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Home My WebLink About4.6 City Liability Insurance /-7 0 - CITY OF DUBLIN AGENDA STATEMENT CITY COUNCIL MEETING DATE: February 10, 1986 SUBJECT Report on City' s Liability Insurance Program EXHIBITS ATTACHED Letter from Associated International Insurance Company dated January 30, 1986; Letter from Ben Fernandez , dated January 30, 1986; Draft letter to DSRSD providing notice of City ' s insurance situation RECOMMENDATION Direct Staff to evaluate alternatives available for , claims administration. Direct Staff to begin discussions with Alameda County on modification to existing agreements requiring the City to provide primary liability insurance coverage . Direct notice to DSRSD regarding current insurance situation. FINANCIAL STATEMENT: If the City of Dublin is unable to obtain liability coverage , existing assets may be jeopardized as a result of any claims filed for which the City is found to be liable . DESCRIPTION The current City of Dublin liability insurance program provides coverage through March 1 , 1986. There are two exceptions to this renewal date . The errors and omissions policy will expire Septerriber 1 , 1986. The policy sold to tenants using Shannon Center will expire on December* l, 1986. Mr. Ben Fernandez , the City ' s Insurance Broker, has been working with insurers to attempt to place the coverage . As of this date , he has been unable to find companies interested in providing liability insurance for a local government agency. Staff is continuing to investigate the possibility of the City participating in programs under evaluation by the Cities of Alameda County and the Association of Bay Area Governments . In order to prepare for the provision of risk management services after March 1 , 1986, Staff has recognized the probable need to obtain the services of a firm providing claims adjustment services ., In all previous policy years , the main liability portion of the insurance program has not included a deductible . Therefore , the insurance company has been responsible for investigating claims and providing any form of settlement . In all likelihood, the City will be required to assume a self insured retention (SIR) , in the upcoming year. From a practical standpoint , a SIR is the same as a deductible. If the City is unable to obtain any insurance , then the total amount of risk would be best handled through a claims adjustment firm. The use of a professional claims adjuster is necessary to provide the expertise and assure that all claims are handled in an appropriate manner. Staff would consult with other government agencies which currently utilize claims adjusters and with the City' s Insurance Broker. An evaluation of the range of services available and the cost involved would be prepared to determine the most effective manner of providing for these services after March 1 , 1986. The City currently has a separate agreement with the County of Alameda related to the provision of contract services and the assumption of liability insurance for those services . This agreement was negotiated when the City first sought services from Alameda County. At that time , the County Risk Manager did not want to assume the risk under the County' s self-insured program due to the relatively low cost at which full insurance could be provided on the open market . However, as indicated in Mr. ---------------------------------------------------------------------------- COPIES TO: Ben Fernandez ITEM NO. i AGENDA STATEMENT: Report on City ' s Liability Insurance Program Page 2 Fernandez ' letter of January 30, 1986, it appears that police professional liability coverage will not be available . The provision of liability insurance related to police operations is a major portion of the County' s share of the insurance agreement . The City has also provided primary coverage for other County contract services provided to the City of Dublin. Mr. Fernandez has indicated that given the lack of available insurance , it may be appropriate to discuss with the County a change in the contractual arrangements . It is not uncommon for the contractor to provide their own insurance . It has always been the City' s viewpoint in the negotiation of contract services , that the City should only pay for quality services and not the negligent acts of those providing the services . The City must also have some assurance that costs for unassociated claims are not passed. on to the City. The independent contractor designation assumes that the City does not have control over the training and direct supervision of the performance of the contractor' s work. Therefore , it is requested that the City Council direct Staff to meet with the County to negotiate a change in the treatment of insurance costs attributable to the County contract services . The final area which