endorsement Umbrella Increased limits are available as an alternative to the District which desires higher limits for General Liability and Business Auto Liability Pollution Liability Legal liability protection for environmental damage and bodily injury Clean-Up costs for third party owned premises Both gradual and sudden occurrences are covered Occurrence coverage form Defense is in addition to the policy limit No exclusion for punitive damages Directors & Officers Liability Duty to defend Pay on behalf in lieu of reimbursement coverage form Defense is in addition to the policy limit (Includes Breach of Contract) No Aggregate limit No deductible or retention Full prior acts coverage back to the creation of the District Definition of claim includes coverage for declaratory and injunctive relief suits No Failure to Supply exclusion Employment Practices Liability included Coverage included for libel, slander, defamation of character McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS) 3

18 Galveston Co. MUD No. 6 TYPE OF POLICY: COMMERCIAL GENERAL LIABILITY AND HIRED CAR & NON OWNERSHIP AUTOMOBILE LIABILITY PROPOSED EFFECTIVE DATE: 12/15/18 COVERAGE: LIMITS OF LIABILITY: POLICY TERM: Bodily Injury and Property Damage Full Sewer Backup Coverage Punitive Damages Not Excluded Host Liquor Liability Terrorism Not Excluded No Mold Exclusion No Assault & Battery Exclusion Duty to Defend Defense Cost Outside the Limit Coverage in U.S. Only $1,000,000 Each Occurrence $3,000,000 General Aggregate $1,000,000 Personal/Advertising Injury $3,000,000 Product Liability $100,000 Damages to Premises Rented to You $1,000,000 Hired and Non Owned Auto Liability INCLUDES 1 DETENTION POND One Year PREMIUM: $1,241 COMPANY: Mid-Continent Casualty Company AM Best Rating: A + VIII DOES THE DISTRICT HAVE AN INTERLOCAL AGREEMENT FOR LAW ENFORCEMENT? YES/NO: IF YES, PLEASE SEND A COPY. NUMBER OF PEACE OFFICERS: THE DISTRICT WILL NEED LAW ENFORCEMENT LIABILITY & PEACE OFFICERS BOND SEE SUMMARY PAGE FOR ADDITIONAL PREMIUM. DOES THE DISTRICT OWN ANY ROADS YES/NO: ACCEPTED BY: DATE: REJECTED BY: DATE: SUBJECT TO POLICY TERMS, CONDITIONS, LIMITATIONS AND EXCLUSIONS McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS) 4

19 COMMERCIAL GENERAL LIABILITY This policy is an agreement to pay damages for which the insured is legally obligated because of bodily injury or property damage and to defend any suit brought against the insured on account of bodily injury or property damage. The policy will insure the District, any executive officers or directors thereof, and employees while acting within the scope of their duties as it applies to the following coverage s. COVERAGES PREMISES-OPERATIONS: District s liability exposure is primarily from the existence of its facilities or any other District property. PRODUCTS: Products and/or completed operations coverage for waterworks and sewage disposal plant operations are included in the premises-operations coverage. CONTRACTORS LIABILITY: Protects the District against claims arising out of operations performed on behalf of the District by independent contractors. Every independent contractor employed by the District should furnish a certificate of their liability insurance to the District. BLANKET CONTRACTUAL: Protects against claims arising out of the named insured assuming liability of others under a written contract. PERSONAL INJURY: Protects against claims arising out of one or more of the following offenses committed in the conduct of the named insured s business: False arrest, libel and slander, wrongful entry or eviction and other similar offenses including invasion of the right of private occupancy and defamation or violation of right of privacy. HIRED AND NON-OWNED AUTOMOBILES: Covers liability for claims arising out of non-owned automobiles and hired automobiles being used on behalf of the District. McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS) 5

20 ** OPTIONAL COVERAGE ** Galveston Co. MUD No. 6 TYPE OF POLICY: POLLUTION LIABILITY PROPOSED EFFECTIVE DATE: 12/15/18 COVERAGE: EXCLUSIONS: LIMIT OF LIABILITY: DEDUCTIBLE: POLICY TERM: Occurrence Form Legal Liability to Others-Bodily Injury and Property Damage and Clean Up Costs Compensatory Damages Defense Cost Outside the Limit Punitive/Exemplary Damages Not Excluded Terrorism Not Excluded Mold Not Excluded Statutory Fines or Penalties Unless Direct Result of Pollution Incident as Defined by the Policy Disposal of Sludge at Landfill Site $1,000,000 each occurrence $3,000,000 aggregate $5,000 Per Claim for Clean Up Costs One Year PREMIUM: $750 COMPANY: Mid-Continent Casualty Company AM Best Rating: A + VIII ** OPTIONAL COVERAGE ** ACCEPTED BY: DATE: REJECTED BY: DATE: SUBJECT TO POLICY TERMS, CONDITIONS, LIMITATIONS AND EXCLUSIONS McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS) 6

