01 What is covered?

Legal costs such as attorney’s fees and other expert fees such as mediation, for both the enforcement and defense of conservation easements and fee owned land is covered.  This would cover land trust attorney and other fees where the land trust either starts the law suit or is named in a law suit.  It will also cover attorney and other expert fees prior to litigation in an effort to resolve cases without unnecessary litigation. Payment for damages including liquidated damages are excluded. The policy has 33 exclusions from coverage that land trusts should carefully examine.

02 Can we extend the program to other areas such as condemnation, government holders and historic preservation, business disputes, litigation regarding land adjacent to conserved or owned land?

If enough land trusts participate initially to make Terrafirma feasible and successful over several years, then we can examine the feasibility of expanding the program to cover some or all of these additional risks. Initially, none of these risks will be covered.

03 How much is the premium?

The premium is $60 per parcel insured (parcels include conservation easements, fee properties, trail easements, access easements).  There are discounts on the premium for accreditation, best practices, and risk management training.

04 Are there any other costs when signing up for Terrafirma?

Yes, but only for the first year of coverage.  For the first year, there is a registration fee which is taken from a sliding scale depending on how many parcels your organization insures.

05 In determining the premium, do you count the number of deeds and easements or are adjacent properties to be treated as one, even if they are covered by multiple deeds or easements?

Premiums are based on the numbers of deeds and conservation easements in the land trust portfolio, not on parcels. Contiguity has no effect except in some limited circumstances for certain fee-owned reserves, and for multiple parcels in one conservation easement all of which are owned by the same person and held by the same land trust. 

See special counting rules below for divided easements, reserves assembled from many deeds, and multiple easements owned by the same owner.

COUNTING CONSERVATION PROPERTIES FOR PREMIUM PAYMENT

  1. Each exercised division right under an insured conservation easement, trail easement or deed covenant at the time of each annual application is counted as a separate conservation easement with an additional $60 premium. If the divided parcel is not subject to an insured conservation easement, trail easement or deed covenant, then no additional premium is charged and no coverage provided.
  2. Separate easements that are fully and legally merged in one ownership would be treated as one easement. (Please note that though a property may be described as containing several legal parcels, or taxable parcels, or assessed parcels if conserved under one easement then the property would be treated as one complete parcel.)
  3. Fee-owned reserves comprised of multiple parcels may be treated as one insured unit with one annual premium payment rather than the multiple premiums for units acquired under separate deeds, but only if both of the following conditions are met without exception:
    a. Each deeded parcel must be owned in its entirety and exclusively by the same entity.
    b. The collection of parcels must form in the aggregate a contiguous, compact conservation reserve operated as a single unit.
  4. Multiple conservation easements may be treated as one insured unit with one annual premium payment rather than the multiple premiums for multiple conservation easements, but only if all the following conditions are met without exception:
    a. Each conservation easement is held by the same land trust or the same set of co-holders.
    b. Each underlying parcel must be owned in its entirety and exclusively by the same landowner.
    c. The land covered by the conservation easements must be contiguous.
    d. Each conservation easement is substantively identical in terms of restrictions and permitted uses. (Land trusts will be asked to provide copies of the conservation easements they wish to be treated as one unit.)
    If the property and the easement have been subdivided but is in identical ownership it is still treated as one conservation easement.

06 How much is the deductible?

There is a $5,000 deductible for each claim submitted.

07 Why are the premium and deductible so low and why isn’t there coinsurance?

Coinsurance or a high deductible and premiums would not likely have a positive effect on costs or on land trust practices or choices. In practice, unless the coinsurance percentage is quite high (causing the insured to incur a painful level of uninsured cost), they did not find that it significantly affects the insured’s attitude toward defense. If Terrafirma required coinsurance or a very high deductible, it could be a financial burden on the smaller insureds, could make it more difficult to gain their cooperation in a vigorous defense and could be counterproductive.  Insurance, while helpful in protecting the insured, will not cover all of their costs even with a low deductible. Staff time, mitigation steps and a deductible would still be incurred, as would potential public embarrassment. 

