2.4. ERMUSR 05-12-2015 - Laserfiche WebLink

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Excess liability coverage gives the city additional protection against this risk as well. There are, though, a couple important restrictions on how the excess coverage applies to risks that are subject to aggregate limits: • The excess coverage does not apply to the following types of risks: o Failure to supply utilities. o Mold. o "Limited pollution" claims if either the pollutant release or the damage is below ground or in a body of water. o Auto no-fault claims. o Uninsured/underinsured motorist claims. o Workers' compensation, disability, or unemployment claims. o Claims under the medical payments coverage. • The excess coverage does not automatically apply to liquor liability unless the city specifically requests it. 3. The city may be required by contract to carry higher coverage limits LMCIT's limit of$2,000,000 will meet most contract requirements, but if even higher limits are required, LMCIT's excess coverage is an option. LMCIT can also issue an endorsement to increase the city's coverage limit only for claims relating to a particular contract. 4. There may be more than one political subdivision covered under the city's coverage An HRA, EDA, or port authority is itself a separate political subdivision. If the city EDA, for example, is named as a covered party on the city's coverage and a claim were made that involved both the city and the EDA, theoretically the claimant might be able to recover up to $1,500,000 from both the city and the EDA, since there are two political subdivisions involved. Excess coverage is one way to provide enough coverage limits to address this situation. Another solution is for the HRA, EDA, or port authority to carry separate liability coverage in its own name. This issue of multiple covered parties can also arise is if the city has agreed by contract to name another entity as a covered party, or to defend and indemnify another entity. Who needs excess liability coverage? If anything, excess liability coverage is even more important to a small city rather than to a large city. If a city ends up with more liability than it has coverage,the city will have to either draw on existing funds or go to its taxpayers to pay that judgment. A large city faced with, say, $1,000,000 of liability over and above what its LMCIT coverage pays might be able to spread that cost over several thousand taxpayers. The small city by contrast might be dividing that same $1,000,000 among only a couple hundred taxpayers. $1,000,000 divided among 5,000 taxpayers is $200 apiece—annoying but probably at least manageable for most taxpayers. $1,000,000 divided among 200 taxpayers is $5,000 apiece—enough to be a real problem for many. What's the effect of waiving the"per claimant"statutory liability limit? For cities that choose to waive the statutory limits,the city is choosing to waive the protection of the statutory limits, up to the amount of coverage the city has. Someone with a claim against a 49