HomeMy WebLinkAbout1994-03-08 - AGENDA REPORTS - INSURANCE PREMIUMS (2)AGENDA REPORT
City Manager Approval
CONSENT CALENDAR
DATE: March 8, 1994
SUBJECT: Insurance Premiums
DEPARTMENT: City Manager
BACKGROUND
Item to be presented by:
Dennis Luppens
The City's earthquake protection insurance is layered three times in increments of $2,500,000,
$2,500,000 and $10,000,000, for a total coverage limit of $15,000,000 of coverage. Because of
the method used in California to cover earthquakes, there currently exists a gap in our coverage.
For example, if an aftershock occurred today and caused more damage to City property, there
would not be coverage for the initial $3,250,000. This is the cost of the damage caused by the
4:30 A.M., January 17, 1994, earthquake and the following 96 hours.
Staff recommends insuring this $3,250,000 gap through the purchase of supplemental coverage
in the same amount. The premium for the coverage is approximately $55,000. The supplemental
coverage would extend through December 15, 1994. At this time, the City's normal earthquake
coverage would be in effect for the entire $15,000.000.
Staff believes this is a prudent recommendation, especially when one considers the total amount
on earthquake premiums the City has paid over the past years is less than $100,000, and staff
expects to receive more than $3,000,000 from our insurance carriers to pay for damage.
In addition, staff is requesting an additional $68,964 to be used on insurance premiums (See
attachment.) to extend the renewal date from what was December 15 annually to March 1
annually. The cost for the additional three months was not budgeted in the FY 1993-1994
budget. Staff was in the process of evaluating municipal insurance pool and, in November 1993,
renewed our general liability, property, business income and steam and boiler insurance only
through March 1, 1994, to keep open the option of going into a pool or hiring another insurance
broker during FY 1994-1995. Because of the earthquake, staff believed it was wise to continue
with our current broker and consider other insurance options during FY 94-95.
RECOMMENDATION
Direct staff to purchase the supplemental earthquake insurance and transfer $55,000 from the
City's contingency fund into account number 26-4201-294. Direct staff to appropriate $68,964 for
extending the annual renewal date by three months to a count number 26-4201-294 from
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APPROVEDAge l Iten 16
PREMIUM.XLS
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12/15/93 to 3/1/94
3/1/94 to 12/15/94
12/15/94 to 3/1/95
75 days
290 days
75 days
General Liability
$44,342 PAID
$172,042 PAID
$44,494 REQUESTED
Property
$21,696 PAID
$84,354 PAID
$21,816 REQUESTED
Business Income
$2,717 PAID
$7,222 PAID
$1,868 REQUESTED
Steam and Boiler
$797 PAID
$3,043 PAID
$787 REQUESTED
Total Premium
$69,552 PAID
$266,662 PAID
$68,964 REQUESTED
$336,214 Equals Premium Budgeted and Paid for the Consecutive Months
of December 15, 1993 to December 15, 1995
$68,964 Equals Premium Unbudgeted but Requested for the Months of December 15, 1994 to March 1, 1995.
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