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1989-1312779L NO $9./3/ AN ORDINANCE ACCEPTING THE PROPOSAL OF ARKWRIGHT MUTUAL INSURANCE COMPANY FOR BOILER AND MACHINERY INSURANCE COVERAGE, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR, AND DECLARING AN EFFECTIVE DATE THE CITY COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I That the proposal of Arkwright Mutual Insurance Company-for moiler and Machinery insurance coverage, a copy of which is attached hereto and incorporated by reference herein, is hereby accepted SECTION II That the City Council hereby authorizes the expen ture o unds in the manner and amount as specified in the agreement SECTION III That this ordinance shall become effective imme ate y upon its passage and approval PASSED AND APPROVED this the 12.~ day of , 1989 Ray St ns, ayor ATTEST enn ~ ter a, Cy 5zcrerarry APPROVED AS TO LEGAL FORM DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY BY ILM ~ - ,i 1, ii It k I k I I ( ill u l i ti tl l ~IW lil ~N II it Milli I v 71 40 10)J IAA 1! 3103 4 September 7 1989 City of Denton Purchasing Department 901 B texas Street Denton Texas 76201 SUBJECT BOILER & MACHINERY INSURANCE BID NUMBER RFP 1006 Enclosed is Arkwright Insurance Company's Renewal Proposal for Boiler & Machinery coverages The objective of our proposed Boiler & Machinery program is to continue to provide a broad and comprehensive policy that will produce stability of coverage and price over the long term while providing state of the art" loss prevention and property conservation services The proposed coverages high limits and service capabilities ire tailored specifically for the City of Denton This proposal meets or exceeds specifications See attached forms and proposal details We are prepared to renew these coverages effective October 1 1989 If any questions arise from this proposal I will be available for assistance Cordially Alan H Armbruster Senior Account Representative AHA/ j r 1468t B O I L E R & M A C H I N E R Y I N S U R A N C E P R O P O S A L for CITY OF DENTON TEXAS Prepared by Alan H ALmbruster Sr AccounL RepLesentatLve ARKWRIGHT INSURANCL COMPANY September 7 1989 CONTENTS I LOSS PREVENTION ENGINLERING II CLAIMS SERVICES III COVERALLS IV SPLCIAL CONDITIONS V POLICY TERM VI LOCATIONS VII LIMITS OF LIABILITY VIII DEDUCTIBLES IX PREMIUM X COST/BENEIIIS XI SUMMARY OI BENEFITS XII CURRENT INSUREDS I LOSS PRFVENTION £NGINIERING The City of Denton's substantial commitment to loss prevention is evidenced by the condition of its facilities and excellent loss experience over prior years the full resources of the Factory Mutual Engineering Division will continue to supplement the activities of your personnel in achieving the identification and control of all mayor exposures to loss Boiler and Machinery State Jurisdictional Inspections Life Studies 2nd Transfoimer Oil Testing are only a few of the many specialized engineering services available to the City of Dcnton qs an Arkwright Insured Arkwright provides additional backup to the Factory Mutual Engineering Division effort through the resources of our own loss prevention engineers Our purpose is to assure the quality of the basic field inspection effort and to assist in unique loss prevention engineering problems which may arise Our Regional Engineering Staff includes John Williams Assistant Vice President and Manager of Engineering for Arkwright and James E Haskett Senioi Boiler & Machinery Engineer Both individuals would be involved in our efforts with the City of Denton Both Mr Williams and Mr Haskett each have in excess of thirty years Boiler & Machinery experience Mr Haskett will continue to serve as primary coordinator of all Factory Mutual field inspections in addition to his periodic visits to selected plants requiring special attention Our local Factory Mutual Engineers enjoy considerable expertise and experience II CLAIMS SFRVlCFS Losses are adjusted through Factory Mutual Adjustment located in Dallas Texas Factory Mutual Adjustment will work directly with the City of Denton so that claims can be e_pedited and delays minimized Factory Mutual Adjustment will contact the insured for immediate action based on the loss Depending on the nature of claims Adjustment representatives can be at the site of the loss within hours Mr Tom Freeman Vice President and Regional Claims Manager for Arkwright is responsible for developing a positive working relationship with our policyholders and working closely with Factory Mutual Adjustment He will monitor all loss adjustment activities and participate where necessary to provide supplemental service that will assure fair and equitable settlements on a timely basis Representatives of the City of Denton will be kept informed through correspondence and reports so that the status of claims can be known at all times CIrY OF DENTON III COVERAGES Extended Comprehensive Boiler & Machinery coverage for Physical Damage as per current policy to include Any boiler any fired vessel any metal unfired vessel subject to vacuum or internal pressure other thin static pressure of contents any refrigerating and air conditioning vessels and piping or any piping and its accessory equipment and including any boilei of pressure vessel mounted on mobile equipment An) mechanical or electrical machine or electrical apparatus used for the generation transmission or utilization of mechanical or electrical power Any transformer or electrical apparatus whether or not located on the premises of the insured owned by a public utility company and which is used to supply electrical power solely to the premises of the insured computing Machines and Electronic Data Processing equipment or electronic computer control equipment Miscellaneous electrical apparatus consisting of iadro broadcasting equipment IV SPECIAL CONDITIONS 1 Repair or Replacement on Same or Another Site with New Kind etc 2 Connected and Ready for Use exclusion waived 3 Lightning Loss No exclusion 4 'Care Custody or Control of Inured' provision has been deleted and loss of use of such property has been reinstated IV SPECIAL CONDITIONS (Continued) V POLICY TERM VI LOCATIONS VII LIMITS OF LIABILITY 5 Electronic computer control or data processing equipment used for production purposes is included 6 Sixty (60) day Notice of Cancellation 7 Premium and/or rates may be adjusted annually 8 90 day Automatic Coverage for newly acquired properties 9 A M Best Rating A+ (Superior) 10 Stock Company forms are fully admitted and approved by the State of Texas October 1 1989 to October 1 1992 As per specifications $10 000 000 Combined any one accident $ 50 000 Expediting Expense VIII DEDUCPIBLES $5 000 