9.f) Staff Report-2016 Insurance Coverage Renewalmi-� €-,
SCANDIA
Staff RepoVt
Date of Meeting: December 15, 2015
To: City Council
From: Neil Soltis, City Administrator
Re: 2016 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.
Monetary limit - 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.
Deductible - In 2012, the Council raised the deductible from $500 to $1,000. The deductible is
proposed to remain at $1,000 for 2016.
Property in the open — In the past the City has not insured property in the open on its property
insurance policy. Property in the open is a class of items that are not located in buildings such as
fences, street lights, signs, and playground equipment. While providing for this coverage has not
been provided in the 2016 budget, I have requested that a quote be provided for future
consideration
Issue:
Should the City renew with LMCIT for 2016?
Should the tort liability limit be waived?
Should the City insure property in the open?
Proposal Details:
Staff is recommending the City renew liability insurance with LMCIT for 2016. The 2016
renewal date is 12/1/15 and we have requested that be extended for 1 month so that the policy
term can correspond with the calendar / budget year. Rate information will be available by the
end of the month.
Staff is further recommending the Council not waive the limit on tort liability.
Fiscal Impact:
Rates for 2016 are not yet available. The final cost will be determined based on coverage
selected by the City. In 2015, the total premium for liability and property insurance was $32,229
and the 2016 budget includes $35,202 for property and liability insurance coverage. Each year,
LMCIT returns dividends to its members. The dividends vary significantly year -by -year.
Options:
1) Renew insurance coverage with LMCIT for 2016, and pass a motion to not waive the tort
liability limits.
2) Renew insurance coverage with LMCIT for 2016, and pass a motion to waive the tort
liability limits.
3) Seek other quotes
4) Take no action
Recommendation:
Option 1.