CR 01-038 Authorize Renewal of The Leauge of Minnesota Cities Insurance Trust Policy
V .I:-
A~13, 2001 ~ Council Report 01-038
-s- ~
o ~~_ L_~_~__
AUTHORIZE RENEWAL OF THE LEAGUE OF MINNESOTA CITIES INSURANCE TRUST
POLICY
Proposed Action
Staff recommends adoption of the following: Move to renew the League of Minnesota Cities Insurance
Trust policy and continue to 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 insurance coverage,
excluding medical payments coverage.
Overview
As of January 1, 2001, the statutory municipal tort liability limits continue to be $300,000 per claimant,
$1,000,000 per occurrence. The statutory tort liability limit of$l,OOO,OOO is the same as last year. The
$300,000 per claimant liability is currently waived. The city council must make the decision to not waive the
tort liability limit.
The cities insurance premium will decrease approximately $40,000 or 23% under last years premium.
$30,000 of the decrease is attributed to a change in the deductible amount. Based upon analysis of past and
present claims, the deductible amount is increased to $20,000/$40,000 with $1,000 per occurrence after
reaching the maximum of $40,000.
Primary Issues to Consider
The City of Hopkins currently waives the statutory tort limits and does not purchase excess liability
coverage. A single claimant could potentially recover up to $1,000,000 on a single occurrence. The total
which all claimants would be able to recover for a single occurrence to which the statutory tort limits
apply is also limited to $1,000,000, regardless of the number of claimants. The cost of waiving the
statutory tort limit is approximately $3,600 and is already included in the cities annual premium amount.
If the City of Hopkins does not waive the statutory tort limits, an individual claimant would be able to
recover no more than $300,000 on any claim to which the statutory tort limits apply. The total which all
claimants would be able to recover for a single occurrence to which the statutory tort limits apply, would
be limited to$1 ,000,000. These statutory tort limits apply regardless of whether or not the city purchases
optional excess liability coverage.
Staff Recommendation
Finance recommends renewal of the policy, excluding medical payments coverage and waiving of 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.
Supportin2 Information
. Premi Summary (original estimate at $5,000 deductible)
~inancial Impact: (approximately) $134,500 Budgeted: Yes
Source: All funds
~
.E:
TO:
02/20
LMCIT PREMIUM BREAKDOWN
02/07/2001
Coverage Period: 01/01/2001 -
01/01/2002
PREPARED BY:
"",. ,
CITY OF HOPKINS
POLICY DEDUCTmLE OPTIONS-2001
Calculate the premium savings by determining the claims cost difference between two
deductibles and subtract this from the corresponding premium savings.
Policy Deductible
Year $5,,000 $20/40~000 $25/50,,000
1996 $23,212 $43,531(1) $51,779(1 )
1997 $ 3,594 $ 3,594 $ 3,594
1998 $12,132 $15,967 $15,967
1999 $ 9,840 $20,300 $20,300
2000 $ 8,049 $ 8,049 $ 8,049
Estimated Premium Savings (All package c,overage except Boiler & Machinery which
will remain at $5,000 deductible): '
2001 $30,400 $~7,270
Notes:
(1) Large Deductible basis applies for Each OccurrencelPolicy Annual Aggregate
Limits. Claims closed after the Policy Annual Aggregate Limit is exceeded will be
charged up to a $1,000 deductible.
ill Claim loss deductible calculation based on open and closed claims val\led as of
12/31/2000 .~'
~d~b/;sh f!.i\kT'7-If/lY.?hc~ ru'V!&