or $ 80 per KVA of the stated capacity whichever is greater for all power and distribution transformers For the equipment in the Power Plant only DESCRIPTION Or OBJECT Water Tube Boilers having a heating surface of 15,000 square feet of more Steam Turbine 12 650 kw Steam Turbine 12 650 kw Steam Turbine 22 000 kw Steam Turbine 65 483 kw Steam Turbine 61 162 kw DLDUCTIBLE, AMOUNT $ 50 000 25 300 25 300 44 000 130 966 122,324 Transformers having a capacity of 25 000 kva or more but less than 50 000 kva 28,000 Transformers having a capacity of 50 000 kva or more 55 000 Any other Object at this location 25 000 $5 000 for all other Objects at all locations IX PREMIUM $46 912 Annually X COST/BENEFIT ANAIYSIS BENEFITS COSIS Property Loss Prevention Engineering Services Greatly $ 25 000 + Reduce Liability Exposures (see Note) Prudent Location Deductible (only one deductible applies in event of joint Fiie/DIC 5 000 + loss fewer dollars of loss assumed) Stability Of Price And Market Due To Reinsurance Cycles 5 000 F 5 000 + Property Appraisals Available Fixed' Annual Premium (no loss retro) 1 + Known Underwriters/Adju sters (dir ect/open contact) 1 + Market Stability After Large Loss es (proven) 1 + Flexibility Of Program Design (i e coverages/additional locs ) 1 + High Loss Limits (i e stability of price) 1 + BENEFIIS/SERVICES INCLUDED TOTALS ($40 000 NOTE 55+ locations inspected at an average of 8 hours pei location for visits and report writing (55+ locs x 8 hours = 440+ manhours x $65/hr - $28 600+) Proposed Annual Premium/$5 000 Deductible EFFECTIVE ""RISK TRANSFER/INSURANCE' COST $46,912 $ 6 912 XI SUMMARY OF BENEFITS 1 Arkwright Insurance Company is a major underwritet of Governmental Manufacturing, Commercial and Institutional organizations The property insurance programs we design for our Insureds are unique in each case 2 the deductible for the various All Risk property coverages applies concurrently Only one deductible would apply to any one loss 3 Arkwright's Proven stability. regardless of vast swings in the reinsurance marketplace 4 S erior En ineerin Pro ert Conservation services An engineer of our organization iegulary visits with you to assist in property conservation needs Free engineering reviews of plans materials and completed work is provided for any new or proposed projects 5 Repair or replacement coverage is provided for property coverages without coinsurance 6 Stable Pricing and deductibles both now and in the future 7 Service is provided on several levels with planned visits by management the account underwriter and the account engineeis 8 High limits of capacity to provide high Boiler & Machinery limits 9 Local Underwriters emphasize direct open contact 10 Damage to property of others is included while in your care custody and control' with values appropriately reported 11 Written notice is not required in the event of loss 12 Coverage Fnhancements can be added 2t any time XII CURRFNT ARKWRIGHT POLICYHOLDERS CITY OF DENTON CITY OF DALLAS GIIY OF CARROLLTON CITY OF AUSTIN CITY OF El PASO CITY OF ODESSA CENTRAL LOUISIANNA hLECTRIC COMPANY PUBLIC SERVICE OF SAN ANTONIO LOWER COLORADO RIVER AUTHORITY BRAZOS ELECTRIC POWER COOP TEXAS INSTRUMENTS INC FRITO LAY INC SUE DATE I ARKWRIGHT INSURANCE COMPANY March 23, 1989 Clause No 1 INSURED CITY OF DENTON, TEXAS Sheet A No 1 Replacing Sheet No Policy No 390659 Effective Date January 1, 1989 2 COVERAGES The coverages provided by this Policy are defined by the lForms and ocations desc abed meths attached to and forming a part of this Policy and apply only Schedule(s) attached to and forming a part of this Policy 3 PREMIUM PAYABLE Any return of premium accruing under this Policy, unless otherwise stated, shall be applied to the account of CITY OF DENTON, TEXAS 4 LOSS PAYABLE Loss, if any, on all property, unless otherwise stated, shall be payable to CITY OF DENTON, TEXAS 5 BOILER AND MACHINERY COVERAGE The following Object Group Descriptions apply under the terms of Section III of the Forms and Endorsements, and to locations covered for Boiler and Machinery Insurance as shown in the Schedules, attached to and forming a part of this Policy Group Code Group Description COMP-1 BOILERS AND METAL FIRED OR UNFIRED PRESSURE OR VACUUM VESSELS, ASME STAMPED FIBERGLASS REINFORCED PLASTIC UNFIRED PRESSURE VESSELS, METAL PRESSURE PIPING, ALL NORMALLY SUBJECT TO VACUUM OR INTERNAL PRESSURE OTHER THAN STATIC PRESSURE OF CONTENTS, REFRIGERATING OR AIR'CONDITIONING SYSTEMS INCLUDING ADDITIONAL VESSELS AND PIPING, EXCLUDING (1) WASTE DISPOSAL PIPING, (2) ANY PIPING FORMING PART OF A FIRE PROTECTIVE BOILER FEED SYSTEM, ( PIPING BETWEEN PIPING T E OTHER FEED PUMP OR INJECTOR AND THE BOILER, (b) BOILER CONDENSATE RETURN PIPING, (c) WATER PIPING FORMING PART OF A REFRIGERATING OR AIR CONDITIONING SYSTEM USED FOR COOLING, HUMIDIFYING OR SPACE HEATING PURPOSES (SEE FORM 4501T) Letts R 1011 of 11 s In tllGiss S"n SUE DATE l ARKWRIGHT INSURANCE COMPANY March 23, 1989 Sheet A No Replacing Sheet No Policy No 390659 Effective Date January 1, 1989 Clause No BOILER AND MACHINERY COVERAGE (Continued) Group Code Group Description COMP-2 MECHANICAL OR ELECTRICAL MACHINES OR ELECTRICAL APPARATUS WHICH GENERATE, TRANSMIT, CONTROL, CONVERT OR RECEIVE MECHANICAL, ELECTRICAL, HYDRAULIC OR PNEUMATIC ENERGY OR POWER, AND MACHINES WHICH IMPEL GASES OR FLUIDS, EXCLUDING (1) VEHICLES, (2) ELEVATORS, HOISTS, CRANES, POWER SHOVELS, DRAGLINES, EXCAVATORS OR CONVEYORS TOGETHER WITH ANY MECHANICAL, ELECTRICAL OR HYDRAULIC APPARATUS MOUNTED ON THEIR FRAME OR COMMON BASE, OR FORMING AN INTEGRAL PART THEREOF, BUT NOT EXCLUDING ANY SEPARATELY MOUNTED AND CONNECTED DRIVING MOTOR, PUMP OR GEAR SET, (3) ALL BELTS, ROPES, NON-ELECTRICAL CABLES, AND CHAINS OF EVERY DESCRIPTION, CONSTRUCTION AND USE, (4) ELECTRONIC W COMPUTERS, ELECTRONIC O DATA DRAFT PROCESSING EQUIPMENT, OR ELECTRONIC COMPUTER CONTROL EQUIPMENT, (6) ANY EQUIPMENT USED FOR TESTING, EXPERIMENTAL, RESEARCH, DIAGNOSTIC, THERAPEUTIC, SURGICAL, DENTAL OR PATHOLOGICAL PURPOSES, (7) X-RAY MACHINES, USING RADIOACTIVE GMATERIA SG 8) RADIO OTHER OR TELEVISION APPARATUS, (9) PRECIPITATORS AND COAL PULVERIZERS, (10) MAINTENANCE AND PRODUCTION MACHINES WHICH PROCESS, FORM, SHAPE OR TRANSPORT RAW MATERIALS, MATERIALS IN PROCESS, WASTE MATERIALS OF THE PRODUCTION PROCESS OR FINISHED PRODUCTS TOGETHER WITH ANY MECHANICAL, ELECTRICAL OR HYDRAULIC APPARATUS MOUNTED ON THEIR FRAME OR COMMON BASE, OR FORMING AN INTEGRAL PART THEREOF, BUT NOT EXCLUDING, (a) ANY PRESSURE VESSEL WOULD WHICH OTHERWISE E INSURED DRIVING MOTOR, PUMP OR GEAR SET ( AND H (c) PUMPS, COMPRESSORS, FANS OR BLOWERS WHICH ARE NOT AN INTEGRAL PART OF