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i=Hugo 14669 FUgerald Avenue Nrnth Nu9a,M 55636 Phone(651)762-6306 [) Fax(651)426-2659 TO: Bryan Bear, City Administrator FROM: Ronald J Otkin, Finance Director SUBJECT: Resolution Not to Waive Statutory Tort Liability Limits DATE: For the City Council Meeting of February 1, 2016 DESIRED COUNCIL ACTION Adoption of Resolution Not to Waive Statutory Tort Liability Limits HISTORY Memorandum In the late 1990's the League of Minnesota Cities Insurance Trust (LMCIT) required each city that obtained liability coverage from them to decide whether or not to waive the statutory tort liability limits to the extent of the coverage purchased. At that time the City Council opted not to waive the statutory limits. LIABILITY IN EXCESS OF THE STATUTORY LIMITS The City of Hugo does purchase $1 million in excess of the statutory limits because the tort limits either do not or may not apply to the following types of claims: *Claims under federal civil rights laws. *Claims for tort liability that the city has assumed by contract. *Claims for actions in another state. *Claims based on liquor sales. *Claims based on a "taking" theory. Excess liability coverage is important to a small city. If a city ends up with more liability than it has coverage, the city will have to either draw on existing funds or go to its taxpayers to pay that judgment. REQUIREMENT TO WAIVE OR NOT TO WAIVE STATUTORY LIMITS Because the City purchases liability insurance in excess of statutory limits, LMCIT requires the City Council to decide whether or not to waive the statutory limits for those claims that are subject to such limits. Passage of a resolution not to waive the statutory limits provides a written record that the excess liability coverage will only apply to claims that are not subject to tort limits.