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9.c 2017 Liability and Property Insurance renewal with League of Minnesota Cities Insurance TrustSCANDIA Staff Report Date of Meeting: November 14, 2016 To: City Council From: Neil Soltis, City Administrator Re: 2017 Insurance Coverage Renewal Background: The City purchases liability and property insurance coverage through the League of Minnesota Cities Insurance Trust (LMCIT). LMCIT is a cooperative, member -owned organization founded in 1980 that provides property, liability, workers' compensation and employee benefit needs to Minnesota cities. Members contribute premiums to a jointly -owned fund rather than paying premiums to buy insurance from a private insurance company. The funds are used to pay for members' claims, losses and expenses. LMCIT's property/casualty program has more than 1,100 members. LMCIT coverage is designed specifically for Minnesota cities. The city has not recently solicited other quotes since the coverage provided to by LMCIT is specifically tailored to the cities risk exposures. The City Council must decide each year whether to waive the statutory monetary limit on tort liability. If the city does not waive the limit, an individual claimant would be able to recover no more than $500,000 on any claim to which the limits apply, with a total limit on a single occurrence of $1.5 million. If the city does waive the limit, an individual claimant could potentially recover an amount up to $2.0 million, plus any excess liability insurance coverage (Scandia currently carries $1 million). It is estimated that the City saves approximately $500 per year on liability insurance premiums by not waiving the limit. In 2012, the Council raised the deductible from $500 to $1,000 for liability and property insurance. The deductible is proposed to remain at $1,000 for 2017. In the past the City has not insured property in the open. This would include items such as playground equipment, bleachers, fences, and lighting. The cost of this coverage is $1 per $100 of coverage which is an expensive coverage. Pursuant to the memorandum agreement with the Scandia Veteran Memorial Committee and the Scandia Lions Foundation, the City will provide for property coverage for the memorial. Issue: Should the City renew with LMCIT for 2017? Should the tort liability limit be waived? Should the City purchase coverage on property in the open for items other than the Veterans Memorial? Proposal Details: Fiscal Impact: Rates for 2017 are not yet available. The final cost will be determined based on coverage selected by the City. In 2016, the total premium paid to date for liability ($11,819), auto ($5,035), and property coverage (14,728) was $31,582. The premium amount is subject to audit at the end of the year based on the City's actual expenditures. Each year, LMCIT returns dividends to its members. The dividends vary significantly year -by -year. Options: 1) Renew insurance coverage with LMCIT for 2017, and pass a motion to not waive the tort liability limits. 2) Renew insurance coverage with LMCIT for 2017, and pass a motion to waive the tort liability limits. 3) Seek other quotes 4) Take no action Recommendation: Staff is recommending the City renew liability insurance with LMCIT for 2017. The renewal date is 1/1/17 and the rate information will be available in mid-December. Staff is further recommending the Council not waive the limit on tort liability.