SUCH MACHINES (SEE FORMS 4502T and 4503T) Leun R jolt of line Intlloges revisjon E DATE I ARKWRIGHT INSURANCE COMPANY arch 23, 1989 { Sheet A No H Replacing Sheet No Policy No Effective Date Clause No 5 390659 January 1, 1989 7 FORMS AND ENDORSEMENTS The following Forms and Endorsements are attached to and form a part of this Policy Policy Description Endorsement No Form Edition 4000T III (7/87) 4000T DEC (7/87) 4501T (7/87) 4502T (7/87) 4503T (7/67) Insuring Agreement Declarations Object Definitions No 1 - Pressure & Refrigeration Objects Object Definitions No 4- Turbine Objects Object Definitions No 2 - Mechanical Objects and No 3 - Electrical Objects 1 2 3 Authorized Underwriter Lett R left of I e Intl We. rev lion PN 390859 ARKWW~GH SECTION III fi F (Applicable to Boiler and Machinery Coverages Only As Defined in this Section of the Policy) INSURING AGREEMENT The Insuring Agreement, Conditions, Definitions and Special Provisions and other terms of this Section shall apply only as specified None of the provisions, stipulations and other terms of the other Sections of this Policy shall apply Various provisions in this policy restrict coverage Read the entire policy carefully to determine rights, duties and what is and is not covered Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations The words "we," "us" and "our" refer to the Company providing this insurance Other words and phrases that appear in quotation marks have special meaning Refer to section F - DEFINITIONS A COVERAGE We will pay for direct damage to Covered Property caused by a Covered Cause of Loss 1 Covered Property Covered Property, as used in this Coverage Part, means any property that a You own, or b Is in your care, custody or control and for which you are legally liable In addition to paying for loss to this property, we will defend you against any claim or "suit" alleging liability for damage to this property, subject to the Defense and the Supplementary Payments provisions 2 Covered Cause of Loss A Covered Cause of Loss is an "accident" to an "object" shown in the Declarations An "object" must be in use or connected ready for use at the location specified for it at the time of the "accident i' 3 Coverage Extensions a Expediting Expenses With respect to your damaged Covered Property, we will pay the reasonable extra cost to (1) Make temporary repairs (2) Expedite permanent repairs, and (3) Expedite permanent replacement We restrict the amount payable for Expediting Expenses as explained in the Limits of Insurance section of this Coverage Form b Automatic Coverage for A Newly Acquired Location We will automatically cover an "accident" to an "object" at a newly acquired location This automatic coverage begins at the time you acquire the property and continues for 90 days under the following conditions (1) You must inform us, in writing, of the newly acquired location within 90 days of the date you acquire it, (2) The "object" must be in use or connected ready for use at the time of acquisition and throughout the period of automatic coverage and be of a type that would be included in any "Object" Group Description shown in the Declarations, PAGE 1 of 9 Edition July 1987 Form 4000T-Section III (I ~ M11 RMVR~IGII (3) The Limit of Insurance and Deductible amount will be the highest amounts shown in the Declarations for the same type of "object", al Dama (4) InWe will not terruption b or liable under ithis ndirect lose refor sulting efromtlan "acciident""uto an "object", and (5) You agree to pay an additional premium as determined by us c Defense If a claim or "suit" is brought against you allegng that you are liable for damage to property of another in your care, custody or control, that was directly caused by an "accident" to an "object", we will either (1) Settle the claim or "suit", or or "suit", but keep for ourselves the right to (2) Defend you against the claim settle it at any point d Supplementary Payments We will pay with respect to any claim or "suit" we defend (1) All expenses we incur, (2) The cost of bonds to release attachments, but only for bond amounts within the Limit of Insurance We do not have to furnish these bonds, (3) All reasonable expenses incurred by you at our request to assist us in the investigation or defense of the claim or "suit", including actual loss of earnings up to $100 a day because of time off from work, (4) All costs taxed against you in any "suit" we defend, ent (5) Pre-judgement interest awarded against you Limit oarI of the judgmw 11 not pay If we make an offer to pay the applicable pay any prejudgment interest based on that period of time after the offer, and (6) uAll inter on the dgment sand before we have t paid, offered eto pay, oredeposited in court the of any part of the judgment that is within the Limit of Insurance shown in the Declarations These payments will not reduce the Limit of Insurance B EXCLUSIONS We will not pay for 1 Ordinance or Law Any increase in loss caused by or resulting from the enforcement of any ordnance, law, regulation, rule or ruling regulating or restricting repair, alteration, use, operation, construction or installation 2 Nuclear Hazard Loss caused by or resulting from nuclear reaction or radiation, or radioactive contamination, however caused 3 War and Military Action Loss caused by or resulting from a War, including undeclared or civil war, b Warlike action by a military force, ncluding acovernment,dsovere gn defending eotherr against an actual or expected attack, by y g authority using military personnel or other agents, or governmental c Insurrection, rebellion, revolution, usurped power or action taken by authority in hindering or defending against any of these Edition July 1987 PAGE 2 of 9 Form 4000T-Section III i ARKWR~IGII 4 Other Exclusions Loss caused by or resulting from, a explospon sof an "object" of a kmdldepay for loss caused by o scribed below and only to "objects" resulting covered by this insurance and as described on an Object Definitions Endorsement Explosion of any (1) Steam boiler, (2) Electric steam generator, (3) Steam piping, (4) Steam turbine, (5) Steam engine, (6) Gas turbine, or (7) Moving or rotating machinery caused by centrifugal force or mechanics breakdown b frFire om o an e acc dent" With respect to any elec`tri al equipment forming a part of an "object", this exclusion is changed to read Fire or explosion outside the "object" that occurs at the same time as an "accident" or ensues from an "accident " C An "accident" that is the direct or indirect result of an explosion or fire, d Water or other means used to extinguish a fire, even when the attempt is unsuccessf ul, e Lightning, if