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Asking Questions and Choosing Insurance

Cities and towns making property and liability insurance choices have several options available to them:

Given the complexity of city operations and the exposures they create, thereare many questions to ask when evaluating coverages. Here are some considerations specific to municipalities:

Liability
City leaders can begin by determining what they want from their coverage before beginning to work with providers. Insurance should cover regular employees, and potentially other people as well as: volunteers and members of boards or commissions.

Law enforcement is a high-risk area for coverage. City officials should ask for a detailed explanation of the level of liability coverage for police, including any limitations on the coverage.

Property
Does the insurance coverage provide appraisals for the town's properties? SCMIRF, for example, provides members appraisals at no charge for structures of a certain value approximately every five to seven years. For inland areas, properties valued at $100,000 or more are appraised, and for coastal areas, the minimum is $10,000.

Is the insurance based on a replacement cost or an actual cash value basis, taking into account depreciation? A replacement cost basis could make sense for a fire engine, where the cost of a new engine can surpass $500,000.

Cities may also want to take a close look at coverage for the costs of handling a data breach — things such as notifying people whose personal information was exposed or the need of a professional service to restore the affected person's identity.

Aggregate limits
Aggregate limits, which some providers include in their coverage, are limits on the total amount the policy will pay out, no matter how many claims are filed. SCMIT and SCMIRF coverages generally do not have aggregate limits, with some exceptions for items like public official's liability, land use litigation or negligent supervision resulting in abuse.