Guide For Insuring Towns (Necessary Coverages, Underwriting, and Cost.)

Each town is a unique combination of its own citizens, history, and culture that helps to shape its community. The mission of a town’s public entities should be to serve their community and keep its members safe - something they will not be able to accomplish unless they are covered by insurance they can trust. 

With everything from police and fire departments, public officials, as well as any school and water/sewer districts, a lot goes into insuring a town with the proper coverages it needs to run smoothly. 

At Berry Insurance, we’ve proudly partnered with numerous towns across New England in protecting them from issues and challenges they face each year. 

If you’re looking for new insurance coverage, or want to know more about the process of insuring towns, then keep reading to learn all about the required coverages, what goes into the insurance quoting process, and what influences the cost of the insurance policy.

What insurance coverages do towns need? 

When working with towns we typically include the following coverages: 

Workers’ compensation: 

Workers’ compensation covers employees' medical expenses and lost wages following a workplace injury or illness, while also protecting the town with coverage from employee-related lawsuits. 

This coverage is a legal requirement of almost all businesses and public entities in Massachusetts. 

Workers’ compensation also provides towns with Police/Fire accident coverage 

General liability:

General liability insurance provides coverage for the unique exposures of a town's premises and operations. This can include coverage for the following: 

• Injuries to someone else for an accident you cause
• Damages to someone else’s property
• Contractual liability (limited)
• Personal injury coverage
• Emergency medical payments (optional)
• Electronic data/cyber liability (optional)
• Employee benefits liability 

Property: 

Property insurance protects the town’s physical assets - like buildings, furniture and equipment, supplies, computers/electronics, and outdoor structures. It provides financial reimbursement to help recover the cost of items damaged, lost or destroyed from fire, theft, vandalism, burst pipe, explosion, and more. 

If you are contemplating adding any major renovations or additions to your property, you should consider adding a builders risk insurance policy. Builders risk insurance adds an individualized type of property insurance for buildings under construction or renovation. If you’re interested in learning what insurance carriers we’d recommend, then check out our article on the top 4 Massachusetts based insurance carriers for builders risk policies.  

Commercial auto: 

Any vehicles registered under your town would need to be covered through a commercial auto policy. 

A town’s commercial auto policy will typically provide the following coverages: 

• Liability for bodily injuries or property damages caused by your vehicle
• Physical damages to your vehicle 
• Medical payments
• Coverage if you are involved in a hit-and-run
• Coverage if you are hit by an uninsured driver
• Hired auto liability for accidents caused with rented vehicles (optional)
• Non-owned auto liability for accidents from your employee using their car for your town (optional)
• Glass or windshield replacement 

Inland marine: 

Inland marine is a “floater” policy, meaning the coverage travels with the insured items. Rather than covering the property in a specified location like property insurance does, inland marine covers the specified property in any location on the land. 

Any items insured under an inland marine policy are covered in any location they may be in (subject to deductible and coverage limits) including: 

• Fixed locations
• In transit
• In storage
• At a temporary location

This type of policy covers all the causes of damage normal property insurance does, but may even have some broader covered causes of loss.

Umbrella: 

Commercial umbrella insurance provides towns additional liability coverage on top of what is already included within general liability, professional liability, public official liability, law enforcement liability, educators legal/school board liability, commercial auto, and workers’ compensation insurance. 

If your town is hit with a large claim that exhausts your underlying coverage, your umbrella policy will help to cover the rest, up to your chosen limits. In addition, a commercial umbrella policy will cover the legal fees while defending or settling your lawsuit. And in some cases, it may even provide coverage you did not have with your underlying policies.

Public officials: 

Public official liability insurance offers coverage for damages or defense costs associated with claims against either elected or appointed officials, employees, or volunteers of the insured town. 

Most scenarios involving the use of this coverage have to do with accusations against public officials, employees, or volunteers for alleged wrongful acts, errors and omissions. 

Law enforcement liability: 

This coverage offers protections for bodily injury as well as personal injury and property damage caused by wrongful acts committed by or on behalf of a public entity while on duty as law enforcement. 

Operations of law enforcement consists of any and all official activities of the insured town’s police department or other public safety organization. This can include the proper ownership, maintenance, and use of law enforcement property or stations, providing first aid during a medical emergency, and other operations involved in maintaining public safety. 

Educators legal liability/school board: 

Also known as school board legal liability insurance, this liability insurance coverage is designed to cover a wide range of non bodily injury/non-property damage liability claims made against school administrators, employees, and staff. 

Typical claims for this coverage involve how the board and administration run and operate the district, including accusations of the misuse of funds, running meetings incorrectly, or lawsuits against the board/administrators. 

