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HomeMy WebLinkAbout6.e. Accept Tort Liability Insurance Limits 4 ROSEMOUNT EXECUTIVE SUMMARY CITY COUNCIL City Council Meeting Date: November 19, 2013 AGENDA ITEM: Accept Tort Liability Insurance Limits AGENDA SECTION: Consent PREPARED BY: Jeff May, Finance Director AGENDA NO. e L ATTACHMENTS: Recommendation Letter from Dan Peterson, Risk Management Consultant; APPROVED BY: LMCIT Liability Coverage —Waiver Form �Q1 RECOMMENDED ACTION: Motion to waive 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. ISSUES Approve the annual selection of tort liability insurance limits. BACKGROUND Cities obtaining liability coverage from the League of Minnesota Cities Insurance Trust (LMCIT) must decide whether or not to waive the statutory tort liability limits. In the past, the City has waived the $500,000 / $1,500,000 tort cap limit and has elected the $1,500,000 / $1,500,000 limit. Last year the premium for the additional coverage was $1560. By waiving the statutory tort limit cap and getting the "better coverage", the City is better protecting itself in the event of a serious accident or unusual claim. In switching, the feeling is that the additional premium is money well spent by the City to protect itself and ultimately,its citizens. The City Council has to annually take the action to waive the statutory tort liability limits and to accept the LMCIT's higher coverage. Attached is a form that the Mayor will then have to sign and we will return to LMCIT for the institution of this coverage. Also attached is a letter from Dan Peterson, our risk management consultant,recommending that we increase the coverage to $1,500,000 / $1,500,000 for the plan year 12/1/13 through 11/30/14. SUMMARY Recommend the above motion. INC. INSURANCE ADVISORS,INC. 26 E.Birch Street•PO Box 1017•St.Joseph,MN 56374 (320)363-0007•(800)969-7364•Fax(320)363-8581 Mr. Jeff May November 5, 2013 Finance Director City of Rosemount 2875 145th Street West Rosemount, MN 55068-4997 Re: Tort Cap Liability (Maximum Tort Liability) Dear Jeff, You currently have liability insurance coverage in the amount of: -$1,500,000 when a claim is for death by wrongful act or omission -$1,500,000 to any individual claimant in any other case -$1,500,000 for any number of claims arising out of a single occurrence which allows an individual claimant to recover up to $1,500,000. This does not subject the City of Rosemount to any additional risk because, by statute, your liability cannot exceed the extent to which valid and collectible insurance exceeds the tort limitations and covers the claims. Per Minnesota statute, the City of Rosemount may elect to raise its maximum tort liability coverage for a claim for death by wrongful act or omission from $500,000 to $1,500,000 and likewise from $500,000 to $1,500,000 to any individual claimant in any other case by waiving the base $500,000 limits which would automatically be in place. For many years you have chosen to waive the $500,000 limitations and have selected the higher limits for these two exposures. I recommend that you continue to select the $1,500,000 per claimant limit to coincide with the $1,500,000 per occurrence limit. You have not increased your exposure to loss by doing so and you have..Ada' I_ $1,000,000 in coverage in the event a claim would occur that could fall under a federal statute and not be limited by the Minnesota Tort Cap Liability. Additionally, a person seriously injured due to the City's negligence would stand a better chance of being more adequately compensated. I suggest you sign the waiver form provided by League of Minnesota Insurance Trust and return it. Sincerely, / Daniel E Peterson Risk Management. "ADVISING YOU ON INSURANCE" PROPERTY/CASUALTY-LIFE-HEALTH-INVESTMENTS LEAGUE OF MINNESOTA CITIES INSURANCE TRUST 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. 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. The City of Rosemount accepts liability coverage limits of$1,500,000/$1,500,000 from 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 meeting November 19, 2013 Signature Position Mayor Date Return this completed form to LMCIT, 145 University Ave. W, St. Paul, MN. 55103-2044 LMCIT(11/00)(Rev.07/09) Pg 1 of 1