HomeMy WebLinkAbout#14 - LMCIT RenewalSTAFF REPORT
DATE:
REGULAR
ITEM #:
November 21, 2017
14
TO: Mayor and City Council
FROM: Jake Foster, Assistant City Administrator AGENDA ITEM: Approve Property and Liability Deductible Change and Authorize Decision for Liability Coverage Waiver Form
BACKGROUND: The decision to waive, or not waive the statutory municipal tort limits for LMCIT members is typically required to be made by the members governing body. The City of Lake Elmo has not done so in recent history, but it is standard practice for other municipalities.
If the member does not waive the statutory tort limits, an individual claimant would be able to recover no more than $500,000 on any claim to which the statutory tort limits apply. The total all claimants would be able to recover for a single occurrence to which the statutory tort limits apply would be limited to
$1,500,000. These statutory tort limits apply regardless of whether the city purchases the optional excess liability coverage.
If the member waives the statutory tort limits and does not purchase excess liability coverage, a single claimant could potentially recover up to $2,000,000 for a single occurrence. (Under this option, the tort cap liability limits are waived to the extent of the member's liability coverage limits, and the LMCIT per occurrence limit is $2 million.) The total all claimants would be able to recover for a single occurrence to which the statutory tort limits apply would also be limited to $2,000,000, regardless of the number of claimants.
If the member waives the statutory tort limits and purchases excess liability coverage, a single claimant could potentially recover an amount up to the limit of the coverage purchased. The total all claimants would be able to recover for a single occurrence to which the statutory tort limits apply would also be limited to the amount of coverage purchased, regardless of the number of claimants.
Additionally, in order to offset some of the cost of increased premiums, the City can elect to raise the LMCIT property and liability deductible to offset the cost of increased premiums for 2018. Lake Elmo is
one of three metro-area cities of similar population to still have a $500 deductible.
ISSUE BEFORE COUNCIL: Should the Council approve the deductible increase for the City’s property and liability insurance, and provide authorization for the City to not waive the municipal tort limits for liability coverage from LCMIT?
PROPOSAL DETAILS/ANALYSIS:
Staff recommends that Council elect not to waive the statutory municipal tort limits, and approve the
Liability Coverage Waiver From as such. Staff also recommends increasing the deductible for the LCMIT property and liability coverage.
FISCAL IMPACT: The city’s expiring bottom line premium is $65,397. This bottom line premium includes the excess
liability. The savings referenced are off the entire $65,397 premium.
$1,000 deductible: approximate savings of $3,000 from the current $500 deductible level premium;
$2,500 deductible: approximate savings of $6,000 from the current $500 deductible level premium;
$5,000 deductible: approximate savings of $9,500 from the current $500 deductible level premium;
$10,000 deductible: approximate savings of $13,500 from the current $500 deductible level premium.
OPTIONS: Liability Coverage – Waiver Form: 1) Waive statutory municipal tort limits 2) Do not waive statutory municipal tort limits
Property/Liability Deductible: 1) Increase deductible for property/liability coverage
2) Maintain current deductible for property/liability coverage RECOMMENDATION:
“Motion to approve the deductible increase for the City’s property and liability insurance, and authorize election to not waive the statutory tort limits.” ATTACHMENTS:
• LMCIT deductible analysis of similar-sized cities as provided by Zignego Agency Inc.
• LMCIT’s Liability Coverage – Waiver Form