ITEM 3.6 Municpal Tort Liability0t-ceF o
MINNESOTA V
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Administration
City Administrator/ Finance Director
Flaherty
November 13, 2017
PRESENTER(s)
REVIEWED BY:
ITEM #:
Consent Item
2016-2017 coverage period (3.4% increase). The increase was attributable to two primary factors:
3.6
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff is recommending that the City Council elect to not waive the monetary limits on municipal tort
liability established by Minnesota Statute Section 466.04.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
ISA PUBLIC HEARING REQUIRED?
No
No
BACKGROUND/JUSTIFICATION:
The City has received the quoted premium from the League of Minnesota Cities for the 2017-2018 liability
insurance package. The total for the 2017-2018 coverage period is $133,041 compared to $128,635 for the
2016-2017 coverage period (3.4% increase). The increase was attributable to two primary factors:
1) The City's buildings and property received updated appraisal amounts. The last appraisal was done in
2011. The results indicated an increase in the value by $1,723,452 or an increase in premiums of $1,832.
This value increase was a combination of inflationary factors and new investments by the City in recent
years (Northwood Park, WWTF Digester Improvements, Tower #1 Rehab, etc.)
2) The premium for the $1,000,000 excess liability coverage option increased $899.
The remaining components of the insurance package increased $1,675, with no major fluctuations by
coverage area.
Minnesota Statute Section 466.04 references tort liability for political subdivisions. The municipal tort
liability is limited to a maximum of $500,000 per claimant and $1.5 million per occurrence. These limits
apply whether the claim is against the City, against the individual officer or employee, or against both. The
LMCIT liability coverage provides a standard limit of $2 million per occurrence.
At the City's coverage renewal each year, it must decide whether to waive or not waive the statutory limits.
In the past, the City of Otsego has chosen not to waive these statutory limits on tort liability claims. The
LMCIT assures coverage to the limitations set by the Statute without additional cost to the City.
SUPPORTING DOCUMENTS ATTACHED:
• 2017-2018 Renewal Premium Summary
• Liability Coverage Waiver Form
• Summary of LMCIT Liability Coverage Options
LEAGUE OF
MINNESOTA
CITIES
October 24, 2017
Associated Benefits and Risk Covered Party:
6000 Clearwater Dr.
Minnetonka, MN 55343 Effective Date:
CONNECTING & INNOVATING
SINCE 1913
City of Otsego
09/25/2017
RENEWAL PREMIUM SUMMARY
Common Coverages
Coverage
Deductible
Premium
• Property
$ 10,000 / 40,000 / 1,000.
$62,060.
• Mobile Property
10;000 / 40,000 / 1,000.
4,822.
• Municipal Liability
10,000 / 40,000 / 1,000.
31,994.
• Automobile Liability
10,000 / 40,000 / 1,000.
4,332.
• UM/UIM $200,000 all owned autos
10,000 / 40,000 / 1,000.
Included.
• Basic Economic Loss Benefits (PIP) all owned autos .
10,000 / 40,000 / 1,000.
Included.
• Automobile Physical Damage
10,000 / 40,000 / 1,000.
4,946.
• Crime
10,000 / 40,000 / 1,000.
Included.
• Petrofund
NA.
Included.
• Defense Cost Reimbursement
NA.
Included.
Experience Factor Modifier: 0.913
Aggregate Factor Modifier: 1.010
$133,041.
Expiring Experience Factor Modifier: 0.945
(Applied to Municipal Liability, Auto Liability, and UM/UIM) The modifier is calculated with a formula which compares the city's actual loss history with the amount of losses that
would be expected for a city of that size if the city were a perfectly average LMCIT member. If the city's losses and expenses are better than average the city receives a premium credit.
If the city's losses and expenses are worse than average, the city receives a premium debit.
Optional Coverages
Coverage
Deductible
Premium
• Bond
$ 300,000.
10,000 / 40,000 / 1,000.
536.
• Equipment Breakdown
1,000.
8,655.
• Excess Liability Limit:
$ 1,000,000.
NA.
11,261,
• Liquor Liability Limit:
$
NA.
Not Covered.
• Fireworks
10,000 / 40,000 / 1,000.
250.
• No Fault Sewer Back Up Limit:
$ 25,000.
10,000 / 40,000 / 1,000.
4,185.
• Airport Liability
Not Covered.
TOTAL:
$133,041.
DO NOT PAY UNTIL YOU RECEIVE INVOICES
TORT LMT: $500,000/$1,500,000
LEAGUE OF MINNESOTA CITIES
145 UNIVERSITY AVE. WEST
E1ton(651)281-1200 mx:(651)281-1298•
INSURANCE TRUST
sT.l'AUL,MN.551o3-2044
Ton TREE: (800) 925-1122 WEB:WWW.LMC.0RG
PREMSUMXM(11/11)
00
j,EAGUE OF
jrINNES0TA
CITIES
CONNECTING & INNOVATING
SINCE 1913
LIABILITY COVERAGE - WAIVER FORM
LMCIT members purchasing coverage must complete and return this form to LMCIT before the effective date of
the coverage. Please return the completed form to your underwriter or email to pstech@lmc.org
This decision must be made by the member's governing body every year. You may also wish to discuss these issues with
your attorney.
League of Minnesota Cities Insurance Trust (LMCIT) members that 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 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.
Claims to which the statutory municipal tort limits do not apply are not affected by this decision.
LMCIT Member Name
Check one:
❑ The member DOES NOT WAIVE the monetary limits on municipal tort liability established by Minnesota Statutes,
Section 466.04.
❑ The member WAIVES the monetary limits on municipal tort liability established by Minnesota Statutes, Section
466.04 to the extent of the limits of the liability coverage obtained from LMCIT.
Date of city council/governing body meeting
Signature Position
14S UNIVERSITY AVE. WEST PHONE: (651) 281-1200 FAX: (6S1) 281-1299
ST. PAUL, MN 55103-2044 TOLL FREE: (800) 92S-1122 WEB: WWW.LMC.ORG
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