5.1. SR 03-22-1999
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Item #5.1.
MEMORANDUM
TO:
Mayor & City Council
FROM:
Lori Johnson, Finance Director
DATE:
March 22, 1999
SUBJECT: April 1 Insurance Renewal
In past years the city's property, liability, and other general insurance policies
have renewed in October. Last year, in order to take advantage of additional
and broadened no cost coverage which was available only at renewal, the city
opted to renew in April thereby adding the new coverage six months early.
This renewal now coincides with the liquor liability renewal.
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Each year quotes are requested from all companies writing municipal
insurance in Minnesota. Of the four companies contacted, only the League of
Minnesota Cities Insurance Trust (LMCIT) supplied a quote for all of the city's
coverage. The three other companies indicated that they were not interested
because of the city's current low premiums, the dividend program, and because
they could not offer coverage comparable to the LMCIT's. American States
Insurance Company submitted a quote for the liquor property and liability
coverage.
PrODertv. Liabilitv and Other General Coveraf!e
Attached is the quote submitted by the LMCIT for April 1, 1999, to April 1,
2000. Although the premium rates have not increased, the total premium has
increased due mainly to increased expenditures and revised property and
equipment values. More detailed information on the increases will be
available Monday.
The only real issue the Council should consider on the LMCIT renewal is
whether the city wants to purchase expanded Y2K coverage which is being
offered. This is a very unusual opportunity since most, if not all, other
companies are not offering this type of coverage. The current renewal will
include $25,000 of liability and $5,000 of extra expense coverage related to
Y2K claims. The expanded coverage would increase the liability coverage to
. $750,000 and $25,000 of extra expense coverage. All coverage is subject to a
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330. TDD & Phone: (612) 441-7420. Fax: (612) 441-7425
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15 percent co-payment. This coverage is not for corrective actions but covers
claims as a result of a Y2K issue. For example, if the stop lights no longer
function, the coverage would pay the extra expense of having a patrol officer
direct traffic and any liability resulting from an accident that occurred as a
result of the malfunctioning stop lights. The coverage would not pay for the
cost of making the stop lights operational.
In order to qualify for this coverage, the city needs to have met several criteria
including the appointment of a Y2K coordinator, completed
assessment/inventory sheets for all departments and functions, have a
contingency plan including staff on duty on December 31, 1999, and have an
action plan which is being reviewed on a continual basis. Once the city meets
all of these requirements, it may apply for the coverage. The additional cost is
estimated to be $6,445.
Liauor Liabilitv and ProDertv
The main discussion on Monday will be regarding the liquor liability insurance
coverage at Northbound. American States Insurance Company has submitted
a very competitive proposal. This company is rated as a top company by Best,
an insurance resting agency. Changing to American would result in a
premium savings of approximately $4,500. As you may recall, the LMCIT just
recently entered the liquor liability market. After considerable research, it
appears as though the American States Insurance proposal offers a similar
coverage at a much reduced cost. The League is still working on a response to
the reduced quote and any coverage differences. Additional information will
be available on this issue on Monday.
Action Reauested
The City Council is asked to approve the LMCIT renewals for the period of
April 1, 1999, to April 1, 2000, for the city's property liability, boiler, open
meeting, petro, crime, and other coverages. The City Council is also asked to
consider the liquor liability renewal.
f: \shrdoc \council\insrenw I. doc
03/15/1999 09:57 6124416714 FIRST NATIONAL INS PAGE 03
MAR-1~-1399 ~:~5 le~UE ~ MN CITl~S &12 281 12~a ~.~2~13
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· LMC
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145 V~iYt'.r5ity Avenue We.e, St. Paul, MN 55103-2044-
Pbonl!:: (6511281-1200 · (800,9'.25.1122
Fax: (651) 281.12~ · TOO (pStl 281.1290
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1st Nationa] Insur3Dcc Agency
716 Main St., Suite 107
Elk River, MN 55330
Date: March t 2. t 999
Re: City of Elk Rh'er
Err. Dak: 4/1~51
RE~"EW AL PREMIL~ SUMMARY AND BINDER
"UM'UIM
$~4,02).
13:83'.
It 7:750.
I
1.,866.
I
I
11,001.
!
] t.686.
I
.Propel1y
.Mubile PropertY
'"Municipal Liabilitj'
.. Automobile Liability
.
· Automobile Physical Damage
.Crime
1 215.
i
"Bonds
Boiler 8: Mach.
Pe1:I'ofund Reimb.
Open Meeting Law (80%)
Liquor Liab.
1 l,'47.
14,416.
690.
1,53l.
6.2S8.
TOTAL
$193.878.
TORT LlMlT
S7S0,OOO.1S7S0.000.
.Dedu~tiblc: $500.
REMARKS: 00 NOT PAY UNTIL YOt; RECEl\"E INVOICES!
Option - Open Mming Law 1000/0. S353. Additional
Renewal eo...erage is bound up to 60 days pending issuance of renewal based on L.M.C I.T.
forms and practices in effect on renewal date.
11/97
LMCJn2
Sincerely.
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'oN EQl.'AL OFPOaTUNITY/_ FFIAM4 TIV~ ACTIOI\I 1>""'1.0Y6l
APRIL 1, 1999, INSURANCE RENEWAL
. 4/1/99 to 4/1/00 4/1/98 to 4/1/99
Amount Amount
Rate Coverage Premium Rate Covera~e Premium
Property 0.071 33,820,915 24,015 0.07627 30,153,459 22,998
Boiler 8.13818 24,729,915 4,476 43,074,134 7,796
Mobile Property
Scheduled >$25,000 0.29693 612,561 1,819 0.23993 469,300 1,126
Unscheduled <$25,000 487,050 2,016 477,500 1,792
Municipal Liability
Op Exp/Population 7,998,108 68,611 6,740,250 56,938
Waterworks Payroll 88,635 2,670 84,200 2,501
Waterworks Per 1M/gal 488 461 413 381
Electric Utility 725,980 25,889 657,320 23,155
Streets per mile 92 1,380 95 1,404
Rec Center/Ice Arena 69,150 4,277 42,000 2,559
Independent Contractors 6,831,920 1,363 2,000,000 456
Beach 408 401
Y2K Basic 25,000
E&O 25,797,470 12,691 13,488,057 7,229
117,750 95,024
Auto Liability & Damage 33,553 30,069
Crime. Inside Premises 143 130
Crime. Outside Premises 72 60
. Time Element 0.01454 55,000 8
Petrofund Reimb. 690 484
open meeting law 1,531 1,234
Bonds 1,547 200,000 1,579
TOTAL 187,620 162,292
Liauor Liabilitv
LMCIT 7,937
American States 3,614
($20,000 Money & Sec.)
Savings with American 4,323
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