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Mayor Hanson and Members of the City Council <br />January 4, 1991 <br />Page 2 <br />risks the City incurs by not carrying an Umbrella policy. <br />You will note that there are potential exposures by not <br />carrying an Umbrella policy. You should keep in mind in <br />reviewing this that those exposures exist to the extent that <br />the City would be sued in an action where a judgment is <br />entered against us above our present policy limits of <br />$600,000. It should also be noted that I talked with <br />Mr. Peter Tritz of LMCIT regarding Umbrella coverage. He <br />stated that it was his opinion that the City should carry an <br />Umbrella policy. He also stated that of the cities insured <br />with LMCIT, only about one -third of them presently carry <br />this added coverage. <br />I have asked Tom Sweeney to review this matter and be ready <br />to provide his recommendation to the Council at Wednesday's <br />meeting. <br />If the Council decides an Umbrella is necessary, the next <br />decision that needs to be made is whether the City is going <br />to waive its Statutory Limits of Liability. By waiving the <br />Statutory Limits of Liability, we will pay an increased <br />premium for the Umbrella coverage over the amount previously <br />listed. In my review of this matter, the only advantage we <br />gain by waiving our Statutory Limits of Liability is that a <br />greater amount of insurance is available for all suits <br />against us rather than some suits being limited by the <br />Statutory Limits of Liability. There is no greater exposure <br />to the City by not waiving our Statutory Limits. Therefore, <br />if we decide to have an Umbrella, I would recommend that we <br />not waive our Statutory Limits of Liability and pay the <br />lower premium rate. <br />Another issue which needs to be addressed is the limits for <br />property coverage. In my review of our insurance, it <br />appears to be that some of our limits are too high <br />especially when considering the appraisals the City had done <br />in 1989. For property coverage, one does not need to insure <br />land values, footing values or water and sewer connections. <br />Therefore, I have been making adjustments in our property <br />limits to reflect replacement cost of the items which would <br />be damaged should a fire or wind storm affect the property. <br />Scheduled Equipment Coverage. We have found some instances <br />whereby equipment has been scheduled under Contractor's <br />Equipment or Miscellaneous Equipment floater to provide <br />coverage for damage which would occur away from the insured <br />premises. This coverage is needed for certain types of <br />equipment. However, we have found instances where items <br />which would not leave a premises are being insured in this <br />manner. This rate is higher than that which we would pay as <br />Page 20 <br />