2108.1 Only two types of disbursements may be made from a sinking fund:

1. (a) Paid losses; and
2. (b) Allocated loss adjustment expenses.

2108.2 A paid loss includes all sums paid to claimants, or members, or participants in the sinking fund, in direct settlement or in satisfaction of a judgment for a liability covered by the liability coverage document.

2108.3 An allocated loss adjustment expense is an expense incurred by a sinking fund that is related to a specific claim. Allocated loss adjustment expenses include:

1. (a) Attorney's fees for claims in a suit;
2. (b) Adjuster's fees and medical expenses incurred to determine the extent of the sinking fund's liability for particular claims; and
3. (c) Court related expenses for: expert testimony, stenographic services, summons, and copies of legal documents.

SOURCE: Final Rulemaking published at 36 DCR 5113 (July 21, 1989).