05-25-1988 Additions - Laserfiche WebLink

Home Browse Search

1987 decision means that a city could be held liable for "rent" for the time during which an ordinance was enforced, if it were later determined that enforcing that ordinance resulted in a "taking" of the property. You may want to discuss this issue with your city attorney. If a zoning ordinance has resulted in a taking of property, the property owner's remedy is to bring an inverse condemnation suit. However, LMCIT's current liability coverage document excludes inverse condemnation. (Liability insurance policies offered to cities by commercial insurance companies almost universally contain a similar exclusion.) Because of this exclusion, some zoning claims have not been covered by LMCIT in the past - specifically those zoning - related claims based solely on a "taking" theory of law. LMCIT member cities can now add coverage for inverse condemnation suits arising out of enforcement of zoning or other land use regulations. This optional endorsement provides coverage for liability for inverse condemnation damages for the period of time during which the regulation is being enforced, up until the time that the courts determine that the regulation constitutes a "taking." The coverage is subject to a $600,000 annual limit, and a 15% "coinsurance" provision; that is, LMCIT would cover 85% of damages and defense costs, while the city would bear the remaining 15 %. The cost of adding the inverse condemnation coverage is 2.5% of the city's liability premium. It must be emphasized that this coverage applies only to regulatory takings. It does not apply to an inverse condemnation action which alleges that the city has physically occupied or used private property without paying for it. WHY ARE THERE ANNUAL LIMITS ON THESE COVERAGES? In offering the pollution and inverse condemnation coverages, LMCIT is venturing into areas in which there is little or no past experience on which to draw. Despite the risks involved, the LMCIT Board sees LMCIT's job as finding a way if at all possible to provide cities with coverage for their exposures. The lack of past loss data makes it very difficult to accurately project what the ultimate losses are likely to be or what the proper premium rate should be. Obviously LMCIT must strike a balance between meeting the individual city's need for protection on the one hand and making sure that LMCIT will remain financially strong and stable so as to be able to continue to serve cities on the other. The annual coverage limits on both coverages and the coinsurance provisions on the inverse condemnation coverage are designed to help keep that risk manageable. Also, the extended reporting period option will not apply to these coverages. Finally, because the liability coverage is claims -made, rates can be adjusted in the future to reflect the actual losses as they develop. PAGE -6-