coverage for that cause of loss if provided by another policy of insurance you have, f Flood However, if an "accident" results from a flood, we will pay for direct damage to Covered Property caused by the "accident", g An "accident" to any "object" while being tested, "accid h lliimited toe earthquake,landsl landslide,mudslide, subsidence or volcanic eruption, indirectly by earth movement, 1 Lack of power, light, heat, steam or refrigeration, 1 A delay in, or an interruption of, any business, manufacturing or processing activity, or k Any other indirect result of an "accident" to an "object" We will not pay for any loss excluded above even though any other cause or event contributes concurrently or in any sequence to the loss C LIMITS OF INSURANCE 1 We will not ay more than the applicable Limit of Insurance shown in all drectdamage to Covered Property that results from any "one accident Declarations for this Coverage not t in l he Limit of Insurance to payment edamage for g 2 The Property are following part of coverage and limitations Form PAGE 3 of 9 Edition July 1987 Form 4000T-Section III r' ARMVI GII r a Expediting Expenses Our payment for Expediting Expenses will be limited to (1) $5,000, or (2) What is left of the Limit of Insurance after we pay your loss for Covered Property damaged by an "accident", whichever is less b Hazardous Substance Limitation The following applies despite the operation of the Ordinance or Law Exclusion This limitation does not apply to damage, contamination or pollution caused by ammonia If Covered Property is damaged, contaminated or polluted as a reesult of an "accident" to an "object" by a substance declared to be hazardous to health by an authorized governmental agency, the most we will pay for any additional expenses incurred by you for clean up, repair or replacement or disposal of that property is $5,000 As used here, additional expenses mean expenses incurred beyond those for which we would be liable if no substance hazardous to health had been involved c Ammonia Contamination Limitation If Covered Property is contaminated by ammonia as a result of an "accident" to an "object", the most we will pay for this kind of damage, including salvage expense, is $5,000 d Water Damage Limitation If Covered Property is damaged by water as a result of an "accident" to covered refrigerating or air conditioning vessels and piping, the most we will pay for this kind of damage, including salvage expense, is $5,000 Any payment made under Section C will not increase if more than one insured is shown in the Declarations D DEDUCTIBLE We will first subtract the deductible amount shown in the Declarations from the amount we would otherwise pay as a result of direct damage to Covered Property arising from an "accident" If more than one "object" is involved in "one accident", only the highest deductible will apply E CONDITIONS The following conditions apply 1 Loss Conditions a Duties In the Event of Loss or Damage You must see that the following are done in the event of loss or damage (1) Give us a prompt notice of the loss or damage Include a description of the property involved, (2) As soon as possible, give us a description of how, when and where the loss or \ 1 damage occurred, PAGE 4 of 9 Edition July 1987 Form 4000T-Section III i AR G T (3) Allow us a reasonable time and opportunity to examine the property and premises before repairs are undertaken or physical evidence of the "accident" is removed You must take whatever measures are necessary for protection from further damage, (4) Permit us to inspect the property and records, (5) If requested, permit us to question you under oath, at such times as may be reasonably required about any matter relating to this insurance or your claim, including your books and records In such event, your answers must be signed, request, (6) rSen us a signed, sworn equest to settle the claim You must do this within ~60 days after information and (7) Cooperate with us in the investigation and settlement of the claim b Insurance Under Two or More Coverages If two or mre of not pay more than the actual amount of the loss oorhdamage lsubjectdto the Limit of Insurance C Legal Action Against Us No one may bring a legal action against us under this Coverage Part unless, (1) There has been full compliance with all the terms of this Coverage Part, and (2) The action is brought within 2 years after the date of the "accident", or (3) We agree in writing that you have an obligation to pay for the damage to Covered Property of others or until the amount of that obligation has been determined by final judgment or arbitration award No one has the right under this policy to bring us into an action to determine your liability d Loss Payable Clause (1) We will pay you and the loss payee shown in the Declarations for loss due to an "accident" to an "object", as interests may appear The insurance covers the interests of the loss payee unless the loss results from conversion, secretion or embezzlement on your part (2) CWe may cancel the policy as ancellation ends this agreement asatoothe loss payee's Cnterest ion Condition If we cancel we will mail you and the loss payee the same advance notice (3) If we make any payment to the loss payee, we will obtain their rights against any other party e Other Insurance (1) You may have other insurance subject to the same plan, terms, conditions and provisions as the insurance under this Coverage Part If you do, we will pay our share of the covered loss or damage Our share is the proportion that the applicable Limit of Insurance under this Coverage Part bears to the Limits of Insurance of all insurance covering on the same basis (2) If there is other Insurance covering the same loss or damage, other than that described in (1) above, we will pay only for the amount of covered loss or damage in excess of the amount due from that other insurance, whether you can collect on it or not In no case will we pay more than the applicable Limit of Insurance PAGE 5 of 9 Edition July 1987 Form 4000T-Section III mw~ GH`Q' r0l f Transfer of Rights of Recovery Against Others to Us if any person or organization to or for whom we make payment under this Coverage Part has rights to recover damages from another, those rights are transferred to us to the extent of our payment That person or organization must do everything necessary to secure our rights and must do nothing after loss to impair them g Valuation (1) We will pay you the amount you spend to repair or replace your property directly damaged by an "accident " Our payment will be the smallest of (a) The Limit of Insurance (b) The cost at the time of the "accident" to repair the damaged property with property of like kind, capacity, size and quality, (c) The cost at the time of the "accident" to replace the damaged property on the same site with other property (i) Of like kind, capacity, size and quality, and (ii) Used for the same purpose, (d) The amount you actually spend that is necessary to repair or replace the damaged property (2) As respects any "object", if the cost of repairing or replacing only a part of the "object" is greater than (a) The cost of repairing the "object', or (b) The cost of replacing the entire "object" on the same site, we will pay only the smaller of (a) or (b) The repair parts or replacement "object" must be (c) Of like kind, capacity, size and quality, and (d) Used for the same purpose PI (3) We will not pay you (a) If the loss or damage is to property that is obsolete or useless to you or aged property (b) For any extra cost if you decide to property of a better kind or quality repair or of larger capacity (4) If you do not repair or replace the damaged property within 18 months after the date of the "accident", then we will pay only the smaller of the (a) Cost it would have taken to repair, or (b) Actual cash value, at the time of the "accident" Paragraph (4) does not apply to any time period beyond the 18 months that we agree to in writing 2 General Conditions a Additional Insured if a person or organization is designated in this Coverage Part as an additional insured, we will consider them to be an insured under this Coverage Part to the extent of their interest b Bankruptcy The bankruptcy or insolvency of you or your estate will not obligation under this Coverage Part Form 4000T-Section III PAGE 6 of 9 relieve us of any Edition July 1987 ARKWRIGH th~s poky by c cancellation ancel 1 mailinfirst Named Insured Shown in the Declarations may c g or delivering to us advance written notice of cancellation 2 We may cancel this policy by mailing or delivering to the first Named Insured written notice of cancellation at least a 10 days before the effective date of cancellation if we cancel for nonpayment of premium, or b 30 days before the effective date of cancellation if we cancel for any other reason 3 We will mail or deliver our notice to the first Named Insured's last mailing address known to us will state the effective date of cancellation The 4 Notice of cancellation policy period will end on that date 5 If this policy is cancelled, we will send the First Named Insured any premium refund due If we cancel, the refund will be pro rata If the first Named Insured cancels, the refund may be less than pro rata The cancellation will be effective even if we have not made or offered a refund 6 If notice is mailed, proof of mailing will be sufficient proof of notice d Changes This policy contains all the agreements between you and us concerning the insurance afforded The first Named Insured shown in the Declarations is waterms of ived only h be endorsement issuedsbytus and authoried to pol cy'sZterms can e be changes amended or the made a part of this policy e Examination of Your Books and Records to this policy at We may examine and audit o books and and records as they relate three years afterward any time during the policy period up to f Inspections and Surveys We have the right but are not obligated to 1 Make inspections and surveys at any time, 2 Give you reports on the conditions we find, and 3 Recommend changes Any inspections, surveys, reports or recommendations relate only to insurability and the premiums to be charged We do not make safety inspections We do not orm the undertak to perf organ health oresafety of workers ortthe puany bli ceAnd we do not warora tothat provideonditfor 1 Are safe or healthful, or 2 Comply with laws, regulations, codes or standards reports service makes insurance any rating, inspections, surveys, rate This tiizlation which to us, but or similar organ or recommendations PAGE 7 of 9 Edition July 1987 Form 4000T-Section III AR ffidGH g object Group All "objects" in use or connected ready for use and included in an "Object" C) Group Definition will be considered as individually described in the t Declarations The premiums for "objects" included in an "Object" Group Description will be adjusted as follows (1) obtain ull Tbase the initial he rates charged will be those in effect on the first day of coverage (2) We will charge an additional premium for "objects" that are added to the policy after the effective date of this policy The additional premium for these "objects" will be computed pro rata that are e return premium r will t (3) allow a return ve date of the policy The the effects "objects" policy aft be computed pro rata from the time the "objects" are disconnected h Policy Period, Coverage Territory Under this Coverage Part (1) The "accident" must occur (a) During the Policy Period shown in the Declarations, and (b) Within the coverage territory (2) The coverage territory is (a) The United States of America, and (b) Puerto Rico i Premiums The first Named insured shown in the Declarations 1 Is responsible for the payment of all premiums, and 2 Will be the payee for any return premiums we pay The premium shown in the Declarations was computed based on rates in effect at the time the policy was issued On each renewal, continuation, or anniversary of the effective date of this policy, we will compute the premium accordance with our rates and rules effect during the first or any subsequent anniversary, the then there applicable n rates will apply j Representations By accepting this policy, you agree (1) The statements in the Declarations are accurate and complete, (2) Those statements are based upon representations you made to us, and (3) We have issued this policy in reliance upon your representations k Suspension Whenever an "object" is found to be in, or exposed to, a dangerous condition, any of our "accdent" to that object immediately 1 Ths can be done by deliverng orl from an mailing a written notice of suspensions to (1) Your last known address, or (2) The address where the "object" is located PAGE 8 of 9 Edition July 1987 Form 4000T-Section III ARM UGH Once suspended in this way, your insurance can be reinstated only by an endorsement for that "object " If we suspend your insurance, you will get a pro rata refund of premium for that "object" But the suspension will be effective even if we have not yet made or offered a refund 1 Transfer of Your Rights and Duties Under This Policy Your rights and duties under this policy may not be transferred without written consent except in the case of death of an individual Named Insured If you die, your rights and