5.3. SR 01-09-2006 - Laserfiche WebLink

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option for cities in this situation. LMCIT can issue an endorsement to increase the city's coverage limit only for claims relating to that particular contract. There's a small charge for these "laser" endorsements.) 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 $1,000,000 from the city and another $1,000,000 from 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 cany 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. 5. Cities sometimes choose to carry higher coverage limits because of a concern that the courts might overt urn the statutory liabilit)' limits. However, those limits have now been tested and upheld several times in Minnesota. While it"s always possible that a future court might decide to throw out the statutory limits, this is now less of a concern. Whllt excess liability coverage limits are available? Excess coverage is available in $1 million increments, up to a maximum of $5 million. We're just a small cit)'. Isn't excess liability coverage really just something that big cities might need'? Absolutely not. If anything. excess liability coverage is even more important to a small 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, a million dollars of liability over and above what its LMCIT coverage pays might be able to spread that Sl million cost over several thousand taxpayers. The small city by contrast might be dividing that same $1 million cost among only a couple hundred taxpayers. $1 million divided among 5000 taxpayers is $200 apiece - annoying but probably at least manageable for most taxpayers. S I million divided among 200 taxpayers is $5000 apiece - enough to be a real problem for many. How does excess coverage apply to uninsured/underinsured motorist coverage? If the city carries excess liability coverage, the city has the option to have the excess coverage also apply to uninsured or underinsured motorist (UM/UIM) claims. To do so. the city must first increase its primary UM/UIM limit from the basic $50,000 to $1,000,000. There are additional premium charges both to increase the primary UM/UIM limit and to apply the excess coverage to the UM/UIM exposure. The city needs to consider whether the benefit from having higher UMIUIM limits is worth that cost. 3