5.3. SR 10-17-2005 - Laserfiche WebLink

Home Browse Search

Since the city's vicarious liability is subject to the statutory limit just as the city's direct liability is, the city's existing covcrage limit should bc sufficient to cover thc city's exposure.2 One circumstance in which the court's ruling could create a coverage limits problcm with mutual aid and contract for scrvice agreements is if the agreement contains defcnsc and indcmnilication provisions. LMCrr generally recommends that mutual aid and contract for service agreements include provisions for the party in charge to defend and indemnity the other party. The goal is to eliminate contlicts among defendants and make it possible to present a single unified defense. But under the court's ruling, that could result in the city having to pay not only for its own liability up to the statutory limit. but also LO indenmify the other city for that city's vicarious liability. That could add up to more than the city's coverage limit. LMCIT's model mutual aid agreement incorporates "limited indcmnification" language that's designed to avoid creating this problem. The model agreement is available on the web at huo:i /www.lmnc.onuodfs/mulualaidmodel. pdf. Agreeme1lls crealillg a joi1ll powers ellIily As notcd earlier, any "joint powers entity" as defined in the LMCIT liability coverage is pretty clearly going to be considered to be a 'joint venture". Under the Reimer ruling. in a liability claim arising from the joint powers entity's activities the claimant or claimants potentially ean now apparently recover up to the statlltOlY liability limit ii-om each of the participating political subdivisions. The result is that the effective limits on liability arising Ii-om a joint powers entity's activitics arc now eqllal to $300.000 times the number of mcmbers for each claimant; and $1.000,000 times the nllmber of members for each occurrence. Esscntially. this stacking orvicarious liability represents another \-vay in which the liability exposure for a joint powers entity could tUIll Ollt to be greater than the basic $1,000.000 limit of coverage which UvlCIT provides. Of course, there are and always have been other ways in \vhich a city or ajoint powers entity could end up with liability exceeding its coverage limit- fedcral civil rights claims, contractually assllmcd liability. etc. Suggested strategies for cities For mutual aid llnd con/raelfor service joiJ1l powers agreemenls · I f the agreement includes defense and indemnification provisions, makc sure that those provisions limit the city's duty to indemnify to an amount no greater than its coverage limit. Suggested language can be found in the LMCJT model mutual aid agreement at http://W\V\V .IIllI1C .org/po fs/m lit ualai dmodel. pdf. ~ Provided, of course, Iha. Ihe claim is of a Iype that's subject \0 the statutory limit in the lil'Sl place; e.g., it's nol a civil righls claim, etc. 3