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9.b) Staff Report-2015 Insurance Coverage RenewalSCANDIA Staff RepoVt Date of Meeting: October 21, 2014 To: City Council From: Kristina Handt, City Administrator Re: 2015 Insurance Coverage Renewal Background: The City purchases all of its 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 looked for other quotes. There are few, if any, insurance companies that could provide comparable coverage. 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 $1.5 million, plus any excess liability insurance coverage (Scandia currently carries $1 million.). Most communities (about 70%) do not waive the limit. Previously, Scandia waived the limit, but decided not to do so since 2009. In 2010, it was estimated that the city saved approximately $450 per year on liability insurance premiums by not waiving the limit. LMCIT's publication on liability coverage and waivers is attached for your information. In 2012, the Council raised the deductible from $500 to $1,000. The deductible is proposed to remain at $1,000 for 2015. Issue: Should the City renew with LMCIT for 2015? Should the tort liability limit be waived? Proposal Details: Staff is recommending the City renew liability insurance with LMCIT for 2015. The renewal date is actually 12/1/14. Rate information will be available in mid-November. Staff is further recommending the Council not waive the limit on tort liability. Fiscal Impact: Rates for 2015 are not yet available. The final cost will be determined based on coverage selected by the City. In 2014, the total premium for liability and property insurance was about $52,136. Each year, LMCIT returns dividends to its members. The dividends vary significantly year -by -year. Options: 1) Renew insurance coverage with LMCIT for 2015, and pass a motion to not waive the tort liability limits. 2) Renew insurance coverage with LMCIT for 2015, and pass a motion to waive the tort liability limits. 3) Seek other quotes 4) Take no action Recommendation: Option 1.