21 Galveston Co. MUD No. 6 TYPE OF POLICY: DIRECTORS AND OFFICERS LIABILITY PROPOSED EFFECTIVE DATE: 12/15/18 COVERAGE: LIMIT OF LIABILITY: DEDUCTIBLE: POLICY TERM: Claims-Made Coverage Form Duty to Defend Pay on Behalf in lieu of Reimbursement Coverage Form Full Prior Acts Defense Cost Outside the Limit Defense for Alleged Breach of Contract Claim includes any Judicial or Administrative Proceedings Employment Related Practices coverage for the District Included Coverage extended to include Director s Spouse Terrorism Not Excluded $1,000,000 Per Claim No Aggregate Limit None One Year PREMIUM: $1,500 COMPANY: Mid-Continent Casualty Company AM Best Rating: A + VIII OPTIONAL LIMITS Limit Premium X $1,000,000 $1,500 $2,000,000 $2,500 $3,000,000 $3,500 $4,000,000 $4,500 $5,000,000 $5,500 ACCEPTED BY: DATE: REJECTED BY: DATE: SUBJECT TO POLICY TERMS, CONDITIONS, LIMITATIONS AND EXCLUSIONS McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS) 7

22 Galveston Co. MUD No. 6 TYPE OF POLICY: UMBRELLA PROPOSED EFFECTIVE DATE: 12/15/18 COVERAGE: UNDERLYING REQUIREMENTS: EXCLUSIONS: Limit of Coverage over General Liability, Automobile Liability, Pollution and Employers Liability (If underlying coverage is accepted) Terrorism Not Excluded Punitive Damages Not Excluded Defense Cost Outside the Limit $1,000,000 General Liability $1,000,000 Pollution Liability $1,000,000 Automobile Liability $1,000,000 Employers Liability Employee Benefits Liability Directors and Officers Liability Law Enforcement Liability LIMIT OF LIABILITY: $1,000,000 RETENTION: $10,000 POLICY TERM: One Year PREMIUM: $900 COMPANY: Mid-Continent Casualty Company AM Best Rating: A + VIII OPTIONAL LIMITS Limit Premium X $ 1,000,000 $ 900 $ 2,000,000 $1,800 $ 3,000,000 $2,700 $ 4,000,000 $3,600 $ 5,000,000 $4,500 ACCEPTED BY: DATE: REJECTED BY: DATE: SUBJECT TO POLICY TERMS, CONDITIONS, LIMITATIONS AND EXCLUSIONS McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS) 8

23 Galveston Co. MUD No. 6 TYPE OF POLICY: PUBLIC EMPLOYEE BLANKET CRIME (Includes Attorney, Operator, Bookkeeper, Engineer and Delinquent Tax Attorney) ANNIVERSARY OF CURRENT POLICY: 12/15/18 COVERAGE: Loss caused to the District through failure of any employee/consultant to perform faithfully their duties or to account properly for all monies and property received by virtue of their position or employment. Limit applies per employee/consultant up to $100,000. If the bond amount is over $100,000, each employee/consultant is covered up to $100,000 and the excess amount is provided on a per loss basis rather than each basis. LIMIT: $10,000 DEDUCTIBLE: $0 Terrorism Not Excluded TERM: One Year PREMIUM: $120 COMPANY: Hartford Casualty Company AM Best Rating: A+ XV OPTIONAL LIMITS Limit Premium X $ 10,000 $120 $ 25,000 $177 $ 50,000 $221 $ 100,000 $342 $ 250,000 $472 $ 500,000 $565 $1,000,000 Quote available with application ACCEPTED BY: DATE: REJECTED BY: DATE: SUBJECT TO POLICY TERMS, CONDITIONS, LIMITATIONS AND EXCLUSIONS McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS) 9

