Is It Time to Evaluate Coverage?
Every day, local government agencies provide numerous services that their residents rely on including education, utilities, transportation, and safety. Providing these critical services comes with risks that the commercial sector doesn’t typically face. For instance, what if a court clerk forgot to redact certain information from a document requested under the Freedom of Information Act? It could open the government up to liability by exposing the confidential information to the public.
Because local governments, schools, and other public entities are entrusted with taxpayer money, their elected officials and employees must continually seek ways to reduce costs while protecting against cyber threats, lawsuits, and many other unique exposures.
How Are Risks Different for Public Entities?
Tort claims. What happens if someone is injured while on government property or is harmed because of a government employee’s action? The injured person could file a tort claim and lawsuit seeking financial recovery. Many states have imposed a limit on damages, protecting public entities from excessive awards. However, that’s not the case in Kentucky. The Kentucky State Constitution prohibits a cap on damages in general tort claims. It’s estimated that tort claims cost Kentucky around $4.6 billion in 2017. This leaves schools, local governments, police departments, and other public entities exposed to potentially a higher damages from a lawsuit than would be the case in neighboring states. Where would you get the money to pay for a multi-million-dollar jury award? Do you have the proper insurance to cover tort claims?
Location. A private business often operates in different cities or states, which spreads out risk of property damage and disrupted operations as a result of a flood, earthquake, or tornado in a town. Municipalities don’t have that option. All its buildings and workers are in one area, and a natural disaster can quickly devastate operations. Are you accounting for this exposure when determining appropriate insurance coverage?
Cyber Attacks. Both commercial and public entities are often the targets of cyber attacks. However, when a virus infects a government database or utility’s computer system, it could result in critical services being unavailable for an unknown length of time. What if a hacker infiltrates your system and steals records containing sensitive information, such as tax records or court documents, or locks down your system until a ransom is paid? Research has shown for public sector organizations, a data breach on average costs $2.3 million, and the average cost for each compromised record is $75.
Do you have specific cyber security coverage if one of these scenarios happened to your organization?
Property Schedules. Can you identify all the property that your public entity owns, leases, or has a loan on? Neglecting to account for a property will result in denied coverage following an incident, such as a flood or fire. Forgetting to include a property in a schedule unfortunately happens more than many public entities would like to admit. Take steps now to ensure you all your property is properly insured.
Pooling. Pooling is a popular option for public entities because of the cost savings by having multiple members share resources and risk. In fact, it’s estimated that at least 80 percent of public entities in the U.S. participate in one or more pool. Some pools serve certain groups, such as schools, whereas other pools offer certain types of insurance, such as cyber security or workers’ compensation. Public entities often choose to enter a pool because traditional insurance coverage is not affordable.
Perhaps it’s time for your public entity to re-evaluate its coverage and determine if there is a more affordable plan in the standard market that protects against your particular exposures or if staying in the pool offers the best option.
Work with an Agency that Understands Public Entity Needs
Peel & Holland has a long history of serving public entities. We established our Public Entity division in the 1990’s. Did you know we are the exclusively endorsed Employee Benefits agent for the Kentucky Association of Counties (KACo) and offer access to the KACo Health Plan?
We work with you to find the insurance coverage that is right for your entity’s unique needs, keep your coverage up-to-date, and help keep you compliant with regulations. We help minimize the impact that risks can bring so you can focus on serving the community who is depending on you.