must be addressed is the current lease of the Shannon Community Center from the Dublin San Ramon Services District (DSRSD ) . The agreement requires the City to provide the District with proof of insurance naming the City' s insurance as primary for claims arising out of the operation of the Shannon Community Center. If the City is able to obtain liability insurance , this will not pose a problem, however, it is important to apprise the District of the current situation. Also , Staff has attempted to review any operations deficiencies in the area of risk management . There continues to be a concern with the provision of a safe entryway into the Shannon Community Center. Approximately one year ago , DSRSD announced the undertaking of a project to repair the deck at Shannon Center. Due to problems with the contractor, the project was never begun and it does not appear that DSRSD will be proceeding with this project in the near future . Staff would recommend that the City Council authorize the City Manager to send the attached draft letter to DSRSD informing them of our insurance situation and requesting information on the repair of the deck. Staff will report back to the City Council on the results of all of the above efforts at a future meeting. S'kilt".W u I' H..;..+1. J?. .[ •'f } r, .:4 - } - a', l^,1` ASSOCIATED INTERNATIONAL INSURANCE COMPANY 3450 WILSHIRE BOULEVARD• LOS ANGELES, CALIFORNIA 90010 • (213) 739-8840 TELEX 67-7302 • TWX 910-32111219 January 30, 1986 City of Dublin All 6500 Dublin Boulevard Dublin, California 94566 RE: Notice of Cancellation Named Insured: City of Dublin Policy No. : XS112666 Policy Expiration -Date: March 1, 1986 Dear Sir: I recently advised you that Associated International Insurance Company will not be able to renew your Excess liability policy beyond the March 1, 1986 expiration date. It is our belief that Associated International Insurance Company has given sufficient notice of its intent to not renew coverage afforded by this policy and no coverage applies after the March 1, 1986 expiration date, but in the event that our notice is later determined to be deficient, we are sending this Notice of Cancellation as a precautionary measure. Sin el L E. Lee Duncan Vice President COOPER McKENZIE MURPHY POST OFFICE BOX 1030 PLEASANTON,CA.94566 PHONE:415-646-4423 January 30, 1986 City of Dublin P. 0. Box 2340 Dublin, CA- 94568 Attn: Paul Rankin Dear Paul: You have obviously received the notice of non-renewal on the Police Professional Liability coverage provided under policy #PPL1726065 . We are following up- on any additional market, but are not altogether hopeful. It would be our suggestion that Mike Nave get in touch with the County of Alameda as quickly as possible to terminate the contract7to provide insurance coverage for the police department. Your burden is great enough at this time without assuming responsibility for something that may not be .available. Best,-regards, egards, COOP R MCKENZIE MURPHY Be Fernandez BF:mw YOUR A1WNlK! JAOENT F� CITY OF DUBLIN P.O. Box 2340 Dublin, CA 94568 (415) 2329-4600 February 11, 1986 Mr. Paul Ryan, General Manager Dublin San Ramon Services District 7051 Dublin Boulevard Dublin, CA 94568 Dear Mr. Ryan: The purpose of this correspondence is to advise you of the City of Dublin' s notice of liability insurance cancellation. The City' s current lease with DSRSD for the use of the Shannon Community Center requires the City to provide the District with proof of insurance naming the City' s insurance as primary for the operations related to the Community Center. The City has been advised that effective March 1 , 1986, the City' s insurance will be terminated. The City is evaluating options available and continuing to attempt to obtain traditional insurance through our insurance broker. It should be noted that for rental events , tenants are required to provide proof of insurance or purchase a $500,000 insurance policy for which the City has arranged. This type of insurance will continue to be in effect through December 1 , 1986. The current exposure would be for classes and activities sponsored directly by the City, and the operation of the Recreation Department offices at this location. The City is also interested in progress towards the repair of the deck area surrounding the Community Center. Approximately 1 year ago, the District had announced a project to repair the deck area. It appears that this project will not proceed and the City is concerned with the safety of individuals entering the building. As provided for in the agreement , the District is responsible for the repair and upkeep of the area surrounding the building. We will keep you apprised of developments with our insurance situation and if you wish to further discuss these items , please feel free to contact me . Sincerely, Richard C. Ambrose RCA:kk City Manager