Agenda - 08-01-2022; 2 - Ratification of County Manager's Execution of an Insurance Coverage Agreement with Travelers Insurance and Approval of a Letter of Credit Agreement

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DocuSign Envelope ID: FCD9FE56-CF01-4E96-B983-B8E8DFE6811C 21 ALLOCATED LOSS ADJUSTMENT EXPENSE EXHIBIT In addition to the terms contained elsewhere in the Agreement,you agree to the provisions listed in this Allocated Loss Adjustment Exhibit. 1. Allocated Loss Adjustment Expense ("ALAE") has the same meaning as "Allocated Loss Adjustment Expense" or "ALAE" or "Defense Expense" or"claim expense" in the applicable Policy or, if the Policy contains no such definition, means the following costs which can be directly allocated to a particular claim: A. Fees of attorneys or other authorized representatives where permitted for legal services, whether by outside or staff representatives. B. Court,Alternate Dispute Resolution and other specific items of expense whether incurred by an outside vendor or by one of our employees,including but not limited to: • Medical examinations of a claimant to determine the extent of our liability, degree of permanency or length of disability; • Expert medical or other testimony; • Autopsy; • Witnesses and summonses; • Copies of documents such as birth and death certificates and medical treatment records; • Arbitration fees; • Fees or costs for surveillance or other professional investigations which are conducted as part of the handling of a claim; • Fees or costs for Risk Control personnel, rehabilitation nurses or other nurses, if the cost of such nurses is not included in losses,for services which are conducted as part of the handling of a claim; • Appeal bond costs and appeal filing fees;and • All reasonable expenses incurred by you in the investigation or defense of a claim. C. Medical cost containment expenses incurred with respect to a particular claim, whether by an outside vendor or done internally by an employee for the purpose of controlling losses, to ensure that only reasonable and necessary costs of services are paid. The expenses include but are not limited to: • Bill auditing expenses for any medical or vocational services rendered,including hospital bills(inpatient or outpatient), nursing home bills, physician bills, chiropractic bills, medical equipment charges, pharmacy charges, physical therapy bills,medical or vocational rehabilitation vendor bills; • Hospital and other treatment utilization reviews, including pre-certification/pre-admission,concurrent or retrospective reviews; • Preferred Provider Network/Organization expenses;and • Medical fee review panel expenses. D. Expense(s) not defined as losses which are directly related to and directly allocated to the handling of a particular claim and are required to be performed by statute or regulation. E. Supplementary Payments,as defined in those Policies which have a Supplementary Payments provision,except for salaries, overhead and traveling expenses of carrier employees who are not doing activities previously listed as allocated expenses. F. Defense Costs, as defined in those Policies which have a Defense Cost provision,except for salaries,overhead and traveling expense of carrier employees who are not doing activities previously listed as allocated expenses. G. The following shall not be included as"Allocated Loss Adjustment Expense"or"Defense Expense": • Salaries,overhead and traveling expenses of carrier employees, except for employees while doing activities previously listed as ALAE; • Fees paid to independent claims professionals or attorneys (hired to perform the function of claim investigation normally performed by claim adjusters)for developing and investigating a claim so that a determination can be made Version 09.16.19 ALAE Exhibit Orange County Page 19 CA Form-W041V16F19 ©(2019)The Travelers Indemnity Company.All rights reserved.