24 Galveston Co. MUD No. 6 TYPE OF BOND: DIRECTORS POSITION SCHEDULE BOND ANNIVERSARY OF CURRENT BOND: 12/15/18 COVERAGE: Provides coverage for loss caused to the District through the failure of Directors to perform faithfully their duties or to account properly for all monies and property received by virtue of their position as Director. Terrorism Not Excluded BOND TERM: One Year BOND LIMIT: $10,000 Per Director (5) $50,000 Aggregate PREMIUM: $175 COMPANY: Merchants Bonding Company AM Best Rating: A VIII ACCEPTED BY: DATE: REJECTED BY: DATE: SUBJECT TO POLICY TERMS, CONDITIONS, LIMITATIONS AND EXCLUSIONS McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS) 10

25 ** OPTIONAL COVERAGE ** Galveston Co. MUD No. 6 TYPE OF POLICY: BUSINESS TRAVEL COVERAGE PROPOSED EFFECTIVE DATE: 12/15/18 COVERAGE: 24 Hour Coverage while traveling on district business Accidental Death & Dismemberment Paralysis Benefits Coma Benefits Psychological Therapy Benefit Emergency Evacuation/Family Travel Benefits Rehabilitation Expense Benefit Repatriation Benefit Seat Belt and Occupant Protection Device Benefit Age reduction for over 70 LIMITS: $ 250,000 Each Director $ 50,000 Each Spouse $ 25,000 Each Child $35,000,000 Aggregate Limit PREMIUM: $300 COMPANY: Chubb AM Best Rating: A++ XV ** OPTIONAL COVERAGE ** Date Accepted By Rejected By (Signature of District s Authorized Representative) (Signature of District s Authorized Representative) (Title) (Title) SUBJECT TO POLICY TERMS, CONDITIONS, LIMITATIONS AND EXCLUSIONS McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS) 11

26 Galveston Co. MUD No. 6 ** OPTIONAL COVERAGE ** TYPE OF POLICY: WORKERS COMPENSATION PROPOSED EFFECTIVE DATE: 12/15/18 COVERAGES: Coverage A in the policy provides statutory coverage in which the insurance company agrees to assume the liability imposed upon an insured by the applicable Workers Compensation law or laws. Coverage B for Employers Liability in this policy protects an insured against liability imposed by law for injury to employees in the course of employment. Terrorism Not Excluded Subject to policy terms, conditions and exclusions. LIMIT OF LIABILITY: Employers Liability $1,000,000 Each Accident Bodily Injury by Accident $1,000,000 Each Employee Bodily Injury by Disease $1,000,000 Policy Limit Bodily Injury by Disease POLICY TERM: PREMIUM: One Year $244 (5 Directors) Estimated Annual Premium COMPANY: Hanover Insurance Group AM Best Rating: A XV ** OPTIONAL COVERAGE ** ACCEPTED BY: DATE: REJECTED BY: DATE: SUBJECT TO POLICY TERMS, CONDITIONS, LIMITATIONS AND EXCLUSIONS McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS) 12

27 ** OPTIONAL COVERAGE ** Galveston Co. MUD No. 6 TYPE OF POLICY: Cyber Liability PROPOSED EFFECTIVE DATE: 12/15/18 COVERAGE: LIMIT: A - Network & Information Security B - Communication & Media Liability C - Regulatory Defense Expenses D Crisis Management Event Expenses E Security Breach Remediation/Notification F Computer Program & Electronic Data Restoration G Computer Fraud H Funds Transfer Fraud I E-Commerce Extortion J Business Interruption & Additional Expenses A - $250,000 Each Claim B - $250,000 Each Claim C - $250,000 Each Regulatory Claim D-J $250,000 Each Single First Party Insured Event TOTAL AGGREGATE: $250,000 RETENTION: POLICY TERM: $2,500 Each Claim/Event J Waiting Period of 8 Hours One Year PREMIUM: ESTIMATED $900 - $1,200 (Based on Revenues less than $5,000,000) COMPANY: Travelers Casualty & Surety Co. of America AM Best Rating: A++ XV ** OPTIONAL COVERAGE ** COVERAGE DEFINITIONS & CLAIM SCENARIOS DOCUMENT AT END OF PROPOSAL Application required for formal quote Higher limits also available ACCEPTED BY: DATE: REJECTED BY: DATE: SUBJECT TO POLICY TERMS, CONDITIONS, LIMITATIONS AND EXCLUSIONS McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS) 13

