Insurance Needs for Municipalities
Local governments are subject to a wide variety of hazards that demand careful insurance planning. From liability to property insurance, having the appropriate coverage in force helps conserve taxpayer assets, ensures continued operations, and fosters public trust. This article covers methods through which municipalities can assess their insurance needs, examine their available coverage, and handle their policies properly in the long run.
Determining Needs
The first step in ensuring a municipality is properly insured is to conduct a thorough risk assessment. This review includes the identification of assets, operations, and activities that are exposed to loss or liability. These are such items as:
- Public buildings (e.g., city halls, public libraries, recreation centers)
- Fleet vehicles such as buses, fire trucks, or snow plows
- Employee liability, including police, firefighters, and city employees
- Infrastructure, including roads, bridges, and water systems
- Organized or permitted events and activities by the municipality
Local government entities should also review historical claim data, environmental exposures, and regulatory requirements. Discussions with risk managers and insurance consultants help to keep exposures current and complete. This review should occur periodically to reflect changing conditions, such as increases in services or capital improvement projects.
Coverage Options
After identifying the municipality's exposures, choosing the right coverage comes next. Most types of municipal insurance fall under one of the following categories:
- General Liability Insurance: Covers liability for property damage or personal injury by the public.
- Property Insurance: Insures municipal buildings, contents, and equipment against perils including fire, vandalism, and natural disasters.
- Auto and Fleet Insurance: Covers damage or liability for city-owned autos.
- Errors and Omissions (E&O): Also known as professional liability, it protects elected officials and municipal employees from lawsuits that involve decisions or services.
- Cyber Liability Insurance: With more digital infrastructures, there's also an increasing necessity for cyber insurance that will handle data breaches, ransomware, and network interruptions.
- Environmental Liability: It encompasses episodes of pollution, which can occur due to landfills, water treatment facilities, or public installations.
- Workers' Compensation: Mandated in most states, it covers employees who are hurt on the job.
Some municipalities will also have their own special coverage, such as public transportation or rescue squads. Group purchasing agreements through municipal associations can bring cost savings and tailored coverage.
Policy Management
Insurance policy administration is an ongoing responsibility that goes beyond purchasing coverage. Cities should:
- Adjust policies annually to ensure appropriate limits and active coverage.
- Monitor renewals and premium increases, and negotiate when necessary.
- Maintain accurate inventories and valuations of covered assets.
- Train staff on mitigation processes for risks such as workplace safety, IT security, and emergency planning.
- Report and track claims in a timely and organized manner to insurers.
- Seek out lawyers or brokers to clarify obscure policy terminology or resolve disputes.
The municipality can achieve cost savings through effective policy management, which also leads to reduced insurance premiums because of documented loss reduction and claims handling procedures. Effective insurance planning enables municipalities to protect their public assets while maintaining efficient service delivery. Municipalities can deliver stable and secure governance to their citizens by conducting proper risk evaluations, selecting appropriate coverage, and managing policies effectively.
Contact the Municipal Attorneys at Bingaman Hess Today
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This article is for informational purposes only and does not constitute legal advice. No one may rely on this information without consulting an attorney. Anyone who attempts to use this information without attorney consultation does so at their own risk. Bingaman Hess is not and shall never be responsible for anyone who uses this information. It is not legal advice.
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