HomeMy WebLinkAbout6.b. Tort Liability Limits
EXECUTIVE SUMMARY
City Council Regular Meeting: September 6, 2022
AGENDA SECTION:
AGENDA ITEM: Tort Liability Insurance Limits
Consent
PREPARED BY: Teah Malecha, Finance Director AGENDA NO. 6.b.
ATTACHMENTS: LMCIT Liability Coverage – Waiver Form APPROVED BY: LJM
RECOMMENDED ACTION: Motion to not waive the monetary limits on municipal tort
liability established by Minnesota Statute § 466.04
BACKGROUND
Each year when the City renews its property and liability insurance policy with the League of Minnesota
Cities Insurance Trust (LMCIT), it must decide whether to waive the statutory tort liability limits.
Minnesota Statute limits the City’s liability to no more than $500,000 per claimant with a maximum of
$1,500,000 per occurrence.
The LMCIT provides cities with the option to structure their liability coverage by choosing whether to
waive the statutory tort limits provided by Minnesota Statute § 466.04. If the City waives the limits, a
claimant could recover up to $2,000,000 for a single occurrence.
According to LMCIT, 85 percent of cities do not waive the tort liability limits. It is the recommendation of
our insurance agent, First National Insurance, to not waive the limits.
RECOMMENDATION
Staff recommends approving the recommendation not to waive the monetary limits on municipal tort
liability established by Minnesota Statute § 466.04.
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 pstech@lmc.org.
The decision to waive or not waive the statutory tort limits must be made annually by the
member’s governing body, in consultation with its attorney if necessary.
Members who 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 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 not purchase 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.
2
LMCIT Member Name:
__________________________________________________________________________
Check one:
o The member DOES NOT WAIVE the monetary limits on municipal tort liability established by Minn.
Stat. § 466.04.
o 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 from LMCIT.
Date of member’s governing body meeting: _____________________________________________
Signature: Position: ________________________________
X
Tuesday, September 6, 2022
Mayor