28 GALVESTON CO. MUD NO. 6 PROPOSED EFFECTIVE DATE: 12/15/18 PREMIUM SUMMARY COVERAGE RENEWAL LAST YEAR S PREMIUM PREMIUM GENERAL LIABILITY/HIRED & NON-OWNED AUTO 1, , DIRECTORS AND OFFICERS 1, , UMBRELLA LIABILITY PUBLIC EMPLOYEE BLANKET CRIME DIRECTORS BOND TOTAL PREMIUM $3, $3, McDonald & Wessendorff thanks you for your business. ** Tax Bond Thomas Lee - Billed Directly to Tax Assessor. * * * OPTIONAL NEW COVERAGE(S) * * * OPTIONAL NEW COVERAGE PREMIUM ACCEPTED YES/NO POLLUTION LIABILITY BUSINESS TRAVEL ACCIDENT WORKERS COMPENSATION & EMPLOYERS LIABILITY LAW ENFORCEMENT LIABILITY - $1,000,000 LIMIT 1, PEACE OFFICERS BOND # OF PEACE OFFICERS Each CYBER LIABILITY Quotable TOTAL PREMIUM FOR ACCEPTED OPTIONAL COVERAGE PLEASE REPORT ALL NEW FACILITIES OR PROPERTIES IMMEDIATELY TO MCDONALD & WESSENDORFF PAYMENT IS DUE WITHIN 30 DAYS OF THE EFFECTIVE DATE TO AVOID CANCELLATION. ACCEPTED BY: PRINTED NAME & TITLE: DATE: FEDERAL TAX ID #: WEB ADDRESS IF ANY: Premiums quoted are valid for 30 days from proposed effective date. All descriptions of proposed coverage s provided herein are intended as an outline of coverage and are necessarily brief. For specific wording concerning insuring agreements, definitions, conditions, terms and exclusions not listed, please read each policy carefully. Please contact our office if there are any questions. McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS) 14

29 D & O APPLICATION PLEASE COMPLETE/ SIGN AND RETURN WITH THE ACCEPTED PROPOSAL THANK YOU! 15

30 Professional Liability Application Application for Directors & Officers Liability Insurance $1,000,000 Premium $1,500 Part 1: Background Information **ML 1459 (01-97)** Name of Organization: Galveston Co. MUD No. 6 Address: Purpose of Organization: In continuous existence since: Number of Board Members: Are there subsidiaries? Yes or No (circle response) If yes, provide name (s), date established, nature of operation, profit or nonprofit, purpose, bylaws and financial statement for each. If yes, do you wish to request coverage for subsidiaries? Yes or No (circle response) Are the organization s finances audited by a Certified Public Accountant? Yes of No (circle response) Does the organization have any stockholders or persons who profit from the operation except as salaried employees? Yes or No (circle response) If yes, please give detail Are any directors, Trustees, Officers or employees indebted to the organization? Yes or No. If yes, please give detail Part 2: Insurance Coverage Information Directors & Officers Liability Insurance carried during the past three years including expiring Policy. Insurer: Limits of Liability: Premium: Deductible: Policy Period Directors & Officers Liability Coverage has been continuously in force since: If yes, with which insurance company? Has any policy for Directors and Officers liability Insurance ever been canceled or non-renewed? Yes or No (circle response). If yes, please give detail The individual of the organization designated to receive any and all notices from the Insurer or their authorized representative(s) concerning this insurance is: Name: Title: 16

