ITEM 3.12 Tort LiabilityRequest for
otSTY 0
C1 2�'O City Council Action
MINNESOTA
DEP,AE R TMEN T I NFO RMA TI ON
ORIGINATING DEPARTMENT: REQUESTOR: MEETING DATE:
Administration Dan Jordet, ASD January 13, 2014
PRESENTER(s): REVIEWED BY: ITEM #: 3-12
Dan Jordet, ASD Lori Johnson, CA
AGENDA ITEM DETAILS
RECOMMENDATION:
It is recommended that the City Council adopt a motion making the choice not to waive the monetary
limits on municipal tort liability established by Minnesota Statutes 466.04.
ARE YOU SEEKING APPROVAL OF A CONTRACT? I IS A PUBLIC HEARING REQUIRED?
M
BACKGROUND/JUSTIFICATION:
M04
Minnesota Statutes 466 deals with tort liability for political subdivisions. That statute delineates limits
to claim amounts for actions within the scope of that Statute. To summarize, the limits for tort liability
claims are $ 500,000 for a single claim from an incident arising on or after July 1, 2009 and $ 11500,000
for any number of claims arising out of a single incident. Under the League of Minnesota Cities
Insurance Trust (LMCIT) a city must choose whether to waive those limits or to be protected by them. If
the limits are waived, it is recommended that additional coverage be obtained. Limitations on tort
liability for damages are determined by the amount of additional coverage obtained.
In the past, the City of Otsego has chosen not to waiver these statutory limits on tort claims liability.
The LMCIT assures coverage to the limitations set by the Statute without additional cost to the insured
city.
SUPPORTING DOCUMENTS: X ATTACHED ❑ NONE
o Copy of MS 466.04
o Copy of Liability Coverage Waiver Form
POSSIBLE MOTION
Please word motion as you would like it to appear in the minutes.
Move that the City of Otsego chooses not to waive monetary limits on municipal tort liability established
by Minnesota Statutes 466.04 for the 2014 insurance policy period.
BUDGET INFORMATION
FUNDING:
ACTION TAKEN
BUDGETED: X YES
❑ NO
❑ APPROVED AS REQUESTED ❑ DENIED ❑ TABLED ❑ OTHER (List changes)
COMMENTS:
SECTION I: LIABILITY COVERAGE WAIVER FORM
Cities obtaining liability coverage from the League of Minnesota cities Insurance Trust must decide
whether or not to waive the statutory tort liability limits to the extent of the coverage purchased. The
decision to waive or not to waive the statutory limits has the following effects:
If the city 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 which 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 would apply regardless of whether or not the city
purchases the optional excess liability coverage.
Q If the city waives the statutory tort limits and does not purchase excess liability coverage, a single
claimant could potentially recover up to $1,500,000. on a single occurrence. The total which all
claimants would be able to recover for a single occurrence to which the statutory tort limits apply would
also be limited to $1,500,000., regardless of the number of claimants.
If the city 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 which 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.
This decision must be made by the city council. cities purchasing coverage must complete and
return this form to LMCIT before the effective date of the coverage. For further information, contact
LMCIT. You may also wish to discuss these issues With your city attorney.
City of Otsego accepts liability coverage limits of $ 500, 000/$1 , 500, Q n the League of
Minnesota cities Insurance Trust (LMCIT).
Check one:
�] The city DOES NOT WAIVE the monetary limits on municipal tort liability established by
Minnesota Statutes 466.04.
❑ The city WAIVES the monetary limits on tort liability established by Minnesota Statutes 466.04,
to the extent of the limits of the liability coverage obtained from LMCIT.
Date of city council meet43 January 2014
Signature
Position Administrative Service Director
Return this completed forma to LMCIT T 145 Uni versity A ve. W/ St. Paul, NN. 55103-2044
