ITEM 3.6 Liability CoverageOt�c e4 F o
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Administration
City Administrator/Finance Director Flaherty
October 12, 2020
PRESENTER(s)
REVIEWED BY:
ITEM #:
Consent
3.6
STRATEGIC VISION
MEETS:
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 OF A CONTRACT? "
IS A PUBLIC HEARING REQUIRED?
No
No
BACKGROUND/J USTI FICATION:
The City has received the quoted premium from the League of Minnesota Cities for the 2020-2021 liability
insurance package. The total for the 2020-2021 coverage period is $149,315 compared to $137,297 for the
2019-2020 coverage period (8.7% increase).
The most direct cause for the increase within the insurance policy was for Property coverage, which
increased due to a combination of: 1) insured property value inflation of approximately 4%; and 2) a rate
increase of 6% placed on all cities by LMCIT. A secondary driver for the increase was for Municipal Liability
coverage, which is based on number of households, sewer connections, full-time employees, and
expenditure budgets, all of which are experiencing increases from growth.
Within the policy, there were minor increases in premiums for: mobile property, equipment breakdown
and no-fault sewer backup coverages; however, those increases were offset with minor decreases in
premiums for: automobile liability, automobile physical damage and bond coverages.
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:
Liability Coverage Waiver Form
Summary of LMCIT Liability Coverage Options
PnSSIRI E MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO 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, 2020-2021 coverage period.
RIIDGET INFORMATION
FUNDING: -
BUDGETED:
Insurance coverage is allocated to each
fund/department of the City.
Yes
rt
LEAGUE of
MINNESOTA
CITIES
CONNECTING & INNOVATING
SINCE 1913
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 nstech()lmc.org.
The decision to waive or not waive the statutory tort limits must be made annually by the
nrenrber's governing body, in consultation with its attorney if necessary.
Members who obtain liability coverage fi-om 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 notpurchase excess liability coverage, 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 is
$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:
❑ The member DOES NOT WAIVE the monetary limits on municipal tort liability established by Minn. Stat. §
466.04.
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 fi•om LMCIT.
Date of member's governing body meeting:
Signature:
145 UNIVERSITY AVE. WEST PHONE: (651) 281-1200 FAx: (651) 281-1299
ST. PAUL, MN 55103-2044 TOLL FREE: (800) 925-1122 WEB: www.Lmc.oRG
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