08 Will the premiums increase significantly?

A purpose of establishing a captive insurance program, instead of using commercial insurance, is to give land trusts control over the insurance product, premiums and claims management.  Our desire is to keep premiums and the insurance terms stable over many years. Terrafirma will do this by building strong capitalization and retained earnings, investing in loss prevention, promoting good practices, providing pragmatic claims management, and controlling costs of service providers. To a large extent, our destiny is in our own hands.  If all land trusts work diligently to have good practices and reduce unnecessary litigation, then the program is more likely to be able to keep premiums low. Of course, no one can guarantee that premiums will not change over time, but our consultants have designed the best available approach that protects land trusts from increases. 

09 How would Terrafirma determine premiums after the first years?

Since this is a new program, all participants will be learning about risk management and costs as the program evolves and as we collect data. The pricing structure and eligibility, therefore, will both be reviewed and potentially modified annually. 

10 What are the eligibility requirements?

See the full list of eligibility requirements.

The overall philosophy is to provide the broadest possible coverage consistent with prudent business principles for the greatest number of private land trusts. The purpose is to defend and enforce conservation easements and to protect fee-owned land. In addition to conservation defense, we expect to also focus on increasing prevention, good practices and good precedents.  We believe that land trusts are dependent on each other for optimal defense and can present a formidable collective defense. To accomplish these goals, we want virtually all land trusts to participate in the insurance and risk prevention programs. For this reason, the application form and the process is as simple as possible, mindful of the burden on land trusts and minimizing the administrative costs for the program. We also do not want to confuse land trusts with 
comparisons to accreditation which has a very high bar. Thus eligibility requirements identify only the highest risk organizations. 

11 How would Terrafirma interact with the Conserve-A-Nation program?

Terrafirma does not overlap with the general liability insurance offered through Conserve-a-Nation.  The legal fees insurance has a provision that if the general liability insurance covers certain litigation, that must be used first, then the legal fees insurance would cover anything within the policy that general liability does not. This requires that the two insurance programs coordinate with each other. That would occur through the national coordinating attorney.

12 Do land trusts have to insure their entire portfolios?

A land trust may insure its entire conservation easement portfolio or its entire fee land portfolio or both.   That choice belongs to the land trust. Because Terrafirma will need a balance of high risk and low risk easements and land to be sustainable, land trusts as owners of Terrafirma will not want to insure only their high risk easements or fee land. If only high risk easements or fee land are insured, then the land trust owned and operated insurance program will likely not be able to generate enough income to pay claims or the premiums would have to be extremely high.

13 Is coverage allowed where one land trust owns the fee and a second land trust holds the conservation easement on that fee parcel?

Yes, it is not double coverage as it is two separate ownership interests.

14 What about back up holders and third party enforcers?

Some coverage would be provided for these types of holders as well with conditions and limitations. The policy form has more details.

15 What is a claim?

A claim is a demand made by the insured for payment of the benefits as provided by the policy.  Therefore a claim event is where the insured reasonably anticipates that the event is likely to result in a claim or has already resulted in a claim. This includes a claim for payment of mediation, negotiation or other less than litigation fees. The notice of a challenge or a complaint will initiate the claim without the need to have a lawsuit filed. A claim may stretch over more than one year but it is covered under the policy in the year of first occurrence. Details on these points are explicit in the final insurance policy.

16 How will land trusts know if a particular conservation easement will be defended?

Once the land trust insures its portfolio and meets the underwriting criteria, then any of its insured conservation interests will be defended for any claim occurring during that policy year. How it will be defended is what the claims committee and the national coordinating attorney works out with the land trust. In some cases a land trust may have practices or documentation which would make it difficult to win a lawsuit. There the claims committee and the national coordinating attorney works with the land trust to decide how best to defend that conservation interest using alternative methods.

17 What if the land trust wants to settle but Terrafirma doesn’t or the reverse?

The claims committee will work diligently to arrive at a consensus approach with the land trust.  Ultimately the claims committee of Terrafirma decides case management disputes. The claims committee is of experienced people from participating land trusts and outside experts.

