Laserfiche WebLink
MIDlUTES <br />City Council <br />April 27_, 1981 <br />Fahey asked if the City's basic insurance policy would cover cost of <br />defense. Mr. McNamara replied that the basic policy states there must <br />be bodily injury or property damage, and it depends on how the suit is <br />brought on v,~hether the cost of defense would be covered or not. <br />Mayor Hanson pointed out that the cost of the policy would only be about <br />$50 per councilperson per month. Nanson asked the Clerk how the policy <br />could be paid for as it was not budgeted for. The City Clerk stated <br />that the cost could come from the City's contingency fund. <br />Mr. Fahey asked what the City's defense costs have been ~n the recent <br />past. The Attorney replied that they have been running about $1,500 to <br />$2,000 per year. The Attorney stated that the City's exposure in this <br />area has increased great1y over the past ten years. <br />Mr. McNamara informed the Council that if they elected to go with the <br />three year policy, the full premium is payable in advance. <br />Fahey asked if the insurance provided damages for downzoning of property. <br />Mr. McNamara stated that based on his knowledge, the policy would provide <br />coverage. Fahey stated that if this would be covered, he is in favor of <br />purchasing the insurance. <br />Mr. McNamara informed the Council that most of these claims never get <br />into litigation as the insurance company will step in and try to settle <br />the case out of court. <br />Mrs. Sca1ze stated that she had concern that it appears this insurance <br />would give the Council blanket coverage to do whatever they wanted. <br />McNamara commented that if the Council intentional1y did something like <br />this, they would be exceeding the coverage of the pol9cy. <br />The Attorney stated that the policy would pay for itself just on the <br />basis of cost of defense. <br />Mr. Forsberg felt that based on the past history of the Council, the <br />policy was not necessary. <br />The Attorney stated that the Council also has the exposure to punitive <br />damages that might be awarded. Too often 'the clecisions in law suits <br />are based on the emotions of a jury. <br />Mr. McNamara also pointed out that the insurance companies have the <br />attorneys with the expertise to handle these types ofi things. The City <br />Attorney agreed. The insurance companies have the expertise and the money <br />to spend for investigators. Parks also stated that the reason this is <br />high-cost coverage, is based on the exposure. <br />Mr. McNamara informed the Council that the insurance company will make <br />available case historfes on the types of coverage that are available <br />once the City purchases the coverage. The City then has ten days with <br />which to exam~ine the policy and reject it if they wish. <br />Page -10- <br />