TITLE
Recommendation to authorize City Manager to purchase “all risk” property insurance for City buildings, contents, and vehicles through the Alliant Insurance Services Public Entity Property Insurance Program, for a total premium of $546,772 for the period from July 1, 2007 through July 1, 2008. (Citywide)
DISCUSSION
The Department of Human Resources requests City Council authorization to renew and extend "all risk" property insurance coverage for City buildings and contents and vehicles through July 1, 2008.
Through its broker of record, Alliant Insurance Services, the City annually purchases "all risk" property insurance to cover perils such as fire, vandalism and wind on all City buildings, contents, and vehicles. The proposed "all risk" property insurance policy provides replacement cost coverage with limits of up to $1 billion, subject to a $50,000 per occurrence deductible for named perils and a limit of $10 million in coverage for flood; it does not include coverage for the peril of earthquake. Based on the City's current insured property valuation, the premium for the "all risk" renewal program is $546,772. This represents a decrease of 12 percent over last year's premium.
The City has not purchased earthquake coverage since 2002 due to exorbitant pricing. In prior years, the City has purchased $10 million worth of earthquake coverage for specific properties that are financed by bonds. Under the terms of the bonds, earthquake insurance is required only if it is obtainable from financially secure markets at a reasonable cost. The City was able to obtain one quote for earthquake coverage, however, the purchase of this policy is cost prohibitive. The City will continue to monitor insurance markets, and in the meantime rely upon FEMA's public assistance program should the need arise. If the insurance marketplace for earthquake coverage softens sufficiently, staff will recommend the purchase of earthquake insurance at that time.
This matter was review...
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