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If the statute limits our liability to $1,OOU,000 per occurrence, why would the city purchase higher coverage limits than that? • There are several different reasons why cities should strongly consider carrying higher limits of liability coverage. 1. The statutory tort limits either do not or may not apply to several types of claims. Some examples include: • Claims under federal civil rights laws. These include Section 1983, the Americans with Disabilities Act, etc. . • Claims for tort liability that the city has assumed by contract. This occurs. when a city agrees in a contract to defend and indemnify a private parry. • Claims for actions in another state. This might occur in border cities that have mutual aid agreements with adjoining states, or when a city official attends a national conference or goes to Washington to lobby, etc. • Claims based on liquor sales. This mostly affects cities with municipal liquor stores, but it could also arise in connection with beer sales at a fire relief association fund-raiser, for example. • Claims based on a "taking" theory. Suits challenging land use regulations frequently . include an "inverse condemnation" claim, alleging that the regulation amounts to a "taking" of the property. 2. LMCIT's primary liability coverage has annual limits on coverage for a few specific risks. The table on page 1 lists the liability risks to which aggregate coverage limits apply. If the city has a loss or claim in one of these azeas, there might not be enough limits remaining to cover the city's full exposure. if there is a second loss of the same sort during the year. Excess liability coverage gives the city additional protection against this risk as well. However there are a couple of important restrictions on how the excess coverage applies to risks that are subject to aggregate limits: • The excess coverage does not apply to three risks: lead and asbestos; failure to supply utilities; and Y2k, and • The excess coverage does not automatically apply to liquor liability unless the city specifically requests it. 3. The city maybe required by contract to carry higher coverage limits. Occasionally, a contract might include a requirement that the city carry more than $1,000,000 of coverage limits. Carrying excess coverage is a way to meet these requirements. (There's • 2