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city that has waived the statutory limits would be able to recover up to $2,000,000(of course the <br /> individual would have to prove to the court or jury that he or she really does have that amount of <br /> damages),rather than the statutory limit of$500,000 per claimant. Because the waiver increases <br /> the exposure, the premium is roughly 3% higher for coverage under the waiver option. <br /> For cities that choose not to waive the statutory limits, the city's liability is limited by the <br /> statute to no more than$500,000 per claimant and $1,500,000 per occurrence. LMCIT's higher <br /> coverage limits would only come into play on those types of claims that aren't covered by the <br /> statutory liability limit. <br /> Why would the city choose to pay more for the waiver-option coverage? <br /> The statutory liability limit only comes into play in a case where: <br /> • The city is in fact liable. <br /> • The injured party's actual proven damages are greater than the statutory limit. <br /> Very literally, applying the statutory liability limit means a n injured party won't be fully <br /> compensated for his or her actual, proven damages that were caused by city negligence. Some <br /> cities, as a matter of public policy, may want to have more assets available to compensate their <br /> citizens for injuries caused by the city's negligence. Waiving the statutory liability limits is a <br /> way to do that. <br /> Other cities may feel that the appropriate policy is to minimize the expenditure of the taxpayers' <br /> funds by taking full advantage of every protection the legislature has decided to provide. <br /> There's no right or wrong answer on this point. It's a discretionary question of city policy that <br /> each city council needs to decide for itself. <br /> What's the effect of waiving the statutory limits if the city has excess coverage? <br /> If the city has $1,000,000 of excess coverage and chooses to waive the statutory tort limits, the <br /> claimants (whether it's one claimant or several) could then potentially recover up to $3,000,000 <br /> in damages in a single occurrence. If the city carries higher excess coverage limits, the <br /> potential maximum recovery per occurrence is correspondingly higher. <br /> Carrying excess coverage under the waiver option is a way to address an issue that some cities <br /> find troubling: the case where many people are injured in a single occurrence caused by city <br /> negligence. Suppose, for example, that a city vehicle negligently runs into a school bus full of <br /> children, causing multiple serious injuries. $1,500,000 divided 50 ways may not go far toward <br /> compensating for those injuries. Excess coverage under the waiver option makes more funds <br /> available to compensate the victims in that kind of situation. <br /> The cost of the excess liability coverage is about 25% greater if the city waives the statutory tort <br /> limits. The cost difference is proportionally greater than the cost difference at the primary level <br /> because for a city that carries excess coverage, waiving the statutory tort limits increases both <br /> the per- claimant exposure and the per-occurrence exposure. <br /> Is there an increase in risk if the city waives the statutory tort liability limits? <br /> There is no increase in risk for the city to end up with liability if LMCIT doesn't cover it. The <br /> waiver form specifically says the city is waiving the statutory tort liability limits only to the <br /> extent of the city's coverage. <br /> 50 <br />