18 What does the claims committee do and who is on it?

The claims committee is composed of land trust practitioners and outside experts experienced with legal challenges appointed by the Members Committee. These folks know what it is to operate a land trust and protect hard-won conservation interests. They will also be responsible for ensuring that Terrafirma is well managed and costs are appropriately contained. The Claims Committee is responsible for evaluating, monitoring, approving and managing all of the members’ claims and consists of seven individuals experienced, as a group, in conservation and insurance. It manages the claims and legal strategy for Terrafirma. Alliance Risk Management Services LLC (ARMS) provides the staff for the Claims Committee, and any subcommittees. ARMS staff shall be the Conservation Defense Director for the Land Trust Alliance or as otherwise specified in Terrafirma Operating Agreement (“staff”). As an aggregate, the Claims Committee shall have sufficient diversity so that its members have the following areas of experience:

  1. Practical experience with land trusts and legal challenges to conservation
  2. Understanding of state and local laws relating to conservation easements, real estate, and insurance
  3. Insurance experience
    • Insurance litigation
    • Experience sitting on a claims committee and evaluating claims
    • Insurance coverage
    • Experience setting reserves for claims loss
    • Customer service (sales, policies or underwriting)
  4. Court room and legal strategy
  5. Real estate litigation
  6. Attorney management and cost control

Read the claims committee member biographies.

19 How is the Terrafirma Members Committee selected?

Instead of a Board of Managers, the Members in the LLC Agreement established a Members Committee to represent their interests. In order to assure broad representation of the land trust community in America, the LLC Agreement provides for the election of the Members Committee by region on a rotating basis, and also requires nominations on a basis reasonably designed to include on the Members Committee representatives of national, regional (State) and local land trusts, and also a mix of accredited and non-accredited land trusts.

View the Members Committee regions map.

20 Are the risks to fee-owned land as great as for conservation easements?

A survey of land trusts found that fee-owned land has defense costs to conservation easements.  While the issues may be different, the survey found no significantly different risk of legal challenges between the two. Typically, general liability insurance or possibly directors and officers insurance may cover a land trust that is sued regarding its fee owned land but is unlikely to cover instances, for example trespass, where the land trust must sue to protect its land.

21 Who decides what legal counsel to use through Terrafirma?

The Claims Committee shall be responsible for the selection and assignment of outside counsel in consultation with staff and the member insured land trust. Staff shall advise the member of counsel assignments after confirming representation with outside counsel. The Claims Committee may choose any qualified counsel to represent the member provided that counsel agrees with the fee schedule and is qualified to handle the claim, including outside counsel preferred by the member. The Claims Committee may authorize the engagement of adjusters, third-party investigators, attorneys, or other professionals as necessary. We want to be sure that national knowledge is shared with all land trusts and that land trusts have the best possible representation needed for the particular case. So it will be a balance with consideration for local issues and a preference for experienced local counsel. If land trusts don’t have a litigator they know and have used, then Terrafirma is likely to play a much larger role in attorney selection than for a land trust with a long established relationship with a highly qualified litigator who is able to work at a discounted rate. Ultimately the decision rests with Terrafirma, but since the land trusts are also the owners and operators of Terrafirma, it should result in fair and appropriate decisions about legal counsel.

22 How can land trusts own Terrafirma?

Terrafirma Risk Retention Group is owned and operated by the land trust participants for their collective benefit to support conservation permanence. A Risk Retention Group is a liability insurance company that is owned by its members functioning as a captive insurance company and organized for the primary purpose of assuming and spreading the liability risk exposure of its group member owners. Once licensed by its state of domicile, an RRG can insure members in all states because RRGs operate under a federal law that preempts state regulation, making it easier for RRGs to operate nationally. Terrafirma is also a charitable risk pool and has a tax-exemption from the IRS. 

23 Do land trusts still need to get an endowment if we create an insurance program?

Yes! Conservation defense insurance is a safety net not a substitute for land trust reserves and good practices. No matter what happens land trusts will still need funds for ongoing daily stewardship costs and the annual costs of insurance deductibles and exclusions. You will still need a significant amount of your own funds.You will also need a way to pay the annual insurance premiums.  Some land trusts are considering keeping their segregated legal defense funds intact and using the income from the fund to pay the premiums and having the fund principal available to pay deductibles, exclusions and claims in excess of the policy limit.

24 What about reinsurance?

Terrafirma fully explored all available reinsurance options. Most companies will not offer it to a new risk retention group. The ones who will offer the coverage charge unaffordable premiums that would evaporate the capital buffer without providing significant coverage. After five successful years of operation, Terrafirma will revisit the availability and pricing of reinsurance.

25 Is coverage assignable if the land trust merged with another or assigns a conservation easement during the policy period?

