What you need to know about coverage for municipal liability, served up by the LMC Research and Information Service team. Definition: “Municipal liability” means that in some instances, cities might have responsibility for injuries or losses to people or entities caused by an act of either the city or one of the city’s officers, employees, or agents while performing their duties for the city.
Plain-language explanation: Simply put—this means cities have claims or lawsuits brought against them for incidents related to car crashes, personal injuries, employment actions, damage to property, constitutional rights violations, and more.
In the news: Notable settlements or verdicts against municipalities demonstrate the range of potential financial exposure to cities. Examples include an award to a former job candidate for a botched hiring process; a jury verdict to a student for a head injury on a playground; and a $2.85 million settlement against a city for a police officer’s alleged use of unreasonable force. It quickly becomes clear that the potential financial burden of cities getting sued can boggle the mind.
On one hand: In many instances, statutory protections, called “immunities,” result in judges dismissing lawsuits against cities and city employees. Also, statutory caps on damages reduce potential financial exposure of cities. For example, for certain types of claims, a city’s total liability generally will not exceed $500,000 for any single claim, or $1,500,000 for all claims arising from the same incident. Also, the law specifically prohibits punitive damage awards against cities, which are additional money damages in excess of the loss amount intended just to punish.
On the other: Statutory immunities do not always apply. Even in those instances when statutory protections do apply, cities still can incur significant costs, fees, and loss of time in defending the lawsuit up until the time of dismissal. Many cities would find a jury verdict or settlement in an amount up to the cap financially daunting as well.
League position: Cities maintain offices and facilities that the public visit every day. Cities employ a number of people who drive official cars and trucks. Cities hire and fire many types of people for a variety of jobs. Although no state statute requires a city to get casualty or property insurance, when considering all the moving parts in city government, and adding in general human fallibility, protecting against potential debilitating financial liability seems like a darn good idea. The League of Minnesota Cities Insurance Trust (LMCIT), a self-insured membership cooperative formed in 1980 by Minnesota cities, exists solely to meet the risk management and coverage needs of Minnesota cities. LMCIT structures liability coverage differently than private insurance companies typically do to make it the best option for cities. For example, LMCIT uses a single coverage document, rather than issuing separate policies to cover general liability, errors and omissions, police liability, and so on. When a claim is justified, LMCIT can evaluate the claim and issue a payment, because it’s the right thing to do.
Bottom line, LMCIT knows cities and municipal issues and, as a result, crafts programs with cities in mind. We know the importance of keeping our members informed, and we want to hear from you throughout the claim process, including resolution.
Resource: Find out more information about LMCIT’s Property & Casualty program on LMC's website
This information has been compiled by Pamela Whitmore, staff attorney with the League of Minnesota Cities. Contact: pwhitmore@lmc.org or (651) 281-1224
This blog post conveys general information. It’s not legal advice. Please check with your city attorney before acting on this information.