HomeMy WebLinkAbout08 - Pollution Legal Liability RenewalCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item t
February 22, 2005
To: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
From: Human Resources, Lauren F. Farley, Risk Manager, 949- 644 -3300
Ifarley(a)-city. newport- beach. ca. us
Subj: Pollution Legal Liability Renewal
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Issue:
Does the City Council authorize the expenditure of $267,424 for the pollution
legal liability renewal?
Recommendation:
City Council approve the renewal of the pollution and legal liability insurance
coverage with XL Insurance for the three (3) year policy period beginning 3/01/05
to 3/01/08 for the quoted premium of $267,424 or $89,141 annually.
Background:
This insurance coverage is exclusive to the exposures of pollution and
remediation legal liability. These are defined as sudden and gradual pollution,
such as a leak from one of our underground storage tanks (UST), spill of a trash
truck, pollution at a scheduled location (Big Canyon Reservoir), pollution of water
supply and sewers lines owned and maintained by the City. These exposures
are excluded by the City's excess general liability policy. This coverage became
effective 1 -31 -96 and covers all scheduled City of Newport Beach properties and
scheduled non -owned disposal sites formerly or currently utilized by the City for
the residential waste. This insurance coverage has been underwritten by ECS
Insurance (now XL Environmental Insurance) for the last six years. XL also
provides loss control and risk management support services designed to assist in
identifying, analyzing and controlling possible environmental liability issues for
the City of Newport Beach.
Renewal Quotation:
Our broker, Mark Zahoryin from Brown & Brown, began reviewing this coverage
last October and a site visit was conducted by the XL underwriters at that time,
as well.
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There are only three markets that underwrite this type of coverage and XL is
committed to the City's program and came in with the best premium rate with a
three year commitment.
The following chart provides a comparison of the existing coverage to the
renewal quote:
Limit of Liability
(Each Loss)
Limit of Liability
(Total All Losses)
Retention
(Deductible /SIR)
Non -Owned
Disposal Sites
Premium -3 Years
Funding Availability:
Existing Coverage Quote
$15,000,000 $15,000,000
$15,000,000 $15,000,000
$50,000 $50,000
$5,000,000 $5,000,000
$296,912 $267,424
Funds which cover the recommended expenditure are in the Environmental
Liability Fund, # 3155 -8638 and the FY 04/05 budgeted number is $125,000. The
annual premium of $89,141 encumbers 71% of this budgeted amount. Funds will
be transferred in from reserves in this budget to allow the city to take advantage
of the three year policy commitment to pay the full $267,424 in premium
ultimately saving the city $107,577 over the next three years.
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