Municipal liability has become big business

A 31-year-old woman was recently awarded $12 million for injuries she suffered when a city-maintained tree limb fell on her – just one example of how liability coverage has become a multi-million-dollar headache for municipalities.

Risk Management News

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A 31-year-old woman was recently awarded $12 million for injuries she suffered when a city-maintained tree limb fell on her – just one example of how liability coverage has become a multi-million-dollar headache for municipalities throughout the United States and Canada.

“Municipal liability has been impacted by changes in the law, adverse judgments that raise the bar for local government, loss of statutory defences or their diluted effectiveness,” says Tom Barnes, CEO and General Counsel of the Municipal Insurance Association of B.C. “All of which have broadened the scope of the types of activities and services that can be the subject of claims.”

A Chatham County State Court jury said that the city of Savannah, Georgia should pay 31-year-old Shanta Greene for injuries she suffered in July 2010 when a tree limb fell on the truck she was riding in.

When the limb fell, it impaled Greene as she sat in the truck’s passenger seat. The woman lost her right leg and pelvis and she also suffered a brain injury. (continued.)

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For Barnes, this tragic example of the Georgia woman illustrates how municipalities are trying to cope with more responsibility and fewer dollars from higher levels of government.

“There has been a constant downloading of services to local government from both the federal and provincial governments, so municipalities face the challenge of doing more with less,” he told InsuranceBusiness.ca. “This brings with it a whole host of risk management considerations.”

The reality today is that coverage needs to be constantly updated and expanded to meet and mitigate the risk.

“Insurance coverage has to evolve with the risks faced by the insured,” says Barnes. “We are continually monitoring and changing the terms of our coverage. It has been expanded in some manner each year. Similarly, risk management services have to be enhanced to keep pace with developments.”

The Savannah Morning News reported that the jury also awarded $20,000 to Greene’s cousin, who was driving the truck. The jury also awarded $10,000 to the man’s son, Xavier. Both suffered less serious injuries. (continued.)

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“I want to see the city get these trees in order. I want to see the city look like the downtown area. It’s a beautiful city and I love the trees but I love the safe trees, the ones that don’t hurt anybody,” Greene told WTOC-TV after the verdict.

The city’s attorney said it was clear that the woman’s injuries were accidental but said a jury shouldn’t award her millions of dollars in taxpayer money out of sympathy.

The large payout by the Georgia jury is indicative of the need for better coverage, says Brown – and of the growth of liability cases reaching the courts.

“Cyber and environmental risks are not broad enough to address municipal exposures,” says Brown. “Municipalities have always been an easy target for claims of dubious merit. It is not clear whether this is a result of an inordinately broad concept of what a municipality should be responsible, or merely a reflection of the fact that it is the most visible and available level of government for most people.”

Greene’s attorney, Howard Spiva, said the city could have done more to prevent tree-related accidents, and urged the city to re-examine its tree maintenance procedures. (continued.)

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Savannah Mayor Edna Jackson told WTOC-TV that the city hasn’t decided whether to file an appeal.

According to Brown, an appeal might be – statistically – worthwhile for the city of Savannah.

“Our experience has been that the frequency and severity (adjusted for inflation) of liability claims has been fairly stable for the past 20 years,” he says. “During that time we have consistently found that at least two-thirds of all claims ultimately prove to be without a sound legal basis.”

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