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<br />Joel Hanson
<br />From: Tritz, Pete [PTritz @LMNC.ORG]
<br />.t: Tuesday, October 26, 2004 9:14 AM
<br />To: Joel Hanson
<br />Cc: Everett, Bill; Longfellow, Ellen
<br />Subject: Insurance for users for city facilities
<br />Hi, Joel -
<br />:'s not an off -the wall concept at all. In fact, it even has its own acronym - TULIP, which stands for Tenant and User Liability
<br />insurance Policy. (Cute, huh ?) The idea is that the facility owner arranges for a master insurance liability insurance policy with an
<br />insurance company. That policy meets the specifications for the insurance that the facility owner requires facility users to
<br />rovide. A person that wants to rent or use the facility then can simply pay a small premium to become insured under that master
<br />olicy, which gives them the insurance they need to meet the facility owner's requirements.
<br />^ools in a couple other states have set up these kinds of arrangements on a statewide basis, essentially arranging for a master
<br />olicy that any of the pool inembers can then make available to renters and users of their respective facilities. At the loss control
<br />workshops last spring, we did a session on what sorts of insurance requirements cities should have for users of city facilities. In
<br />that session, Ellen did some informal polling on this concept and there was at least a moderate level of interest.
<br />. couple of comments. First, if we were to do it, it woudl probably have to be in the form of a master policy purchased from an
<br />insurer, rather than a coverage that LMCIT itself would provide. The reason is that as a governmental pool, LMCIT probalyb
<br />- 'oesn't have the legal authority to sell insurance to private persons or entities, which is really what's going on here.
<br />I'd note too that it's not quite analogous to the fireworks situation. In the case of fireworks, what the endorsement does is to give
<br />the city liability coverage for its liability arising from a display the city sponsors. Without the endorsement, the city doesn't have
<br />ie for that exposure. In the case of the insurance requirements for community center renters, the city already has
<br />D age from LMCIT for the city's liability, including claims that might be made against the city which arise from the actions of the
<br />renter or user. But LMCIT does not, of course, cover the user for the user's own liability. The goals of requiring the user to
<br />provide insurance and to name the city as an additional insured are to 1) make sure that there's coverage in place for claims
<br />gainst the user, so that it's less likely the injured party will be forced to by to find a way to manuafacture a claim against the city
<br />,,, order to get at the city's deep pocket; and 2) to put the city's LMCIT coverage a little farther form the risk, by having that policy
<br />in place to respond both for the user and for the city in cases where the injrued party has shotgunned everyone in sight into the
<br />lit. Since the user policy responds to the claim against the city, the city's LMCIT coverage doesn't have to, which keeps those
<br />afnese costs and damages out of the city's experience rating and dividend calculation.
<br />The other point we need to keep in mind is the whole question of what kind of insurance cities whoudl require from people using
<br />ty faciltiies is not necessarily black and white. Whenever you require the user to have insurance, that's an additional cost to the
<br />..ser. Different cities can come to different conclusions on whether it's preferable to irnpose that cost on the user, or whether it's
<br />snore appropriate for the city to bear that risk because as a public policy matter they want to make the facility available to the
<br />immunity as inexpensively as possible.
<br />At the staff level here, we've had this TULIP concept floating around for a while as one of those lower priority projects that we
<br />should maybe take a look at some day when we get the time. I'm thinking this might be a good topic to discuss at a board retreat,
<br />see if it's something we should kick up a few notches in priority.
<br />One final thought. One option you might consider as a possible shorter term solution would be to reduce the coverage limit you
<br />:quire. $300,000 and $750,000 are sort of odd numbers in the insurance world (I'm guessing those numbers were based on
<br />hat the municipal tort limit used to be). The insurance world generally thinks in terms of $100,000, $250,000, $500,000,
<br />$1,000,000 as standard limits for insurance policies. If the user were to provide even a relatively low limit policy - say $250,000 -
<br />and name the city as an additional insured, it would be enough to handle a pretty high percentage of the likely claims and therefor
<br />I meet the goal of keeping the city and LMCIT out of it.
<br />Pe
<br />1/5/04
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