Addison Township officials have not been surprised by the rising cost of insurance; in fact, they expected higher rates. But what did surprise them was just how high those rates could go.
‘We fully expected a good increase,? said Treasurer Dan Alberty, ‘but we didn’t expect anything like this.?
This past year the township paid $27,230 for $15 million of liability coverage. This amount was part of a three year contract through M.M.R.M.A. that had inflation built into the yearly amounts.
To have the same amount of coverage for 2003, the township’s premium would go up to $45,531 for one year. Alberty explained that there are three main reasons for the high increase.
‘First, everyone is blaming 9-11,? he said. ‘And then there are the losses that they have incurred over the years – they have pulled out four to one on us.?
Over the past five years, the township has had around $253,000 in claims while only paying out between $20,000 and $27,000 in yearly rates. Alberty said that some insurance companies would have dropped a client with this kind of record.
Finally, Alberty explained that insurance companies make money by investing their premiums. With interest rates at an all time low, the returns on those investments are also low – so companies are raising their prices.
In order to make the insurance more affordable, Alberty recommended for the township board of trustees to approve $37,766 for $10 million of coverage instead of remaining at the higher amount. For $36,744 the township could go down to $5 million in coverage, but Alberty didn’t feel dropping that low was really cost effective.
‘There’s only $1,000 difference in the amount and it’s losing $5 million in liability coverage,? he said. ‘I’m recommending the $10 million.?
Supervisor Bob Koski agreed at the board meeting that $10 million in coverage would be adequate.
‘I feel that would be a wise drop,? he said. ‘We haven’t lost any court cases, our attorneys are good and we don’t look for trouble.?
Trustee Patricia Eisenhardt asked whether or not anyone has looked into other insurance companies. Koski said no one has at this time.
The board was warned by township attorney Robert Davis that when looking at other companies they need to ‘compare apples to apples.? He told the board that not all companies will cover municipalities and that not all insurance companies offer the same quality of attorneys.
‘You need to watch the lawyer pool,? said Davis. ‘A lower premium may not get you as good of lawyers.?
The township board voted unanimously for the $10 million policy at $37,766 with the current company.