duties will be transferred to your legal representative but only while acting within the scope of duties as your legal representative Until your legal representative is appointed, anyone having proper temporary custody of your property will have your rights and duties but only with respect to that property F DEFINITIONS 1 "Accident" means a sudden and accidental breakdown of the "object" or a part of the "object" At the time the breakdown occurs, it must manifest itself by physical damage to the "object" that necessitates repair or replacement None of the following is an "accident" a Depletion, deterioration, corrosion or erosion, b Wear and tear, c Leakage at any valve, fitting, shaft seal, gland packing, joint or connection, d Breakdown of any vacuum tube, gas tube or brush, e Breakdown of any electronic computer or electronic data processing equipment, f Breakdown of any structure or foundation supporting the "object" or any of its parts, g The functioning of any safety or protective device Turbine Units have separate definitions of "accident" If insured, refer to the Turbine Units Object Definitions Endorsements If a strike, riot, civil commotion, act of sabotage or vandalism results in an "accident" this insurance applies However, the War or Military Action Exclusion and the conditions of this Coverage Part still apply in the Objects Definitions description endorsement 2 specific „ "omeans the bject" categories are shown in attached to this Coverage Form 3 "One Accident" means If an initial accident causes other accidents all will be considered "one accident It All accidents at any one location that manifest themselves at the same time and are the result of the same cause will be considered "one accident " 4 include an arbitration proceeding to which you must submit with our consent ARBWRIGHT INSURANCE COMPANY Editlo July 1987 PAGE 9 0l 9 Form 40007 5ectl0n 111 IBM 00 25 11 851 T AR GHT BOILER AND MACHINERY COVERAGE FORM DECLARATIONS POLICY NO 390659 NAMED INSURED CITY OF DENTON, TEXAS MAILING ADDRESS 215 E McKinney Street Denton, Tex9s 76201 POLICY PERIOD From January 1, 1989 to January 1, 1992 at 12 01 A M Standard Time at your mailing address shown above PN 390649 IN RETURN FOR THE PAYMENT OF THE PREMIUM, AND SUBJECT TO ALL THE TERMS OF THIS POLICY WE AGREE WITH YOU TO PROVIDE THE INSURANCE AS STATED IN THIS POLICY LIMIT OF INSURANCE $10,000,000 PREMIUM See Policy Summary DEDUCTIBLE See Location Schedule(s) BUSINESS DESCRIPTION STEAM AND ELECTRIC POWER PLANTS MORTGAGE HOLDER NONE -,MORTGAGE HOLDER ADDRESS - LOSS PAYEE NONE LOSS PAYEE ADDRESS - SCHEDULE LOCATION OF THE "OBJECTS" SHOWN BELOW See Location Schedules SECTION (1) GROUP DESCRIPTION OR DESCRIPTION OF 11OBJECT" (1) COVERAGE (2) (1) GROUP CODE(S) COMP-1 COMP-2 MM-lA (1) See Clause No 5 on Sheet A for Section(s) and complete Group and Object Description(s) (2) See Location Schedule(s) for Coverage(s) FORMS APPLICABLE TO BOILER AND MACHINERY COVERAGE PART See Clause No 7 on Sheet A SPECIAL PROVISIONS, IF ANY 1 Form 4502T - BREAKDOWN COVERAGE 2 Expediting Expenses Limit - See Clause No 6 on Sheet A ARKWRIGHT INSURANCE COMPANY Form 40007111 DEC PAGE 1 of 1 Ed11io July 1987 r PN 390659 ARK-MGHT Policy Endorsement No 1 OBJECT DEFINITIONS NO 1 - PRESSURE AND REFRIGERATION OBJECTS This endorsement applies to Section III of the Policy 1 BOILERS, FIRED VESSELS AND ELECTRIC STEAM GENERATORS a "Object" means Any boiler, fired vessel or electric steam generator shown in the Declarations and includes any (1) Steel economizer used solely with them, (2) Steam boiler piping valves, fittings, traps and separators, but only if they (a) Are on your premises or between parts of your premises, and (b) Contain steam or its condensate generated in whole or in part in an "object", and (3) Feed water piping between any steam boiler and a feed pump or injector b "Object" does not mean (1) Any part not containing steam or water, (2) Any boiler setting, (3) Any insulating or refractory material, (4) Any piping not containing steam or steam condensate, (5) Any buried piping, (6) Piping, radiators, coils, vessels or apparatus, other than those included above, (7) Any reciprocating or rotating machine, or (8) Any electrical apparatus c Any of the following vessels listed below are included within the provisions of this section when used with an "object " (1) Condensate return tank, (2) Cushion or expansion tank used with a hot water heating boiler, and (3) Indirect water heater tank used for hot water supply service but only if it (a) Is directly in the water circulating system of the "object" it is used with, and (b) Does not form part of a storage water tank d For any boiler or fired vessel, the furnace of the "object" and the gas passages from there to the atmosphere will be considered as outside the "object " e An "object" using a heat transfer medium other than water or steam will be covered as though the medium were water or steam 2 UNFIRED VESSELS a "Object" means any unfired vessel shown in the Declarations However, "object" does not include any (1) Electric steam generator, (2) Part of a vessel that is not under (a) Pressure of the contents of the vessel, or (b) Internal vacuum, (3) Insulating or refractory material, (4) Reciprocating or rotating apparatus within or forming a part of the vessel, (5) Electrical apparatus within or forming a part of the vessel, Form4501T PAGE 1 OF 3 Edition July 1987 ARMUMH C; ~ (6) Piping leading to and from the vessel, (7) Buried vessels or piping, (8) Cylinder containing a movable plunger or piston, or (9) Vessel, radiator, inductor, convector or coil connected to or used with a refrigerating or air conditioning system b We will consider that the - connected ready for use - requirement of the coverage form and its endorsements has been met by an "object" in this section if that "object" is (1) Periodically filled, moved, emptied and refilled in the course of its normal service, and (2) Used for storage of gas or liquid 3 REFRIGERATING AND AIR CONDITIONING VESSELS AND PIPING a "Object" means any refrigerating or air conditioning vessel and piping shown in the Declarations consisting of (1) Interconnected vessels, coils and piping that contain refrigerant, (2) Vessels heated directly or indirectly that, (a) Form part of an absorption type system, and (b) Function as a generator, regenerator or concentrator, and (3) Valves and fittings When the "object" is an absorption system, it also includes hermetic solution pumps, hermetic evaporator refrigerant pumps and purge pumps (or compressors) together with their driving electric motors If the Declarations shown - Additional Vessels and Piping