HomeMy WebLinkAbout1985-09-24; City Council; 8340; Termination of earthquake insuranceCARLSBAD — AGEND^pILL
MTG. 9/24/85
DEPT RM
TITLE:
-TERMINATION, OF EARTHQUAKE INSURANCE
DEPT. HD..
CITY ATTY
CITY
QLU
Occa.o.
o
RECOMMENDED ACTION:
Adopt Resolution No."authorizing the termination of earthquake
insurance protection on the City Hall and Library buildings.
ITEM EXPLANATION
It has been City policy not to purchase earthquake insurance >on City buildings
and contents. Even under favorable insurance market conditions, this coverage
has been extremely expensive, and high deductible requirements and the
questionable financial capacity of many companies to' meet claim payments in full
following ^a major catastrophe has raised questions "regarding its value. In its
place, the City together with almost all other public entities in California,
relies on the provisions of the Federal Disaster Relief Act to provide funds- for
rebuilding^ publip facilities in the event of a major catastrophe not covered by
standard insurance.
The one exception to this policy has been the City Hall and Library complex. ,
' The bond indenture relating to the financing of the construction of'City Hall
requires earthquake, coverage with a deductible not exceeding 5% for a limit not
less than the outstanding^bonds "if such insurance is obtainable on the open
market from reputable insurance companies".
Current earthquake insurance which expires on October 1, 1985 is purchased from
RLI Insurance Company at an annual premium $4,830 providing" limits of $240,000
on City Hall and $250,000 on the Library. The City broker is negotiating with -
three carriers with respect to the renewal, RLI Insurance, Associated
International and Utica Mutual, but no firm quotations have yet been received.
It appears clear, however, that any renewal quotation will be based on a minimum
premium of at least $12,000. The 5% deductible on City Hall alone would be
'approximately $80,000.
In view the fact that only $200,000 of indebtedness remains outstanding, we
believe the indenture trustee'will accept a statement that the City is self-
, insuring this exposure in lieu of insurance. We'are accordingly recommending
' that the program be terminated.
'FISCAL IMPACT
It is anticipated that elimination of this coverage will result in a premium
,saving in excess of $12,000.
EXHIBITS ' T ' ' • '_
Resolution No.
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RESOLUTION NO. RiQ2
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING TERMINATION OF EARTHQUAKE INSURANCE
WHEREAS, it is the City's policy not to purchase earthquake insurance on
City buildings except where required for outside financing; and
WHEREAS, the only current City obligation requiring earthquake coverage is a
limit of $200,000 on City Hall; and
WHERAS, as a result of current high premium costs, the City now desires to
self-insure this exposure.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad,
California, as follows:
1. That the above recitations are true and correct.
2. That the City Manager is hereby authorized to terminate current
earthquake insurance effective October 1, 1985. ,
PASSED, APPROVED AND ADOPTED by the City Council of the City of Carlsbad,
California, at a regular meeting held on the 24th day of September ,
1985, by the following vote, to wit:
AYES: Council Members Casler, Lewis, Kulchin, Chick and Pettine
NOES: None
ABSENT: None
MARY H. CA/LER, Mayor
i/
ATTEST:
FHA L. RAOTENKRANZ,
R. KUNDTZ, Deputy
(SEAL)
Clerk