City’s increased assets help push insurance premium up $18,000

The city’s insurance premium rose $17,992 for the new fiscal year that began July 1.

The city is insured through the League of Minnesota Cities Insurance Trust (LMCIT), a member type insurance.

Rollie Natvig at Princeton Insurance Agency, who is the agent handling Princeton’s policy, presented the policy information at the Aug. 22 meeting, at which the council passed a couple of motions not to choose a couple options for the policy.

One of the main reasons for the nearly $18,000 premium hike is the fact that the city’s assets have risen $13,160,485 to total $33,933,564, Natvig explained. Part of that is due to the city’s new wastewater treatment plant expansion/modification. The amount of taxable property at the plant is about $14 million, according to city finance officer Steve Jackson.

The new premium for the blanket property coverage rose from $55,352 this past fiscal year, to this year’s $64,134, Natvig pointed out. Also, the premium for municipal liability increased from $25,110 to $34,377. Natvig said the projections of higher sales at the city’s off-sale liquor store is a contributor to the liability increase.

A couple places where the premium went down were automobile liability, decreasing $213, to end up at $7,249, and the automobile physical damage premium dropping from $7,601 to $7,358. While the increased value of the city’s assets affected the premium, the LMCIT reduced the premium  from 27 cents per $100 in value to 19 cents per $100, Natvig noted. Eight cents is not much, but considering the total asset value, it adds up, Natvig said.

Natvig also said the LMCIT altered its structure for determining premiums this time. It has recognized that 20 percent of claims come from police departments on average statewide, and so that is one the factors in its new rate calculations, Natvig said. Under the LMCIT’s old structure, cities without a police department were paying a higher premium than they should have, Natvig said.

Natvig cited one “positive note,” which was that the LMC returned a $32,795 dividend to Princeton after figuring the amount of claims made on last fiscal year’s policy.

One of the two options in the insurance policy the council chose not to exercise, would have been to increase the insurance coverage by $1 million for both general liability and auto liability. The coverage is now $1.5 million for each. The premium increase for adding the extra $1 million in coverage was $13,056.

The other option the council did not choose was to waive the $500,000 cap on what each individual claim could be for an event in which the city is liable. If the city had waived the cap, the limit an individual could claim would be $1.5 million. The extra premium to raise the limit would have been $1,457.

But even if the cap was raised, the total limit for all the claims in one event would have still remained at the current $1.5 million.

The reason why a city might increase the per person cap to more than $500,000 has to do with anticipating the damage that could happen to a person, according to Natvig. He explained after the meeting that there could be instances of an individual incurring physical damages through fault of the city that exceed $500,000 when considering the costs of health care today.