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HomeMy WebLinkAboutResolution No. 6322\- RESOLUTION NO. 6322 A RESOLUTION OF THE CITY OF AZUSA URGING STATE LEGISLATION TO SAFEGUARD MUNICIPALITIES AGAINST FINANCIAL JEOPARDY CAUSED BY ARBITRARY AND CAPRICIOUS CANCELLATION OF THEIR GENERAL LIABILITY INSURANCE. WHEREAS, most municipalities and other governmental agencies must insure themselves against the risks of general liability including personal injury and property damages by obtaining policies of insurance from private carriers; and, WHEREAS, such insurance policies are necessary to protect against unforeseen events that could result in substantial money damages against such cities and agencies; and, WHEREAS, Said insurance carriers, in accepting such business, must also accept the concomitant public responsibility and public trust inherent in providing a service that affects the general welfare; and, WHEREAS, the premiums for such insurance represent a significant factor in determining the annual budgets for such cities and agencies, and the tax rate required to be levied for the budget revenues; and, WHEREAS, state statutory limits have been imposed on the tax rates that can be levied by municipalities and agencies, which are intended to check any upward spiral in government spending while maintaining the level of public services; and, WHEREAS, insurance carriers have cancelled and are continuing to cancel such insurance on short notice with increasing frequency and many such cancellations have been made in an arbitrary and capricious manner without regard to the loss experience of the insured municipality or agency or the extreme circumstances faced by such municipality or agency whose insurance is cancelled; and, WHEREAS, such cancellations are a breach of public responsibility and trust; and, WHEREAS, municipalities and agencies affected by such cancellations must, on short notice, obtain insurance at extraordinarily higher premiums, resulting in unexpected financial burdens that can only be met by immediate impairment of public services; and, WHEREAS, such unrestrained cancellations are contrary to the State's purpose in limiting tax rates in that they may result in a reduction of public services for government entities, or an increase in tax rates. NOW, THEREFORE, the City Council of the City of Azusa di es resolve as follows: SECTION 1. The City Council of the City of Azusa urges the State Legislature to enact appropriate legislation to safeguard municipalities and other governmental agencies from the financial jeopardy placed upon them by the uncontrolled cancellations of their general liability insurance policies. SECTION 2. The City Council further urges the State Legislatures, as a minimum, to required that cancellation of such insurance shall be effective only at the end of the fiscal year of the municipality or other governmental agency, and only if notice of such cancellation by the insurance carrier is given not less than four months prior to the end of such fiscal year.