HomeMy WebLinkAbout#16 - LMCIT RenewalSTAFF REPORT
DATE: November 20, 2018
REGULAR
ITEM #: 16
TO: Mayor and City Council
FROM: Jake Foster, Assistant City Administrator
AGENDA ITEM: 2019 LMCIT Renewal
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. At the November 21, 2017 meeting, Council
provided authorization to elect not to waive the statutory municipal tort limits.
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, the 2016 special underwriting conditions will be removed for the City’s January 1, 2019
renewal. The special underwriting conditions raised the City’s deductible to $200,000 from $500 for
liability and land use claims. LMCIT then lowered the special underwriting conditions deductible from
$200,000 to $100,000 for the 2018 renewal siting improvement amongst Council and related to staff
turnover. Upon additional progress regarding these matters, and limited losses, LMCIT will remove these
conditions entirely for 2019. As Council approved the increase of the deductible to $1,000 last year, if
conditions are kept consistent, the liability and land use deductible will be $1,000 down from $100,000.
ISSUE BEFORE COUNCIL:
Should the Council provide authorization for the City to not waive the municipal tort limits for liability
coverage from LCMIT and maintain the $1,000 deductible for Property and Liability coverage?
PROPOSAL DETAILS/ANALYSIS:
Staff recommends that Council elect not to waive the statutory municipal tort limits, and approve the
Liability Coverage Waiver Form as such. Staff also recommends maintaining the $1,000 deductible for the
LCMIT property and liability coverage as it was increased in 2017 for 2018 Property and Liability coverage.
FISCAL IMPACT:
As referenced above, if the City maintains the same deductible, the liability and land use claims will carry
a deductible of $1,000.
If the Council 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.
If Council 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.
OPTIONS:
Liability Coverage – Waiver Form:
1) Waive statutory municipal tort limits
2) Do not waive statutory municipal tort limits
Property/Liability Deductible:
1) Maintain current deductible for property/liability coverage
2) Increase deductible for property/liability coverage
3) Decrease deductible for property/liability coverage
RECOMMENDATION:
“Move to approve maintaining the current $1,000 deductible for the City’s property and liability
insurance, and authorize election to not waive the statutory tort limits.”
ATTACHMENTS:
• LMCIT’s Liability Coverage – Waiver Form
LIABILITY COVERAGE – WAIVER FORM
Members who obtain liability coverage through the League of Minnesota Cities Insurance Trust (LMCIT)
must complete and return this form to LMCIT before the member’s effective date of coverage. Return
completed form to your underwriter or email to pstech@lmc.org.
The decision to waive or not waive the statutory tort limits must be made annually by the
member’s governing body, in consultation with its attorney if necessary.
Members who obtain liability coverage from LMCIT must decide whether to waive the statutory tort liability limits
to the extent of the coverage purchased. The decision has the following effects:
• If the member does not waive the statutory tort limits, an individual claimant could recover no more than
$500,000 on any claim to which the statutory tort limits apply. The total all claimants could recover for a single
occurrence to which the statutory tort limits apply would be limited to $1,500,000. These statutory tort limits
would apply regardless of whether the member purchases the optional LMCIT excess liability coverage.
• If the member waives the statutory tort limits and does not purchase excess liability cove rage, a single claimant
could recover up to $2,000,000 for a single occurrence (under the waive option, the tort cap liability limits are
only waived to the extent of the member’s liability coverage limits, and the LMCIT per occurrence limit i s
$2,000,000). The total all claimants could 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 could 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.
Claims to which the statutory municipal tort limits do not apply are not affected by this decision.
LMCIT Member Name: __________________________________________________________________________
Check one:
o The member DOES NOT WAIVE the monetary limits on municipal tort liability established by Minn. Stat. §
466.04.
o The member WAIVES the monetary limits on municipal tort liability established by Minn. Stat. § 466.04, to
the extent of the limits of the liability coverage obtained from LMCIT.
Date of member’s governing body meeting: __________________________________________________________
Signature: _______ Position: _______________