III.5. Renewal of General Liability and Property Insurance and Authorize not Waiving the Statutory Tort Liability of the League of Minnesota Cities Insurance Trust Policy; BishopDecember 7, 2021 Council Report 2021-122
RENEWAL OF GENERAL LIABILITY AND PROPERTY INSURANCE AND
AUTHORIZE NOT WAIVING OF THE STATUTORY TORT LIABILITY
ON THE LEAGUE OF MINNESOTA CITIES INSURANCE TRUST POLICY
Proposed Action
Staff recommends adoption of the following: Move to approve renewal of the LMCIT Insurance Policy and to not
waive the statutory tort liability limits to the extent of the coverage purchased.
Adoption of this motion will result in staff moving forward with the proposed LMCIT insurance coverage
including not waiving the statutory tort liability limits. The staff recommendation to not waive the statutory tort
liability limits is based on liability exposure to the city in the form of higher premiums.
Overview
The LMCIT notified its members of 2021-2022 coverage rates on November 22, 2021. They indicated that insurance
rates will decrease by 1.5% in the property/casualty programs. Auto physical damage and scheduled mobile equipment
rates will also see an average rate decrease of 1.5%. The overall rate changes may not necessarily correspond with a
specific City’s insurance premiums. Actual premiums are also affected by changes in city expenditures, property
values, payrolls, experience rating and other exposure measures. Property/Casualty insurance premiums were
$223,526 in 2021. The 2022 budgeted amount was set at 234,987. We anticipate that insurance premiums overall for
Hopkins will be within the budgeted amounts for 2022.
Finance continues to recommend the deductible amount of $20,000/$40,000 with $1,000 per occurrence after reaching
the maximum of $40,000. The current amount available in the insurance risk fund to cover deductible costs is
$224,486. In addition we will be sharing in a $15 Million LMCIT dividend this year. LMCIT has consistently paid
out dividends since 1987, totaling approximately $347 million. The dividend will add to our insurance reserves for
potential claims and deductibles.
Primary Issues to Consider
• Deductible amount
• Tort liability exposure
Staff Recommendation
Finance recommends renewal of the LMCIT Insurance Policy and to not waive the monetary limits on the tort liability
established by Minnesota Statutes 466.04, to the extent of the limits of the liability coverage obtained from LMCIT.
Supporting Information
• Election of waiver of tort limits for liability
____________________________
Nick Bishop, CPA
Finance Director
Financial Impact: $ 234,987 Budgeted: Y/N Y Source: All Funds
Related Documents (CIP, ERP, etc.): _____ ______Notes: ___________ _________
LIABILITY COVERAGE – WAIVER FORM
Members who obtain liability coverage through the League of Minnesota Cities Insurance Trust
(LMCIT) must complete and return this form to LMCIT before the member’s effective date of
coverage. Return completed form to your underwriter or email to pstech@lmc.org.
The decision to waive or not waive the statutory tort limits must be made annually by the
member’s governing body, in consultation with its attorney if necessary.
Members who obtain liability coverage from LMCIT must decide whether to waive the statutory tort
liability limits to the extent of the coverage purchased. The decision has the following effects:
• If the member does not waive the statutory tort limits, an individual claimant could recover no more
than $500,000 on any claim to which the statutory tort limits apply. The total all claimants could
recover for a single occurrence to which the statutory tort limits apply would be limited to $1,500,000.
These statutory tort limits would apply regardless of whether the member purchases the optional
LMCIT excess liability coverage.
• If the member waives the statutory tort limits and does not purchase excess liability coverage, a single
claimant could recover up to $2,000,000 for a single occurrence (under the waive option, the tort cap
liability limits are only waived to the extent of the member’s liability coverage limits, and the LMCIT
per occurrence limit is $2,000,000). The total all claimants could recover for a single occurrence to
which the statutory tort limits apply would also be limited to $2,000,000, regardless of the number of
claimants.
• If the member waives the statutory tort limits and purchases excess liability coverage, a single claimant
could potentially recover an amount up to the limit of the coverage purchased. The total all claimants
could recover for a single occurrence to which the statutory tort limits apply would also be limited to
the amount of coverage purchased, regardless of the number of claimants.
Claims to which the statutory municipal tort limits do not apply are not affected by this decision.
2
LMCIT Member Name:
__________________________________________________________________________
Check one:
o The member DOES NOT WAIVE the monetary limits on municipal tort liability established by Minn.
Stat. § 466.04.
o The member WAIVES the monetary limits on municipal tort liability established by Minn. Stat. §
466.04, to the extent of the limits of the liability coverage obtained from LMCIT.
Date of member’s governing body meeting: _____________________________________________
Signature: Position: ________________________________