Keeping employees and stakeholders safe and sound is a full-time job.
Municipalities, towns, and cities inherently face a higher level of risk and responsibility due to their role in providing essential services for the common good. This includes educational, recreational, public safety, and infrastructure services. Public entities have a lot on their plates, especially when it comes to protecting their properties and people. They protect public dollars and need financial safeguards in place.
Comparing Risks in Private and Public Sectors
Unlike private companies, whose risk is limited to their owned or controlled locations and property in transit, municipalities bear a broader risk. This includes damage to their property and most of their roads. The risk is as wide as the community itself.
If a private company is forced to close temporarily, it can use business income insurance or business interruption insurance to cover some of its lost income and extra expenses. However, a municipality cannot suspend its vital operations. The public relies on the government for commerce to continue. A municipality must provide public safety and transportation unless physically prevented from doing so. This means a municipality must be prepared to fund the extra expenses needed to maintain safety and accessibility.
Liability Risks
Municipalities face significant premises and operations risk. They can be liable for what happens on municipally owned property, as well as negligence in designing, maintaining, or regulating roads or other infrastructure. This risk is not limited to physical properties but extends to the services provided by the municipality. For instance, if a municipality fails to adequately maintain a public park and someone gets injured as a result, the municipality could be held liable.
Accessibility and Volunteer Involvement
Municipalities must balance the need for open access to public facilities with the need for safety and security. This is further complicated by the involvement of volunteers and volunteer organizations in community functions. These volunteers often have access to public resources, which can complicate municipal risk management. For example, if a volunteer is given access to a municipal vehicle and they get into an accident, the municipality could be held responsible.
Management and Cyber Liability
Public bodies bear as much management and cyber liability risk as private companies. However, they have little if any ability to manage these exposures. Municipalities hold or have access to vast amounts of data on residents, which they must protect. They don’t have much choice about the information they access, collect, and store, as most of its essential to municipal functions. This makes them a prime target for cyber-attacks, and they must invest in robust cybersecurity measures to protect this data.
Insurance for Municipalities
The market for municipal insurance accounts has a great deal of variety. Several major insurers write stand-alone policies for governmental units. Some common features include:
- High aggregate limits for general liability insurance, as municipalities are frequently drawn into bodily injury and property damage claims, especially those involving catastrophic damages or injuries.
- Law enforcement liability coverage, a unique exposure for governments that employ armed police to protect the public. Recent news reports have shown that governments can be liable for police conduct that is either too aggressive or derelict in enforcing the law.
- Expansive cyber liability coverage. Cyber Defense Magazine notes that municipalities are particularly vulnerable to cyber-attacks due to limited resources, inadequate staff training, the use of outdated technology, and lack of awareness of the latest cyber threats.
Local governments also need commercial auto, workers’ compensation, commercial crime, and other coverages appropriate for their operations.
It’s crucial for municipalities to understand these risks and ensure they are adequately covered. This involves not only purchasing the right insurance policies but also implementing risk management strategies to prevent and mitigate potential risks. This could include regular safety inspections, employee training programs, and the establishment of emergency response plans. By taking a proactive approach to risk management, municipalities can better serve their communities and protect their assets.
Contact Us
To learn more about unique municipality risks and how to address them, contact our OneGroup Municipality team.
Matt Maguire, Regional President, North Country at MMaguire@OneGroup.com.
Todd Goodman, Risk Management Consultant at TGoodman@OneGroup.com.
This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.
Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.
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