MINNESOTA STATUTES 2013 466.04
466.04 MAXIMUM LIABILITY.
Subdivision 1. Limits; punitive damages. (a) Liability of any municipality on any claim
within the scope of sections 466.01 to 466.15 shall not exceed:
(1) $300,000 when the claim is one for death by wrongful act or omission and $300,000 to
any claimant in any other case, for claims arising before January 1, 2008;
(2) $400,000 when the claim is one for death by wrongful act or omission and $400,000
to any claimant in any other case, for claims arising on or after January 1, 2008, and before
July 1, 2009;
(3) $500,000 when the claim is one for death by wrongful act or omission and $500,000 to
any claimant in any other case, for claims arising on or after July 1, 2009;
(4) $750,000 for any number of claims arising out of a single occurrence, for claims arising
on or after January 1, 1998, and before January 1, 2000;
(5) $1,000,000 for any number of claims arising out of a single occurrence, for claims arising
on or after January 1, 2000, and before January 1, 2008;
(6) $1,200,000 for any number of claims arising out of a single occurrence, for claims arising
on or after January 1, 2008, and before July 1, 2009-
5
(7) $1,500,000 for any number of claims arising out of a single occurrence, for claims
arising on or after July 1, 2009;
(8) twice the limits provided in clauses (1) to (7) when the claim arises out of the release
or threatened release of a hazardous substance, whether the claim is brought under sections
I I 5B. 0 1 to I I 5B. 15 or under any other law; or
(9) $ 1,000,000 for any number of claims arising out of a single occurrence, if the claim
involves a nonprofit organization engaged in or administering outdoor recreational activities
funded in whole or in part by a municipality or operating under the authorization of a permit
issued by a municipality.
(b) No award for damages on any such claim shall include punitive damages.
Subd. Ia. Officers and employees. The liability of an officer or an employee of any
municipality for a tort arising out of an alleged act or omission occurring in the performance of
duty shall not exceed the limits set forth in subdivision 1, unless the officer or employee provides
professional services and also is employed in the profession for compensation by a person or
persons other than the municipality.
Subd. 1b. Total claim. The total liability of the municipality on a claim against it and against
its officers or employees arising out of a single occurrence shall not exceed the limits set forth in
subdivision 1.
Subd. 2. Inclusions. The limitation imposed by this section on individual claimants includes
damages claimed for loss of services or loss of support arising out of the same tort.
Subd. 3. Disposition of multiple claims. Where the amount awarded to or settled upon
multiple claimants exceeds the applicable limit under subdivision 1, paragraph (a), clauses (4)
to (9), any party may apply to any district court to apportion to each claimant a proper share of
the total amount limited by subdivision 1. The share apportioned each claimant shall be in the
Copyright V 2013 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved.
2 MINNESOTA STATUTES 2013 466.04
proportion that the rated of the award or settlement made to each bears to the aggregate awards
and settlements for all claims arising out of the occurrence.
History: 1963 c 798 s 4; 1976 c 264 s 1-35- 1983 e 121 s 28; 1983 c 331 s 2,3; 1986 c 444;
1989 c 325 s 50; 1997 c 210 s 3,4; 2006 e 232 s 2.'. 2012 c 131 s 2,3
Copyright (D 2013 by the Office of the Revisor of Statutes, State of Minnesota, All Rights Reserved.
Dan Jordet
From:
Randy Hadaway < rhadaway@ rja.co m >
Sent:
Monday, December 23, 2013 2:25 PM
To:
Dan Jordet
Cc:
Kandy Nelles
Subject:
Premium increase
Da n,
Please let me know if the following adequately explains the premium for the 13-14 policy year.
The aggregate deductible charge is basically flat with expiring.
Liability experience mod is .898 which compares with .878 expiring.
Property.-
The
roperty:The property premium is up 14/, primarily due to a League of Cities' rating error in the protection class over the past
few years. They inadvertently used protection 3 instead of 4 which makes a difference of roughly 12% in the property
premium; the remaining 2% is due to exposure increases.
The new liability rating system has been impacting many of the members municipal liability premiums; Otsego is seeing
an increase of 24/a in their liability premium. one of the primary goals of the new liability rating method is to better
align liability premium costs where the liability claims are actually occurring, LMCIT's biggest loss leaders in recent years
in order have been police liability, land use litigation, employment, practices, sewer backups, and administrative errors
and omissions. The new liability method ratables follow pretty closely: number of households (to account for land use
litigation losses), total FTEs (to account for employment liability), sewer connections (to account for sewer backup
losses), and total annual expenditures (to account for all other liability claim types..)
Auto: 4 more units resulting in a 6% increase over expiring.
No Fault Sewer Back -alp increased 265% because of the new rating system.
Excess is up 181 over expiring due to the increase in the underlying premiums of the Municipal and Auto liability and
No -Fault Seger Back-up.
Bottom line is up 15.4/. The new liability rating system the League is using is the key to the increase.
The new liability rating system took effect for cities with renewal dates later than 11/15/2012. So this its Otsego's first
year under the new rating basis.
On a positive note, the city is scheduled to receive a P/C dividend this month for $10,558.
Thank you,_
Randy
I