|
Co►s' 2
<br />CONSIDER OPTIONAL EXCESS MUNICIPAL LIABILITY INSURANCE LIMITS
<br />By: Heidi A. Nelson, Asst. City Administrator
<br />Background:
<br />As a part of the annual renewal of our property, casualty, and liability insurance coverage for the City of ,
<br />Ramsey, the City Council is required to waive or not waive the statutory tort limits for its liability coverage.
<br />During the first presentation of this case on November 27, 2007, Council directed staff to request quotations for
<br />increasing the liability limits of municipal insurance coverage. Subsequently, at the December 11, 2007 regular
<br />meeting, Council approved not - waiving the statutory tort limits with the understanding that a new resolution
<br />could be passed waiving the tort limits if Council elected to purchase additional excess liability when rate
<br />quotations were available.
<br />Staff has received the quotations for optional excess liability from T.C. Field & Company. The rates are
<br />attached along with the renewal quotation for the city's property, casualty, liability, and workers compensation
<br />insurance. As explained at the December l lth meeting, the excess liability premiums are formulated utilizing
<br />the city's overall liability. There are two options available to the city to increase its excess liability coverage;
<br />they are as follows in summary:
<br />Not -waive statutory tort limits and purchase excess liability:
<br />($400,000/$1,200,000 for 2008; $500,000 1$1,500,000 for 2009)
<br />Purchase optional excess liability coverage:
<br />Additional Coverage Additional Premium (base premium for 2008: $41,989.00)
<br />$1,000,000 $14,314.00; total premium: $56,303.00
<br />$2,000,000 $21,271.00; total premium: $63,260.00
<br />$3,000,000 $25,049.00; total premium: $67,038.00
<br />$4,000,000 $26,838.00; total premium: $68.827.00
<br />$5,000,000 $28,188.00; total premium: $70,177.00
<br />Under this scenario, an individual would still be limited to the statutory limit of $400,000 for
<br />2008, but the per occurrence liability would increase to the level of excess liability purchased
<br />plus $1,200,000 base coverage.
<br />Waive the statutory tort limits and purchase excess liability:
<br />Purchase optional excess liability coverage:
<br />Additional Coverage Additional Premium (base premium for 2008: $41,989.00)
<br />$1,000,000 $14,314.00 + 5% of additional premium and base premium for
<br />no individual limit; total premium: $59,118.00
<br />$2,000,000 $21,271.00 + 5% of additional premium and base premium for
<br />no individual limit; total premium: $66,423.00
<br />$3,000,000 $25,049.00 + 5% of additional premium and base premium for
<br />no individual limit; total premium: $70,390.00
<br />$4,000,000 $26,838.00 + 5% of additional premium and base premium for
<br />no individual limit; total premium: $72,268.00
<br />$5,000,000 $28,188.00 + 5% of additional premium and base premium for
<br />no individual limit; total premium: $73,686.00
<br />Under this scenario, there would be no statutory limit to what an individual could recover; the
<br />per occurrence limit would be equal to the level of additional coverage purchased by the city.
<br />An LMC -IT research memo entitled "LMCIT Liability, Coverage Limits, and Waivers" is attached for Council
<br />information.
<br />Funding: If the Council elects to purchase additional tort liability coverage, additional funding would be
<br />required for the premiums. Insurance premiums are allocated to each department and paid for via a department
<br />dine item in the general fund.
<br />-115-
<br />
|