11-26-2018 Council Packet - Laserfiche WebLink

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RELEVANT LINKS: League of Minnesota Cities Information Memo: 2/13/2017 LMCIT Liability Coverage Guide Page 6 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. See Summary of LMCIT Liability Coverage Options and the effects of choosing the various coverage structure options. At the city’s coverage renewal each year, it must decide whether to waive or not waive the statutory limits. There is no right or wrong answer on this point. It’s a discretionary question of city policy that each city council needs to decide for itself. a.Waiving the statutory limit Members who choose to waive the statutory limits are waiving the protection of the statutory limits, up to the amount of coverage the city has. Someone with a claim against a city that has waived the statutory limits would be able to recover up to the LMCIT standard limit of $2 million, rather than the statutory limit of $500,000 per claimant. Because the waiver increases the exposure, the premium is a few percentage points higher for coverage under the waiver option. A city may choose to pay more in premium for the waiver option because the statutory liability limit only comes into play in a case where the city is in fact liable and the injured party’s actual proven damages are greater than the statutory limit. Some cities as a matter of public policy may want to have more assets available to compensate their citizens for injuries caused by the city’s negligence. Waiving the statutory liability limits is a way to do that. There is no increase in risk if the city waives the statutory liability limits. In other words, there is no risk for the city to end up with liability if LMCIT doesn’t cover it. The LMCIT waiver form specifically says the city is waiving the statutory tort caps only to the extent of the city’s coverage. That’s not to say there is no risk the city’s liability could exceed its coverage limits. There are certain situations in which this could happen, but the waiver doesn’t increase that risk. See Section II.D.3, Purchasing higher liability limits. In those cases where the city waives the statutory limit, but also purchases the LMCIT excess liability coverage, a claimant could potentially recover more. For example, if the city has $1 million of excess coverage and chooses to waive the statutory tort caps, the claimants (whether it’s one claimant or several) could then potentially recover up to $2.5 million in damages in a single occurrence. If the city carries higher excess coverage limits, the potential maximum recovery per occurrence is correspondingly higher. See Section II.D.3, Purchasing higher liability limits. Carrying LMCIT’s excess coverage under the waiver option is a way to address an issue that some cities find troubling, and that’s: the case where many people are injured in a single occurrence caused by city negligence. An example is if a city vehicle negligently ran into a school bus full of children causing multiple serious injuries.