Yes if there is a merger however the surviving organization will need to insure all of its easements or fee land or full portfolio, not just one of the merging organization’s portfolio. An assignment of a single easement may pose additional administration issues but Terrafirma can address that individually.

26 How will divided or merged conservation easements be treated?

A full additional premium will be needed for each exercised division right under an insured conservation easement, trail easement or deed covenants where the divided parcel is subject to an insured conservation easement, trail easement or deed covenants. No additional premium will be needed (and no coverage) where the divided parcel is released from all easements or covenants. Separate easements that are fully and legally merged will be treated as one easement.

See special counting rules below for divided easements, reserves assembled from many deeds, and multiple easements owned by the same owner.

COUNTING CONSERVATION PROPERTIES FOR PREMIUM PAYMENT

  1. Each exercised division right under an insured conservation easement, trail easement or deed covenant at the time of each annual application is counted as a separate conservation easement with an additional $60 premium. If the divided parcel is not subject to an insured conservation easement, trail easement or deed covenant, then no additional premium is charged and no coverage provided.
  2. Separate easements that are fully and legally merged in one ownership would be treated as one easement. (Please note that though a property may be described as containing several legal parcels, or taxable parcels, or assessed parcels if conserved under one easement then the property would be treated as one complete parcel.)
  3. Fee-owned reserves comprised of multiple parcels may be treated as one insured unit with one annual premium payment rather than the multiple premiums for units acquired under separate deeds, but only if both of the following conditions are met without exception:
    a. Each deeded parcel must be owned in its entirety and exclusively by the same entity.
    b. The collection of parcels must form in the aggregate a contiguous, compact conservation reserve operated as a single unit.
  4. Multiple conservation easements may be treated as one insured unit with one annual premium payment rather than the multiple premiums for multiple conservation easements, but only if all the following conditions are met without exception:
    a. Each conservation easement is held by the same land trust or the same set of co-holders.
    b. Each underlying parcel must be owned in its entirety and exclusively by the same landowner.
    c. The land covered by the conservation easements must be contiguous.
    d. Each conservation easement is substantively identical in terms of restrictions and permitted uses. (Land trusts will be asked to provide copies of the conservation easements they wish to be treated as one unit.)
    If the property and the easement have been subdivided but is in identical ownership it is still treated as one conservation easement.

27 How does Terrafirma mesh with accreditation?

Coordination with these existing standards and programs to avoid confusion and multiple conflicting layers of requirements is essential. Accreditation is not required to obtain insurance.  Accredited land trusts will have a shorter application form, will be automatically eligible and will receive an automatic premium discount.

28 Is the program non-assessable?

Yes. Land trust will not have any obligation to commit future capital contributions in the event of financial difficulties for Terrafirma.

29 How long of a commitment does a land trust have to make?

Prior to the inception of Terrafirma, some land trusts signed a commitment to participate in the first three years of the conservation defense insurance program. A land trust can be released from its commitment if claims exceed our estimates and premiums increase by more than 2.5 percent a year over the first three years. Prior to this election, Terrafirma will have a reasonable period of time to address any problems or costs increases.

30 What is the underwriting process?

Terrafirma has basic eligibility criteria so that only land trusts and quasi-governmental organizations that operate exclusively for a conservation purpose are covered. The organization will also have to be in good standing and be an Alliance member along with a few other essential good practices. Some discounts will be available for accredited land trusts as well as other land trusts who meet certain practices.The application form is on-line at Terrafirma.org. Terrafirma does not underwrite individual easements or fee land, but rather the organization based on thirteen essential measures of good practices.

31 Do divisions of fee land or conservation easements affect my coverage?

Yes.  If you permit a property division on your land, the land that is divided and transferred to a new owner will not be covered until the division is reported to Terrafirma and an additional premium paid.  This is consistent with the Terrafirma counting rules.

32 Where can I find a copy of Terrafirma's Form 990?

You can download a copy of Terrafirma's Form 990 by clicking here.

33 Do I have to add newly acquired properties mid-year?

No. In fact, you must wait until the next policy year to add them to your policy. Your coverage for that parcel will not begin until the next policy year.

34 Can I get coverage for other properties acquired mid-year?

No. Fee parcels and easement parcels that you purchase or receive in donation mid-year can not be added to your Terrafirma policy until you renew your parcel for the subsequent policy year.

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