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LMC League of Minnesota Cities Insurance Trust 145 University Avenue West, st. Paul, MN 55103-2044 (651) 281-1200 · (800) 925-1122 Fax: (651) 281-1298 · TOO: (651) 281-1290 www.lmnc.org r-e- of Min_ola Citiu Ciau promoting ..-.J1tmCQ November 29, 2006 To: LMCIT members and agents From: LMCIT Re: Liability coverage - employee activities in outside organizations Beginning in 2006-2007, the LMCIT liability coverage will include new provisions addressing when and how the LMCIT liability coverage will respond to claims against city officers or employees arising from their activities as officers or members of outside organizations. There are two elements to the changes: · The city council will determine whether or not an employee's activities in a particular organization are considered to be within the scope ofhislber city duties. The council's decision is final for purposes of coverage. · When the city council determines that an employee's activities in a particular organization are within the scope of his/her city duties, coverage for claims arising from that employee's activities in that organization are subject to a $100,000 annual limit per employee. Background City officers and employees often participate in outside organizations that are related in some way to their city duties. Examples include associations of wastewater operators, fire instructors, finance officers, etc. These organizations may engage in a wide variety of types of activities. If the employee's activities in those organizations leads to a liability claim against the individual, the organization mayor may not have insurance or assets to defend and indemnify the employee for that liability claim. If the organization is unable or unwilling to defend the individual, slbe will very likely look to the city for protection, and the city will likely look in turn to LMCIT. Why is this potentially a problem? This type of liability claim is problematic for a number of reasons: · The LMCIT liability coverage applies to claims against an individual which arise from activities within the course and scope of the individual's city duties. Determining whether an employee's activities in a particular organization are within his/her city duties is sometimes difficult. There are a wide range of types of organizations, that relate in different ways to city activities. Some organizations clearly have the purpose of benefiting the city; some are focused on broader public benefit, and benefit the city only indirectly if at all; others are AN EQUAL OPPORTUNITY/AFFIRMATIVE ACTION EMPLOYER