31 Part 3: Employer Detail Total number of: Full Time Employees: Part Time Employees: Total number of Employees with annual salaries in excess of 50,000? How many of these employees have annual salaries in excess of 100,000? Does the organization have a written procedure for hiring and firing employees? Yes or No Does a lawyer or human resource person review involuntary employment terminations prior to termination of an employee? Yes or No (circle response) Has there been a reduction of employees in the past 12 months? Yes or No (circle response) Is a reduction of employees anticipated in the next 12 months? Yes or No (circle response) Part 4: Claim Information Within the last 5 years has the organization or any individual proposed for insurance received any inquiry, complaint or notice of hearing from any Municipal, State Administrative Agency, Federal Regulatory Authority or Congressional or Legislative Committee of similar such agency? Yes or No If yes, please explain Within the last 5 years, has any claim been made, or is any claim now pending, against the organization, or any person proposed for Insurance in the capacity of either Director, Officer, Trustee, Employee or Volunteer of the organization? Yes or No (circle response) IF YES, ADVISE ON A SEPARATE SHEET DETAILS OF THE DIRECTORS & OFFICERS LIABILITY INSURANCE AND REMEDIAL MEASURES TAKEN TO PREVENT A RECURRENCE OF SUCH CLAIM(S). Is any person proposed for this insurance aware of any fact, circumstance or situation which may result in a claim against the organization or any of its Directors, Officers, Trustees, Employees, or Volunteers? Yes of No (circle response) If yes, give detail. Attach Financials Attach District Directory The undersigned declares that to the best of his/her knowledge and belief the statements set forth herein are true. The undersigned further declares that any occurrence or event taking place prior to the effective date of the insurance applied for which may render inaccurate, untrue, or incomplete will immediately be reported in writing to the Insurer and the Insurer may withdraw or modify any outstanding quotations and/or authorization or agreement to bind the insurance. The insurer is hereby authorized, but not required, to make any investigation and inquiry in connection with the information, statements and disclosures provided in this application. The decision of the Insurer not to make or to limit any investigation or inquiry shall not be deemed a waiver of any rights by the Insurer. Signature: Title: Date: 17

32 McDonald & Wessendorff Insurance DATE: September 12, 2018 ENGINEER: Blackline Engineering ATTN: Scott Novosad Morton Street, Richmond, TX Phone: (281) Katrina Thornhill RE: Galveston Co. MUD No. 6; Engineer Report of Values (ERV) We have been requested to submit an insurance proposal for the above referenced District. Please review the questions below and indicate the type and quantity of any facilities pertinent to The District. Indicate how many of the following the district owns. If none, so indicate. Does the district have water wells? If so, number of submersible pumps? Lessors Risk (Sq/Ft) Pumps 500 HP or greater Swimming Pools Parks / Trails Detention Ponds* 1 Lakes** *Ponds = have sloped sides / primarily for detention/retention can be wet or dry **Lakes = mainly for amenity purposes Please complete the following information for all insured facilities. ***PLEASE NOTE: INSURANCE POLICY IS BASED ON REPLACEMENT COST VALUATION*** LOCATION SCHEDULE Description Address City State Zip Any facilities to insure? Replacement Month/Year Flood Zone Construction Value (ie: X,A,AE) & sq ft of buildings $ Fire Alarm: Y/N Sprinklers: Y/N Intrusion Alarm: Y/N Central Station Alarm: Y/N PLEASE LIST CONTENTS AS SEPARATE LINE ITEM. TOTAL REPLACEMENT COST: $ Mobile Equipment (please include year, make, model, serial number & value): Thanks for providing this information to our office. Please call if you should have any questions, or comments concerning this document. Please return upon completion by fax to (281) SIGN HERE: SCOTT NOVOSAD 9/28/18 X Acknowledged By: (Signature) Print Name Date In the event of a claim, if the values are not updated The District could suffer a financial loss. Please note the Engineer or General Manager s signature approving these values.

33 CyberRisk HOW OUR COVERAGE RESPONDS FOR PRIVATE, NONPROFIT AND PUBLIC COMPANIES Liability Insuring Agreements Insuring Agreement Definition Claim Scenario Coverage Response Network and Information Security Liability Communications and Media Liability Coverage for claims arising from unauthorized access to data, failure to provide notification of a data breach where required by law, transmission of computer virus and failure to provide authorized users with access to the company website Coverage for claims arising from copyright infringement, plagiarism, defamation, libel and slander in electronic content A hacker obtains sensitive personal information from the insured s computer system. As a result, a number of customers bring a claim against the insured for allowing access to their personal information. A lawsuit is brought against the insured by another entity alleging that their online content and organizational branding have been plagiarized and their trademarks infringed upon. Damages and defense costs for covered lawsuits Damages and defense costs for covered lawsuits Regulatory Defense Expenses Coverage for governmental claims made as a result of network and information security liability or communications and media liability A charity with offices nationwide suffers a major data breach involving thousands of donors. As a result, attorneys general in multiple states bring regulatory action against the insured. Costs for responding to regulatory claims stemming from the data breach, including any resulting fines or penalties First-party Insuring Agreements Insuring Agreement Definition Claim Scenario Coverage Response Crisis Management Event Expenses Coverage for public relations services to mitigate negative publicity The insured s chief customer service officer has his laptop stolen. The laptop contains more than 100,000 donor records, including their personal contact information. Costs for hiring a public relations firm to restore donor confidence or mitigate negative publicity generated from the incident Security Breach Remediation and Notification Expenses Coverage for costs associated with notification of individuals breached, credit monitoring for 365 days, fraud expense reimbursement and call center A skilled cyber criminal hacks into the insured s internal processing system. Names, addresses and credit information for more than 50,000 of the insured s members are captured from the system. Costs for retaining legal counsel to assist with the breach response, including forensics, notice requirements and expenses; providing credit monitoring and a call center for impacted individuals; and obtaining an ID fraud policy for affected victims Computer Program and Electronic Data Restoration Expenses Coverage for expenses to restore data lost from system damage due to computer virus or unauthorized access A computer virus corrupts the insured s system software and data. Costs for repair and restoration of the insured s computer programs and electronic data Computer Fraud Coverage for loss of money, securities or other property due to unauthorized system access An organized crime ring gains unauthorized access to the insured s accounts payable in their computer system and alters the bank routing information on outgoing payments. The result $1 million transferred to the crime ring s account. Direct loss of the insured s money, securities or other property

