Memo - Sewer Back up Insurance
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MEMORANDUM
Date:
To:
May 5, 2005
Mayor & City Council
Christine Harkess, Finance Director
From:
Subject: Sewer Back up Insurance
In continuing our dialog regarding sewer back up insurance I've put together several scenarios as
to how a homeowner might receive relief under the city's sewer back up insurance. I have not
included materials from past council packets as that material has been distributed several times
previously, If you have them available you may want to bring them to the meeting for reference,
If we decide to purchase the no-fault sewer back up insurance the premium will be 8.5% of the
city's municipal liability premium or about $6,700. Acceptance of our request for this insurance
is not automatic; we will need to go through the underwriting process.
As a reminder, in order for the claim to receive relief on the city's policy the following four
conditions must be met:
. The sewer backup resulted from a condition in the city's sewer system
. The sewer backup was not the result of an obstruction or other condition in sewer
pipes or lines which are not part of the city's sewer system or which are not owned or
maintained by the city.
. The sewer backup was not caused by or related to a catastrophic incident.
. The date of the occurrence giving rise to the claim for damages must be on or after
the retroactive date shown on the endorsement.
Coverage Limits are -
. $10,000 per building per year
. For purposes of the limit, a structure or group of structures that is served by a single
connection to the city's sewer system will be considered a single building.
. Deductibles apply and claims under the no-fault coverage are treated as a liability
claim, so the same per-occurrence and/or annual deductibles will apply.
Here are several scenarios of how claims against this policy might be paid -
Scenario # I
Homeowner has no sewer back up insurance on their homeowners policy and experiences $5,000
of damage. The city's policy would cover them up to $5,000.
Scenario #2
Homeowner has no sewer back up insurance on their homeowners' policy and experiences over
$10,000 of damage. No other homeowner on their line has losses. The city's policy would only
cover losses up to $10,000.
Scenario #3
Homeowner has no sewer back up insurance on their homeowners' policy and experiences over
$10,000 of damage. Several other homeowners on their line also have losses. Total claims paid
would be $10,000 to all claimants regardless ofthe total of the claims.
Scenario #4
Homeowner has sewer back up insurance on their homeowners policy and experiences $5,000 of
damage. The city's policy would cover them up to $5,000 onlv after they have received relief on
their personal homeowners policy.
Scenario #5
Homeowner has sewer back up insurance on their homeowners' policy and experiences over
$10,000 of damage. No other homeowner on their line has losses. The city's policy would only
cover losses up to $10,000 again onlv after they have received relief on their personal
homeowners policy.
Scenario #6
Homeowner has sewer back up insurance on their homeowners' policy and experiences over
$10,000 of damage. Several other homeowners on their line also have losses. The city's policy
would only cover losses up to $10,000 onlv after they have received relief on their personal
homeowners policy. Total claims paid would be $10,000 to all claimants regardless of the total
of the claims. If there is a mix of claimants having personal sewer back up insurance and those
that don't claims applied to the city's exposure would be after any personal insurance amounts
were paid.
Scenario #7
Homeowner has sewer back up insurance on their homeowners' policy and experiences over
$10,000 of damage. Several other homeowners on different lines also have losses. The city's
policy would cover losses on each homeowner on separate lines up to $10,000 each onlv after
they have received relief on their personal homeowners policy. Total claims paid would be
$10,000 to each claimaht on the different lines.
These scenarios are not meant to be inclusive of the different types of claim situations nor are
they to be interpreted as how the claims may actually be paid, Only our insurance adjusters can
determine the validity of each claim and how the claims are structured, or deductibles and limits
applied.