Adopt Resolution #20-315 Not Waiving Statutory Tort Limits

Purpose: The City is required to annually pass a resolution waiving or not waiving statutory tort limits of $500,000/$1,500,000 for its liability coverage. The City of Ramsey annually renews its property, casualty and liability insurance coverage with the League of Minnesota Cities. A form is required to be filed for the City. Attached is the Liability Coverage Waiver Form that is required to be signed after City Council approval of a resolution indicating whether the City chooses to waive or not waive the statutory tort limits. The tort limits are $500,000 per individual claimant on any one claim (per occurrence) or a total of $1,500,000 for all claimants per occurrence.  If the City Council were to waive the statutory limits, additional insurance would need to be purchased by the City to cover the increased liability.  The City has not waived the tort limits in the past and the majority of cities elect the 'not waive' option.  These statutory tort limits apply regardless of whether the city purchases optional excess liability coverage. If the City Council was to consider waiving the tort limit, staff would request rates for the increased coverage for 2021 and bring them back for consideration at a future regularly scheduled meeting of the City Council along with budget considerations.

A League of Minnesota Cities memo regarding Liability Coverage Options is attached to further outline liability limits, coverage limits and waivers.

Option #1: Not Waive the Statutory Tort Limits for League of Minnesota Cities Insurance Trust Liability Coverage for the City - $500,000/$1,500,000. An individual claimant would be able to recover no more than $500,000 on any claim to which the statutory tort limits apply. The total which all claimants for any single occurrence to which the statutory tort limits apply would be limited to $1,500,000.

Option #2: Waive the Statutory tort limits and not purchase excess liability coverage - $1,500,000/$1,500,000. An individual claimant would be able to recover up to $1,500,000 on a single occurrence, whereas the total of all claimants per single occurrence, would also be limited to $1,500,000 regardless of the number of claimants.  There is an additional costs to waive the tort limits not currently budgeted for.

Option #3: Waive the Statutory tort limits and purchase excess liability coverage. A single claimant could potentially recover an amount up to the limit of the coverage purchased. The total which all claimants would be able to recover for a single occurrence to which the statutory tort limits apply would also be limited to the amount of coverage purchased, regardless of the number of claimants. As noted, this option is more expensive and is currently not budgeted for.  There are additional costs in both waiving the limits  and purchasing excess liability.

Amounts attributed to not-waiving the statutory tort limits was included in the 2021 General Fund Budget under the respective departments.

Staff recommends that the City Council adopt the resolution not waiving (Option #1) the Statutory Tort Limits for liability coverage.

Adopt Resolution #20-315 Not Waiving the Statutory Tort Limits for League of Minnesota Cities Insurance Trust Liability Coverage for the City of Ramsey.