Municipal Insurance

What Does Municipal Insurance Mean?

Municipal insurance provides coverage for local governments, including small towns or counties. It protects against liabilities arising from damage or loss involving public property, public institutions, or public officials, such as police officers. The protection works much like general liability insurance sold to private businesses, but it accounts for the specific exposures that come with public employees and government property. Additionally, this insurance can safeguard local bonds if their value falls below par.

Insuranceopedia Explains Municipal Insurance

Operating municipal institutions involves various risks. For example, a public school could experience a fire, or a town veterinarian might administer the wrong medication to a pet. Municipal insurance provides liability coverage for such incidents and similar situations.

This type of insurance is considered unique due to the significant day-to-day risks associated with local governance. In the 1980s, many insurers denied coverage to towns with a history of high claim volumes. As a result, insurers often emphasize risk management training for local officials when negotiating coverage to help reduce the frequency and severity of future claims. Lawsuits against towns and counties can also produce verdicts well above the limits of a base municipal policy, which is why many local governments layer extra protection on top, much like private firms that purchase commercial umbrella insurance for catastrophic claims.