This coverage would only be applied to towns also looking to insure a school or school district. 

EPLI:

Employment Practices Liability insurance, or EPLI, is a type of insurance policy protecting towns from claims they violated the rights of their employees. This policy can be added onto a town’s general liability insurance (with certain limitations), or purchased as a separate policy. 

There are two different types of EPLI: 1st party and 3rd party. The distinction between the two is simply who is making the claim. 1st party EPLI covers a town  from claims if an employee claims his or her rights were violated. 3rd party EPLI covers claims by a third party (like a customer, vendor, or partner) who claims you harassed or discriminated against them.

EPLI covers the following:

• Wrongful dismissal, discharge or termination; wrongful failure or refusal to employ or promote
• Sexual or other workplace harassment
• The loss of certain private employment information
• Employment discrimination including age, gender, race, color and national origin resulting from disparate treatment
• Retaliation
• Violation of the Equal Pay Act or Family Medical Leave Act

Cyber liability and privacy crisis management expense: 

Cyber liability insurance will protect towns from losses due to cyber attacks, providing coverage for legal services and defense costs, notification expenses, forensic analysis, regulatory compliance and fines, and recovery of lost files. 

Either a standalone coverage or as part of a town’s liability coverage, cyber coverage is separated into first and third-party coverage. First party is automatically included and covers the costs associated with an attack on a public entity’s computer systems or network. Third-party instead covers claims made by any clients or vendors who have been impacted or injured as a result of an attack on your computer system or network. 

What can towns expect during the quoting process? 

Even if you’re already familiar with the quoting process for a town’s insurance, it can still be wise to review what goes into the process and what factors insurance underwriters will be primarily reviewing when writing a quote. 

After the initial request for insurance coverage, most agencies will provide numerous forms and paperwork for towns to fill out regarding their budget, assets, population served, and many other important factors. When working with Berry Insurance, we would handle this paperwork for you, as well as setting up an in-person meeting to check out the spaces and get a better gauge of the insured’s expectations from their insurance policy. 

When collecting information for a carrier’s underwriters, we would likely need to record the following information for a town. 

• Budgets
• Claim history/loss runs
• Statement of value - list of all buildings and locations 
• Construction Occupancy Protection Exposure (COPE) - determined risk of the property through square footage, year built, type of construction, safety features (sprinklers, alarms, etc.) and when any updates of major systems took place
• Updated schedules for any vehicles or equipment 
• Contents limit
• List of drivers - License numbers, dates of birth, claim history 
• Accurate information for all vehicles used by the insured
• Supplemental information for professional coverages (i.e. public officials, Police/Fire, law enforcement, and school board if applicable)

After gathering all the required information, we would send it to the insurance carrier’s underwriters to review. Once the underwriters have everything in hand, hearing back from them can take anywhere from 2-3 weeks, usually depending on whether they require more information than what we already provided.

Once we get the quote back from the insurance carrier, we would review it before presenting it to the insured, where they can then decide to accept the policy or take some time to compare to other quotes they may have. 

The complete process can take around a month or a month and a half, depending on the time of year and if the underwriters are experiencing any delays at the time the quote request is submitted. Delays tend to be more common the closer we get to the municipality insurance policy expiration time period around June/July, making it better for any renewals or new insurance inquiries to be sent out earlier in the year. 

How much will insuring a town cost? 

The price towns can expect to pay for their insurance coverage will vary greatly due to multiple factors unique to each and every town. 

Costs depend largely on the population size being served, the insured’s current budget, the infrastructure, whether or not the town has employees or subcontractors, as well as numerous other contributing factors. 

Also, if a town includes insurance coverage for their schools or water and sewer districts in their coverage, they can expect a higher price as that adds additional coverage unique to both types of public entities. 

Typically, smaller towns or ones in less densely populated places will cost less to insure than larger towns or ones that have had recent updates to their infrastructure. Of course there will always be exceptions, and we would have to work directly with any town to discuss their unique exposures and history to better determine the price range of their policy. 

Community-wide coverage

Now that you have learned more about what coverages you need, the quoting process, and what to expect for cost, you will be prepared for a more seamless insurance renewal season.

At Berry Insurance, we like to focus on providing educational content to our clients, as we believe educated buyers make for stronger and safer communities. As you can tell, a lot goes into guaranteeing towns are receiving the necessary coverages they need to operate smoothly, making it crucial for you to work with an insurance agency you can trust. If you think Berry insurance is the right agent for you, then reach out to us today so we can begin the process for your town.

Interested in learning more about us and what we offer municipalities? Then check out our article on the top 5 benefits of having municipality insurance with Berry insurance.