HomeMy WebLinkAbout2010-05-05 PACKET 04.I.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA
MEETING ITEM #
DATE 5/5/2009
PREPARED BY
CITY CLERK
CARON STRANSKY
STAFF AUTHOR
ORIGINATING DEPARTMENT
COUNCIL ACTION REQUEST
To not waive the tort liability limits.
STAFF RECOMMENDATION
Recommends that the City Council not waive the statutory tort limits where 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 $1.5 million.
BUDGET IMPLICATION
ADVISORY COMMISSION ACTION N/A
SUPPORTING DOCUMENTS:
® MEMO /LETTER: City Clerk Caron Stransky dated April 28, 2010
❑ RESOLUTION:
❑ ORDINANCE:
❑ ENGINEERING RECOMMENDATION:
❑ LEGAL RECOMMENDATION:
® OTHER: Memo from LMCIT
ADMINISTRATORS COMMENTS
City Administrator Date
COUNCIL ACTION TAKEN: APPROVED ❑ DENIED ❑ OTHER
CITY OF COTTAGE GROVE
MINNESOTA
From: Caron Stransky, City Clerk
Date: April 28, 2010
Subject: TORT LIABILITY LIMITS
The LMCIT gives cities several options for structuring their liability coverage. The City can choose
either to waive or not to waive the monetary limits that the statutes provide; and the City can select
from among several liability coverage limits. Attached is a memo which discusses these options
and identifies issues to consider in deciding which of the options best meets the City's needs.
Cities obtaining liability insurance coverage from the League of Minnesota Cities Insurance Trust
( LMCIT) must decide whether 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 and
must be made by the City Council
Option 1: 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 $1.5 million.
These statutory tort limits would apply regardless of whether or not the City
purchases optional excess liability coverage.
Option 2: If the City waives the statutory tort limits and does not purchase excess
liability coverage, a single claimant could potentially recover up to $1.5 million 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 the $1,5
million, regardless of the number of claimants.
The City received a quote from the LMCIT for a $1 million excess liability insurance policy in the
amount of $33,088. In 1986, the City established the self- insurance fund to protect the City against
liability of the City and its officers, employees, agents and servants, resulting from its torts,
including torts for which the City has immunity, and those torts of its officers, employees and
agents. The establishment of the fund, the allocation of funds to it or the expenditure of funds, or
any other act in conjunction with the establishing or operation of the fund shall not waive any
immunity granted to a political subdivision, nor shall it waive any statutory limitation on liability
afforded a political subdivision. Initially, the City deposited $25,000 into the fund and the City
Council authorized expenditures from the fund established for any one or more of the following
purposes:
Payment of losses.
Costs of defense and investigation.
Premiums and deductible amounts when commercial insurance is purchased for a risk.
Costs of loss control customarily borne by commercial insurers under conventional
insurance policies.
Since 1986, the Fund has grown to a balance as of December 31, 2008 actual ending balance was
$2,054,305. Therefore, it is not recommended that the City purchase the $1 million excess liability
insurance policy.
Staff recommends that the City Council select Option 1, to not waive the monetary limits on tort
liability. Claims to which the statutory municipal tort limits do not apply are not affected by this
decision. Staff also recommends that the City not purchase the $1.0 million for an excess liability
insurance policy. Sufficient funds are available in the Self- Insurance Fund.
/Attachment