34 First-party Insuring Agreements (continued) Insuring Agreement Definition Claim Scenario Coverage Response Funds Transfer Fraud Coverage for loss of money or securities due to fraudulent transfer instructions to a financial institution An insured receives an that appeared to be from its bank, but was not. The insured s employee opens the , which activates embedded malware that reads key strokes from their computer. The perpetrator uses this means to obtain banking and password information and initiate a fraudulent electronic wire transfer from the insured s bank account. The insured s funds that were fraudulently transferred from its bank account E-Commerce Extortion Coverage for money paid as a result of threats made to fraudulently transfer funds, destroy data, introduce a virus, attack a system or disclose electronic customer information The insured receives a series of notes that threaten to hack into its customer database and disclose all of the contact information to the general public. Expenses to manage the incident and monies or securities paid to the extortioner Business Interruption and Additional Expenses Coverage for loss of income and expenses to restore operations as a result of a computer system disruption caused by a virus or unauthorized computer attack An organization s server is infected by a severe virus and as a result, their internal computer network is not available for an extended period. The net proceeds that would have been earned (or net losses that would have been avoided) resulting from the computer system disruption Travelers CyberRisk coverage is offered as a stand-alone policy or as a cohesive part of the Wrap+ and Executive Choice+ management liability suite of coverages. CyberRisk provides a combination of coverage options to help protect organizations from emerging cyber threats and now includes access to the Travelers erisk Hub an information portal of risk management tools. travelersbond.com Travelers Casualty and Surety Company of America and its property casualty affiliates. One Tower Square, Hartford, CT This material does not amend, or otherwise affect, the provisions or coverages of any insurance policy or bond issued by Travelers. It is not a representation that coverage does or does not exist for any particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law. Availability of coverage referenced in this document can depend on underwriting qualifications and state regulations The Travelers Indemnity Company. All rights reserved. erisk Hub is a registered trademark of NetDiligence. Travelers and the Travelers Umbrella logo are registered trademarks of The Travelers Indemnity Company in the U.S. and other countries Rev. 4-15

35 As required by Chapter 2270, Government Code, McDonald & Wessendorff Insurance hereby verifies that it does not boycott Israel and will not boycott Israel through the term of the policies included in this proposal. For purposes of this verification, boycott Israel means refusing to deal with, terminating business activities with, or otherwise taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations specifically with Israel, or with a person or entity doing business in Israel or in an Israeli-controlled territory, but does not include an action made for ordinary business purposes. Foreign Terrorists Organizations. Pursuant to Chapter 2252, Texas Government Code, McDonald & Wessendorff Insurance represents and certifies that, at the time of execution of this proposal neither McDonald & Wessendorff Insurance, nor any wholly owned subsidiary, majority-owned subsidiary, parent company or affiliate of the same (i) engages in business with Iran, Sudan, or any foreign terrorist organization as described in Chapters 806 or 807 of the Texas Government Code, or Subchapter F of Chapter 2252 of the Texas Government Code, or (ii) is a company listed by the Texas Comptroller of Public Accounts under Sections , , or of the Texas Government Code. The term "foreign terrorist organization" in this paragraph has the meaning assigned to such term in Section of the Texas Government Code. McDonald & Wessendorff Insurance 611 Morton Richmond, Texas PH (281) (MUDS) Fax: (281) (MUDS)