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Home My WebLink About6.e. Accept Tort Liability Insurance Limits EXECUTIVE SUMMARY City Council Regular Meeting: September 5, 2017 AGENDA ITEM: Accept Tort Liability Insurance Limits AGENDA SECTION: Consent PREPARED BY: Jeff May, Finance Director AGENDA NO. 6.e. ATTACHMENTS: Recommendation Letter from Courtney Zack, Risk Management Consultant; LMCIT Liability Coverage – Waiver Form APPROVED BY: LJM 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. ISSUE 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 $2,000,000 / $2,000,000 limit. Last year the premium for the additional coverage was $2814. 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 waiving, 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 Courtney Zack, our risk management consultant, recommending that we increase the coverage to $2,000,000 / $2,000,000 for the plan year 10/1/17 through 9/30/18. [Note that we are moving our policy coverage period from a December 1 renewal to an October 1 renewal in 2017.] SUMMARY Recommend the above motion. IA--INSURANCE ADVISORS. INC. 26 E. Birch Street. PO Box 1017 . St. Joseph, MN 56374 , (320) 363-0007. (800) 969-7364. Fax (320) 363-8581 August 25,2017 Mr. Jeff May Finance Director City of Rosemount 2875 145" Street West Rosemount, MN 55068-4997 Re: Tort Cap Liability (Maximum Tort Liability) Dear Jeff, You currently have liability coverage in the amount of: -$2,000,000 when a claim is for death by wrongful act or omission -$2,000,000 to any individual claimant in any other case -$2,000,000 for any number of claims arising out of a single occurrence which allows an individual claimant to recover up to $2,000,000. 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 $2,000,000 and likewise from $500,000 to $2,000,000 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. The League of Minnesota Cities Insurance Trust has issued publications containing a tone suggesting the current financial picture was tightening somewhat. This could indicate a consideration of perhaps a raise in premiums to control costs of managing risk. However, at this time I do continue to recommend you select the $2,000,000 per claimant limit to coincide with the $2,000,000 per occurrence limit. You have not increased your exposure to loss by doing so and you have added an additional $1,500,000 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 the League of Minnesota Insurance Trust and return it. Sincerely, Courtney Zack Risk Management tlA \,{I ^,/ lnril. f n"Lriur I lu" ,,ADVISING YOU ON INSURANCE" P RO P ERTY/ C ASU ALTY - LIF E - HEALTH - INVESTMENTS 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. The City of Rosemount selects liability coverage limits of $2,000,000 / $2,000,000 from the League of Minnesota Cities Insurance Trust (LMCIT). 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 September 5, 2017 Signature Position Mayor