2.4. ERMUSR 05-12-2015 - Laserfiche WebLink

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Why does LMCIT provide higher coverage limits than the statutory limit? The reason is to give member cities better protection. The statutory liability limit caps the city's liability for many types of claims. But some liability claims, which are listed in the next section, aren't covered by the statutory limit, so the city's potential liability is unlimited. The higher limit also protects against a major incident in which many people might be injured. The $2,000,000 per occurrence coverage limit gives the city better protection for these types of claims, and makes it less likely the city could end up with liability exceeding its coverage limit. Another reason to provide higher limits is because it's increasingly more common to see contracts require more than the statutory limit of$1,500,000; a more common figure is a $2,000,000 limit. LMCIT's higher limits will now meet this requirement, but if even higher limits are required, there is the option to carry LMCIT's excess coverage to meet the additional requirements. LMCIT can also issue an endorsement to increase the city's coverage limit only for claims relating to a particular contract. If the statute limits our liability and LMCIT is already providing higher limits than required, why purchase even more limits? There are four good reasons why cities should strongly consider carrying LMCIT's excess coverage,which provides higher limits of liability coverage. Excess coverage is available in $1,000,000 increments, up to a maximum of$5,000,000. 1. The statutory tort limits either do not or may not apply to several types of claims The following are the types of claims the statutory limits do not apply to. LMCIT's higher limit of$2,000,000 will definitely provide better protection against these types of claims, but there could be cases where even that limit might not be enough. • Claims under federal civil rights laws. These include Section 1983,the Americans with Disabilities Act, etc. • Claims for tort liability that the city has assumed by contract. This occurs when a city agrees in a contract to defend and indemnify a private party. • Claims for actions in another state. This might occur in border cities that have mutual aid agreements with adjoining states, or when a city official attends a national conference or goes to Washington to lobby, etc. • Claims based on liquor sales. This mostly affects cities with municipal liquor stores, but it could also arise in connection with beer sales at a fire relief association fund-raiser, for example. • Claims based on a "taking" theory. Suits challenging land use regulations frequently include an "inverse condemnation" claim, alleging that the regulation amounts to a"taking" of the property. 2. LMCIT's primary liability coverage has annual limits on coverage for a few specific risks The table on page 1 lists the liability risks to which aggregate coverage limits apply. If the city has a loss or claim in one of these areas, there might not be enough limits remaining to cover the city's full exposure if there is a second loss of the same sort during the year. 48