Included - "object" will also f include (4) Vessels, radiators, coils and all interconnecting piping along with their values and fittings that are connected to or used with the system and within which steam, water, brine or other solution is circulated for cooling, humidity control or space heating When a vessel uses a heat transfer medium other than water or steam we will consider the medium or its vapor as substitutes for the words-water or steam-as used in this Section b However, "object" does not include any (1) Boiler, (2) Steam piping, (3) Reciprocating or rotating machine or apparatus, (4) Electrical apparatus except as included in paragraph (3) above, (5) Electronic computer or electronic data processing equipment as well as, any hose, flexible device or nonmetallic pipe connected to such apparatus, (6) Vessel, cooling tower, reservoir or other source of supply of cooling water for a condenser or compressor as well as any water piping leading to or from such a source of supply, or (7) Buried vessels or piping 4 AUXILIARY PIPING a Object means any piping shown in the Declarations including any valve, fitting, trap or separator on the piping b However, "object" does not include any ` (1) Radiator, convector, coil or other vessel or apparatus connected to that piping, or (2) Buried piping Form4501T PAGE 2 OF 3 Edition July 1987 - ARKWRIGHT 0 5 SMALL COMPRESSING AND REFRIGERATING UNITS a "Object" means any small compressing or refrigerating unit shown in the Declarations, (not over 15 h p - maximum nameplate rating), b However, "object" does not include any wiring or piping leading to and from the unit 6 AIR CONDITIONING UNITS a "Object" means any air conditioning unit shown in the Declarations (not over 600,000 Btu per Hour - maximum nameplate rating) and including any (1) Interconnected vessels, radiators, inductors, convectors and coils that make use of a refrigerant, steam, water, brine or other solution and form part of the unit, (2) Interconnecting piping, valves and fittings containing only a refrigerant, water, brine or other solution, (3) Vessels heated directly or indirectly that (a) Form part of an absorption type unit, and (b) Function as a generator, regenerator or concentrator, (4) Compressors, pumps, fans and blowers used solely with the unit together with their driving electric motors, and (5) Control equipment used solely with the unit b However, "object" does not include any (1) Boiler, (2) Steam piping, (3) Vessels, cooling tower, reservoir or other source of supply of cooling water for a condenser or compressor, or water piping leading to or from such a source of supply, (4) Wiring or piping leading to or from the unit, or (5) Electronic computer or electronic data processing equipment ARKWRIGHT INSURANCE COMPANY Fo M4501T PAGE 3 OF 3 Edit on July 1907 (BM 00 26 11 85) PN 390659 GH`Q' Policy Endorsement No 2 OBJECT DEFINITIONS NO 4 - TURBINE OBJECTS This endorsement applies to Section III of the Policy TURBINE UNITS 1 "Object" a Means any turbine unit shown in the Declarations including any (1) Turbine, (2) Combustor, precooler, intercooler, regenerator or heat exchanger of a gas turbine unit, (3) Electric generator, pump, compressor, fan, blower, wheel or gear on (a) Any shaft of the driving turbine or turbines, or (b) A shaft connected to any of the driving turbines by a coupling, clutch or gear set, (4) Mechanical or hydraulic governing mechanism together with any electric motor used solely with the governing mechanism, (5) Auxiliary apparatus mounted on the unit or the bed or frame of the unit, (6) Lubricating oil pump, fuel pump or pump for circulating coolant, if used solely for the unit and any machine driving such a pump, (7) Auxiliary electric motor, steam turbine or other apparatus used solely to rotate the driving turbine or turbines for starting or maintenance purposes, (8) Apparatus used solely to scavenge a gas turbine unit, (9) Shaft that froms a part of the unit or connects parts of the unit together with any coupling, clutch, bearing, gear or gear set on such a shaft, and (10) Interconnecting wiring, piping or ducts between parts of the unit and mounted on the unit b Does not include any (1) Machines or other apparatus other than those included in paragraphs 1 (1) through (10) above, (2) Electronic computer or electronic data processing equipment, (3) Wiring, piping or ducts leading to or from the unit, (4) Condenser, its connecting pipe or adapter, (5) Penstock or draft tube, or (6) Boiler using exhaust gases from any gas turbine unit There are two definitions of "accident" for turbine units, c When the word - BREAKDOWN - is shown in the Declarations the following definition of "accident" applies to those units "Accident" means a sudden and accidental breakdown of the "object" or a part of the "object" At the time the breakdown occurs, it must manifest itself by physical damage to the "object" that necessitates repair or replacement None of the following is an "accident" (1) Depletion, deterioration, corrosion or errosion, (2) Wear and tear, (3) Leakage at any valve, fitting, shaft seal, gland packing, joint or connection, (4) Breakdown of any vacuum tube, gas tube or brush, (5) Breakdown of any electronic computer or electrons the "processing equipment, (6) Breakdown of any structure or foundation supporting ] Y of it parts, Form 4502T PAGE 1 of 2 Fdition July 1987 MT w. (7) The functioning of any safety or protective device (8) The cracking of any part of a gas turbine exposed to the products of combustion d When the word - EXPLOSION - is shown in the Declarations the following definition of "accident" applies to those units "Accident" means a sudden and accidental a Tearing asunder of any casing, combustor, duct, piping, precooler, mtercooler, regenerator, or heat exchanger, forming a part of a gas turbine, caused by pressure of gas, liquid or vapor therein, but not the tearing asunder of any gasket, rupture disc, shaft seal or seal strip, and cracking does not mean tearing asunder, b Breaking of the casing of any driving turbine, or the casing of any driven compressor or any auxiliary turbine of the "object", into two or more separate parts, but not the breaking of any gasket, rupture disc, shaft seal, seal strip or diaphragm, or c Breaking of any spindle, rotor or shaft of the "object", into two or more separate parts, but not the breaking of any blade, bucket or vane whether or not it forms a part of such spindle, rotor or shaft, of any shroud ring or other fastening, or of any gear or coupling, nor the loosening of any assembled parts, nor the breaking or loosening of any electrical conductor or its insulation, or