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RISK MANAGEMENT INFORMATION WHEN LMCIT DENIES A LIABILITY CLAIM When the League of Minnesota Cities Insurance Trust (LMCIT) denies a liability claim, it is usually not an issue of coverage i.e. whether or not the citys LMCIT liability coverage covers the claim. Rather, the issue is liability; that is, is the city legally lia claim? A scenario A water main breaks and your city’s sewer system backs up into several homes causing major damage; or someone falls and isinjured on a city sidewalk; or a tree falls in a windstorm and damages a car. A citizen has a loss and is looking to the city to pay for it. Your city has liability coverage through LMCIT, so you report the claim to LMCIT –and the claim is denied. City officials quickly hear from angry citizens demanding to know why LMCIT won’t pay for such losses and what the city is going to do about it. LMCIT Background LMCIT provides liability coverage toover 800Minnesota cities. LMCIT is not an insurance company –it is a cooperative self-insurance organization of cities. The idea behind LMCIT is that rather than paying premiums to an insurance company, the cities pool those funds and use them to cover claims. Any funds LMCIT collects from its members that are not needed to cover losses or expenses are returned to member cities as dividends. LMCIT has returned over $210million in dividends to its member cities since 1987. Something to Think About About liability In order for the city to be liable When a third party makes a claim against the city and the for someone elses damages: city submitsthat claim to LMCIT, the key issue is liability. 1.The city must have been It’s important to remember the city isn’t automatically negligent. liable simply because the injury occurred on city property, 2.The damages must have been or because city equipment or personnel were involved. caused by the citys negligence. It’s very much an over-simplification, but, in general, for 3.It must not be one of the the city to be liable for someone else’s damages, three areas in which the city is conditions must be met: immune from liability. 1.The city must have been negligent. That is, the city must have done something it shouldn’t have done, or failed to do something it should have done. 2.The damages must have been causedby the city’s negligence.