The City purchases property insurance on behalf of Lubbock Power and Light (LP&L), the City's municipal electric utility, for its structures, contents, and equipment. The coverages include, but are not limited to:
- Special Form Property Policy, formerly known as All Risk, for direct physical loss up to $538,841,091, which is the estimated total value of all electric utility structures, contents, and equipment;
- Flood and earthquake coverage to include high hazard zones;
- All property and contents;
- Mobile equipment and vehicles;
- Boiler and machinery insurance coverage for the mechanical failure and damage of generating equipment, boilers, heating, ventilating, air conditioning equipment, pumps and other mechanical equipment, excluding wear and tear; and
- Business Interruption coverage.
The City, on behalf of LP&L, currently utilizes a layered coverage program including AIG, Argenta, Munich RE, Travelers, Lancashire, Amlin, Liberty, Arch, Munich, Convex, Alcor, and Chubb. Each carrier has a set deductible ranging from $250,000 to $5,000,000 deductible, per occurrence. The current rate for this coverage is $0.6303 per $100 valuation, and a premium of $3,486,958.
The current year premium is a combination of property, business interruption and boiler and machinery coverage. The bundling of the property and boiler and machinery coverages affords the electric utility greater coverage and allows access to loss prevention services that include state inspections for the boilers, and infrared thermographic testing, oil analysis, and Doble testing on electric generating and distribution equipment.
The City’s broker is working to secure quotes for coverage to accommodate the LP&L business plan, which excludes electric production as of October 1, 2023, at a rate not to exceed $0.1333 per $100 valuation. Approving this insurance coverage on a rate basis allows the City Manager the ability to add and remove properties, as necessary, to maintain an accurate property valuation.
Carriers bind insurance coverage October 1, 2023, after notification of City Council approval. Insurance policies are issued after premiums are received from the City. The policy for the insurance coverage is approved by the Texas Department of Insurance as to content. Current insurance policies are available for review in the Risk Management Department. |
