5.3. SR 01-09-2006 - Laserfiche WebLink

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Since the city's vicurious liability is subject to the statutory limit just as the city's direct liability is, the city's existing coverage limit should be sufficient to cover the city's exposure.2 One circumstance in which the court's ruling t:Oultl <.:reate a coverage limits problem with mutual aid and contract Cor service agreements is if the agreement contains defcnsc anti indcmnilication provisions. LMClT generally recommends that mutual aid and contract for service agreements include provisions for the party in charge to delend and indemnity the othcr party. The goal is to eliminate conl1icts 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 to indemnify 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 http://\v\vw .1 mnc.onuodfslmutualaidmodel. pdf. Agreements creating a juin/ powers en!ifY 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 can now apparenlly recover up to the statutory liability limit ii'om each of the participating political subdivisions. The result is that the eflective limits on liability arising Irom a joint powers entity's activities an: now equal to $300.000 times the number of members for each claimant; and $1.000,000 times the number of members for each occulTence. Essentially. this stacking or vicarious liability represents another way in which the liability exposure ror a joint powers entity could tum out to be greater than the basic $1,000.000 limit of coverage which LMCIT provides. Of course, there are and always have becn other ways in \vhich a city or ajoint powers entity could end up with liability exceeding its coverage limit- federal civil rights claims, contractually assumed liability, etc. Suggested strategies for cities For mUlual aid Cllld cUll/rae/jor servicejoim powers agreements . I f the agreement includes delense and indemnification provisions, make sure that those provisions limit the \:ity's duty to indemnify to an amount no greater than its coverage limit. Suggested language can be found in the LMCIT model mutual aid agreement at h tlp:/ /W\V\V .Imnc. 0 m/pd rs/m utual ai umodel. pdf. ! Provided.ofl:oursc, that the claim is ofa type that's subject to the statutory limit in the lirsl place; e.g., it's not a civil rights claim, etc. 3