10-24-2016 Council Packet - Laserfiche WebLink

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city that has waived the statutory limits would be able to recover up to $2,000,000 (of course the individual would have to prove to the court or jury that he or she really does have that amount of damages), rather than the statutory limit of $500,000 per claimant. Because the waiver increases the exposure, the premium is roughly 3%higher for coverage under the waiver option. For cities that choose not to waive the statutory limits, the city's liability is limited by the statute to no more than $500,000 per claimant and $1,500,000 per occurrence. LMC1T's higher coverage limits would only come into play on those types of claims that aren't covered by the statutory liability limit. Why would the city choose to pay more for the waiver -option coverage? The statutory liability limit only comes into play in a case where: • The city is in fact liable. • The injured party's actual proven damages are greater than the statutory limit. Very literally, applying the statutory liability limit means an injured party won't be fully compensated for his or her actual, proven damages that were caused by city negligence. 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. Other cities may feel that the appropriate policy is to minimize the expenditure of the taxpayers' fiords by taking full advantage of every protection the legislature has decided to provide. There's 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. What's the effect of waiving the statutory limits if the city has excess coverage? If the city has $1,000,000 of excess coverage and chooses to waive the statutory tort limits, the claimants (whether it's one claimant or several) could then potentially recover up to $3,000,000 in damages in a single occurrence. If the city carries higher excess coverage limits, the potential maximum recovery per occurrence is correspondingly higher. Carrying excess coverage under the waiver option is a way to address an issue that some cities find troubling: the case where many people are injured in a single occurrence caused by city negligence. Suppose, for example, that a city vehicle negligently runs into a school bus full of children, causing multiple serious injuries. $1,500,000 divided 50 ways may not go far toward compensating for those injuries. Excess coverage under the waiver option makes more finds available to compensate the victims in that kind of situation. -'�6 The cost of the excess 25% greater if the city waives the statutory tort limits. The cost difference is proportionally greater than the costdifference at the primary level ' '-Ii66Zsc for a city that carries excess coverage, waiving the statutory tort limits increases both the per- claimant exposure and the per -occurrence exposure. Is there an increase in risk if the city waives the statutory tort liability limits? There is no increase in risk for the city to end up with liability if LMCIT doesn't cover it. The waiver form specifically says the city is waiving the statutory toil liability limits only to the extent of the city's coverage.