CC - 1975-46 - Safeguarding Municipalities Against Financial JeopardyRESOLUTION NO. 75- 46
A RESOLUTION OF THE CITY OF ROSEMEAD URGING
STATE LEGISLATION TO SAFEGUARD MUNICIPALITIES
AGAINST FINANCIAL JEOPARDY CAUSED BY ARBITRARY
AND CAPRICIOUS CANCELLATION OF THEIR GENERAL
LIABILITY INSURANCE
WHEREAS, most municipalities must insure
themselves against the risks of general lia-
bility including personal.injury and property
damages by obtaining' policies of insurance from
private carriers; and
WHEREAS, such insurance policies are neces-
sary to protect against unforeseen events that
could result in substantial money damages against
such cities; and
WHEREAS, said insurance carriers, in accept-
ing such business, must also accept the concomitant
public responsibility and public trust inherent in
providing a service that affects the general wel-
fare; and
WHEREAS, the premiums for such insurance re-
present a significant factor in determining the
annual budgets for such cities, and the tax rate
required to be levied for the budget revenues; and
WHEREAS, state statutory limits have been im-
posed on the tax rates that can be levied by muni-
cipalities, 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 can-
cellations have been made in an arbitrary and capri-
cious manner without regard to the loss experience
of the insured municipality or the extreme circum-
stances faced by such municipality whose insurance
is cancelled; and
WHEREAS, such cancellations are a breach of
public responsibility and trust; and
WHEREAS, municipalities affected by such can-
cellations 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
Resolution No. 75- 76
P~ . a
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 Rosemead
does resolve as follows:
SECTION 1. The City Council of the City of Rosemead
urges the State Legislature to enact appropriate legislation
to safeguard. municipalities 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
Legislature, as a minimum, to require that cancellation of
such insurance shall be effective only at the end of the fiscal
year of the insured municipality, 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.
SECTION 3. The City
of this resolution and send
Senator Alfred Song, State
city in Los Angeles County,
APPROVED AND ADOPTED
Clerk shall certify to the adoption
a copy of this Resolution to State
assemblymen Montoya & Fenton., to each
and the League of California Cities.
this 0 day of July, 1975.
yor of the City'o o emead,
California
ATTEST:
Ci y 'Clerk
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