ITEM 3.6 Insurance Coverage40
OtsTyF o
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT REQUESTOR:
MEETING DATE:
Administration City Administrator/Finance Director Flaherty
October 22, 2018
PRESENTER(s) REVIEWED BY:
ITEM #:
Consent
3.6
STRATEGIC VISION
MEETS:
I THE CITY OF OTSEGO:
X
Is a strong organization that is committed to leading the community through innovative
communication.
Has proactively expanded infrastructure to responsibly provide core services.
Is committed to delivery of quality emergency service responsive to community needs and
expectations in a cost-effective manner.
Is a social community with diverse housing, service options, and employment opportunities.
Is a distinctive, connected community known for its beauty and natural surroundings.
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 OFA CONTRACT? FIS A PUBLIC HEARING REQUIRED?
No No
BACKGROUND/JUSTIFICATION:
The City has received the quoted premium from the League of Minnesota Cities for the 2018-2019 liability
insurance package. The total for the 2018-2019 coverage period is $134,456 compared to $133,041 for the
2017-2018 coverage period (1.1% increase).
The most significant aspect regarding the change in premiums was the City's Experience Factor Modifier,
which decreased to 0.886 from 0.913, a 2.96% decrease. This decrease is due to the City having very few
claims during recent history. This decrease helps reduce insurance premiums across the policy.
The only noteworthy increase within the insurance policy was for Property coverage, which increased
$4,407 (7%). This was due to additional property added to the policy for Lefebvre Creek Park and Norin
Landing Park.
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:
• 2018-2019 Renewal Premium Summary
• Liability Coverage Waiver Form
• Summary of LMCIT Liability Coverage Options
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE ITTO APPEAR IN THE MINUTES:'
Motion that the City of Otsego elects not to waive the monetary limits on municipal tort liability
established by Minnesota Statute Section 466.04 for the September 25, 2017-2018 coverage period.
BUDGET INFORMATION
FUNDING:
BUDGETED:
Insurance coverage is allocated to each
fund/department of the City.
Yes
00
LEAGUE Of
MINNESOTA
CITIES
October 11, 2018
Associated Benefits and Risk Consulting
CONNECTING & INNOVATING
SINCE 1913
Covered Party: City of Otsego
Effective Date: 9/25/2018
RENEWAL PREMIUM SUMMARY
Common Coverages
Coverage
Deductible
Premium
• Property
$ 10,000 / 40,000 / 1,000.
$66,467.
• Mobile Property
10,000 / 40,000 / 1,000.
5,077.
• Municipal Liability
10,000 / 40,000 / 1,000.
29,444.
• Automobile Liability
10,000 / 40,000 / 1,000.
4,771.
• 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.
3,633.
• Crime
10,000 / 40,000 / 1,000.
Included.
• Petrofund
NA.
Included.
• Defense Cost Reimbursement
NA.
Included.
Experience Factor Modifier: 0.886
Aggregate Factor Modifier: 1.010
$134,456.
Expiring Experience Factor Modifier: 0.913
(Applied to Municipal Liability, Auto Liability, and UINMIM) 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.
511.
• Equipment Breakdown
1,000.
8,972.
• Excess Liability Limit:
$ 1,000,000.
NA.
10,764.
• 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.
4,567.
• Airport Liability
Not Covered.
TOTAL:
$134,456.
DO NOT PAY UNTIL YOU RECEIVE INVOICES
TORT LIMIT: $500,000/$1,500,000
LEAGUE OF MINNESOTA CITIES
145 UNIVERSITY AVE. WEST
PHONE: (651) 281-1200 FAx: (651) 281-1298
INSURANCE TRUST
ST. PAUL, MN SS103-2044
TOLL FREE: (800) 925-1122 WEB:WWW.LMc.oRG
PREMSUMXM(11/11)
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j,E r2 of
INNES0TA
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 toil 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 Ilmits 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
Signat
145 UNIVERSITY AVE. WEST
ST. PAUL, MN 55103-2044
Position
PHONE; (651) 281-1200 FAx. (651) 281-1299
TOLLFREE; (800) 925-1122 WEB:WWW.LMC.O&G
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