of any band wire, retaining ring, wedge, or their fastenings We will not pay for the repair or replacement of any electrical conductor or its insulation, or of any band wire, retaining ring wedge, or their fastening, if that repair or replacement is made necessary as a result of an "accident" to an "object " "Accident" does not mean a Depletion, deterioration, corrosion or errosion of material, b Wear and tear, or c The breaking of any structure or foundation supporting the "object" or any part of the "object " ARBWRIGHT INSURANCE COMPANY Farm 9501T PAGE 2 01 2 Ed I Joey 1987 ISM 00 29 11 85) ARKWIUG111 TN 380658 Policy Endorsement No 3 OBJECT DEFINITIONS NO 2 - MECHANICAL OBJECTS AND OBJECT DEFINITIONS NO 3 - ELECTRICAL OBJECTS This endorsement applies to Section III of the Policy SECTION A (BM 00 27 11 85) 1 DEEP-WELL PUMP UNITS a "Object" means any deep-well pump unit shown in the Declarations including any (1) Nonrotating equipment used solely to start, stop or control the driving electric motor of the unit, and (2) Electrical conductors connecting the equipment and motor b However, "object" does not include any (1) Other electrical conductor, (2) Electronic computer or electronic processing equipment, (3) Piping leading to or from the unit, (4) Mechanism, appliance or shaft connected to the unit, or (5) Well casing 2 MISCELLANEOUS MACHINES, GEAR WHEELS AND ENCLOSED GEAR SETS a "Object" means any machine shown in the Declarations including any control apparatus mounted on that machine b However, "object" does not mean any (1) Mechanism or other apparatus connected to the machine, other than control apparatus included above, (2) Shaft on which a machine described as a gear wheel is mounted or the bearing on any such shaft, (3) Electrical apparatus, (4) Electronic computer or electronic data processing equipment unless used solely to govern or control the machine, (5) cFelt, wire, screen, die, extrusion hain, belt, clutch plate, brake pad, or any swing or tool s bject g to disc, cutting blade, frequent, periodic replacement, or (6) Piping or duct leading to or from the machine 3 ENGINES, PUMPS, COMPRESSORS, FANS AND BLOWERS a "Object" means any machine shown in the Declarations including any (1) (2) (3) Auxiliary or control apparatus mounted on that machine or the bed or frame of that machine, Auxiliary electric motor or other apparatus used solely to rotate that machine for starting or maintenance purposes, Lubricating oil pump or fuel pump and its driving electric motor if used solely for that machine, and Form 4503T PAGE 1 of 3 Edition July lgn7 r AItI(WRIGI T r, (4) When the machine is a reciprocating pump or a reciprocating compressor and (a) Forms an integral part of a steam engine or internal combustion engine, or (b) Is connected to such an engine by a coupling clutch or gear set, then (c) "Object" also includes the driving engine and any interconnecting coupling, clutch or gear set b However, "object" does not include any (1) Apparatus connected to the machine, other than auxiliary or control apparatus included under a (1) above, (2) Electrical apparatus other than electric motors included under a (2) and (3) above, (3) Air tank, (4) Electronic computer or electronic data processing equipment, (5) Condenser or its adapter, (6) Piping or duct leading to or from the machine, or (7) Well casing 4 WHEELS AND SHAFTING "Object" means any wheel (except gear wheels) or shaft shown in the Declarations including any a Rotating part or parts of any wheel, pulley, disc or coupling excluding the shaft it is mounted on, the bearings for that shaft and any cutting blade, and b Rotating shaft and its couplings and bearings / SECTION B (BM 00 28 11 85) 1 ROTATING ELECTRICAL MACHINES, TRANSFORMERS, AND INDUCTION FEEDER REGULATORS a "Object" means any rotating electrical machine, transformer or induction feeder regulator shown in the Declarations For any rotating electrical machines, "object" also includes any (1) Exciter that is (a) Mechanically connected to that machine, and (b) Used solely for excitation of that machine, (2) Shaft of that machine and any gear, wheel or magnetic brake mechanism on the shaft or on the frame of that machine, if the shaft does not form an integral part of any other machine, (3) Continuous shaft that (a) Forms an integral part of that machine, and (b) Also forms an integral part of another rotating electric machine including any gear, wheel or magnetic brake mechanism on the shaft or on the frame of that machine, (4) Shaft coupled to that machine including the couplings and bearings on it, if there is no mechanism other than a coupling on the shaft, and (5) Nonrotating equipment used solely to start, stop or control any motor shown in the Declarations including all electrical conductors connecting such equipment with that motor provided that control equipment does not form a part of a switchboard, cubicle or bus structure controlling any electrical machine other than the motor Form 4503T PAGE 2 of 3 Edition July 1987 ARKWIIG6[ 2 MISCELLANEOUS ELECTRICAL APPARATUS a "Object" means any electrical apparatus shown in the Declarations including any (1) Rotating electrical machine used solely to operate a part of the apparatus, and (2) Instrument transformer b However, "object" does not include any (1) Rotating electrical fnachme other than a machine included above, (2) Transformer other than an instrument transformer included above, (3) Induction feeder regulator, (4) Electronic computer or electronic data processing equipment, (5) Solid state rectifier unit, (6) Conduit, (7) Electrical conductors or piping leading to or from such apparatus, or (8) Cabinet or compartment in which any part of the apparatus 3s installed 3 SOLID STATE RECTIFIER UNITS a "Object" means any solid state rectifier unit shown in the Declarations including any (1) Rectifier, (2) Transformer used solely with the unit, other than an arc-furnace transformer, (3) Heat exchanger used solely with the unit together with its interconnected vessels, coils and piping, (4) Cooling fan or pump and its driving electric motor if used solely with the unit, and (5) Electrical conductors connecting parts of the unit b However, "object" does not mean any (1) Electrical conductor or piping leading to or from the unit, (2) Electronic computer or electronic data processing equipment, (3) Equipment or apparatus other than that listed in paragraphs a (1) through (5) above, or (4) Cabinet or compartment on or in which any part of the unit is installed ARKWRIGHT INSURANCE COMPANY PAGE 3 of 3 Edh a July 1987 Form 4503T ! I ! 1 I I I l 1 1 1 I I I R ! S f f I Y I I 1 !t f t I ! I 1 I I 1 V 3 t i