Item 3.10 Accept Liability Insurance Renewal and Elect to Not Waive Monetary Limits
Request for
City Council Action
DEPARTMENT INFORMATION
ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE:
Administration City Administrator/Finance Director Flaherty September 14, 2026
PRESENTER(s) REVIEWED BY: ITEM #:
Consent 3.10 – Insurance Renewal
STRATEGIC VISION
MEETS: THE CITY OF OTSEGO:
X Is a strong organization that is committed to leading the community through innovative communication.
Has proactively expanded infrastructure to responsibly provide core services.
Is committed to delivery of quality emergency service responsive to community needs and expectations in a
cost-effective manner.
Is a social community with diverse housing, service options, and employment opportunities.
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff are recommending that the City Council approve the renewal of the City’s property/casualty insurance.
ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED?
No No
BACKGROUND/JUSTIFICATION:
The City has received the quoted premium from the League of Minnesota Cities for the 2026-2027 liability insurance
package. The total for the coverage period is $265,894 compared to $240,360 for the 2025-2026 coverage period
(10.62% increase).
A few comparisons to further evaluate the policy changes:
1) Property and respective Equipment Breakdown Coverages increased $11,781 (7.96%), primarily due to
building projects such as the new fire station and water treatment at wellhouse 4.
2) General liability coverage increased $9,753 (19.80%) due to factors such as increased employee numbers,
increased budgeted expenditures, more households, and more utility system connections.
3) Automotive liability coverage increased $1,348 (5.87%) with more vehicles and equipment on the policy and a
few higher valued vehicles added to the policy for the Fire Department.
4) Data Breach liability coverage increased $2,009 (49.99%) due to growing instances of cyber-security threats.
Minnesota Statute Section 466.04 references tort liability for political subdivisions. The municipal tort liability is
limited to a maximum of $500,000 per claimant and $1.5 million per occurrence. These limits apply whether the claim
is against the City, against the individual officer or employee, or against both. The LMCIT liability coverage provides a
standard limit of $2 million per occurrence.
At the City’s coverage renewal each year, it must decide whether to waive or not waive the statutory limits. In the
past, the City of Otsego has chosen not to waive these statutory limits on tort liability claims. The LMCIT assures
coverage of the limitations set by the Statute without additional cost to the City.
SUPPORTING DOCUMENTS ATTACHED:
• Liability Coverage Waiver Form
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to authorize the City Administrator/Finance Director to accept the property/casualty insurance coverage
offered from LMCIT and that the City of Otsego elects not to waive the monetary limits on municipal tort liability
established by Minnesota Statute Section 466.04 for the September 25, 2026-2027 coverage period.
BUDGET INFORMATION
FUNDING: BUDGETED:
Insurance coverage is allocated to each
fund/department of the City.
Yes
League of Minnesota Cities Insurance Trust
Liability Coverage Waiver Form
Members who obtain liability coverage through the League of Minnesota Cities Insurance Trust
(LMCIT) must complete and return this form to LMCIT before their effective date of coverage.
Use the submit button below, otherwise, print and email to pstech@lmc.org, or fax to
651.281.1298.
Members who obtain liability coverage from LMCIT must decide whether to waive the statutory tort
liability limits to the extent of the coverage purchased. The decision to waive or not waive the statutory
tort limits must be made annually by the member’s governing body, in consultation with its attorney if
necessary. The decision has the following effects:
•If the member does not waive the statutory tort limits, an individual claimant could recover no more
than $500,000 on any claim to which the statutory tort limits apply. The total all claimants could
recover for a single occurrence to which the statutory tort limits apply would be limited to
$1,500,000. These statutory tort limits would apply regardless of whether the member purchases the
optional LMCIT excess liability coverage.
•If the member waives the statutory tort limits and does not purchase excess liability coverage, a
single claimant could recover up to $2,000,000 for a single occurrence (under the waive option, the
tort cap liability limits are only waived to the extent of the member’s liability coverage limits, and
the LMCIT per occurrence limit is $2,000,000). The total all claimants could recover for a single
occurrence to which the statutory tort limits apply would also be limited to $2,000,000, regardless of
the number of claimants.
•If the member waives the statutory tort limits and purchases excess liability coverage, a single
claimant could potentially recover an amount up to the limit of the coverage purchased. The total all
claimants could 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.
Claims to which the statutory municipal tort limits do not apply are not affected by this decision.
Select one of the options below.
The member DOES NOT WAIVE the monetary limits on municipal tort liability established by
Minn. Stat. § 466.04
The member WAIVES monetary limits on municipal tort liability established by Minn. Stat. § 466.04,
to the extent of the limits of the liability coverage obtained from LMCIT
LMCIT Member Name:
Date of member’s governing body meeting:
Name and title of person completing this form:
Signature of person completing this form: