Bill seeks better insurance for local governments in North Dakota

A North Dakota state trooper investigates the scene where a Larimore school bus collided with a train east of Larimore on Grand Forks County Road 4 in 2015. Forum News Service file photo

BISMARCK — North Dakota lawmakers have introduced a bill to increase liability limits for political subdivisions in the event one is found at fault for damage or harm.

Bill sponsors say current limits aren’t enough to cover hospital charges and other damages, while state officials dealing with insurance say raising limits could lead to higher premiums for city and county governments.

“We’ve had some issues in our state with some very unfortunate incidents,” North Dakota Insurance Commissioner Jon Godfread said. “But anytime you increase what the potential liability would be, it’s going to have an increase on the premiums, and you know these premiums for these political subdivisions are paid for by property taxes.”

Many political subdivisions — including counties, cities and school districts — pay premiums to the North Dakota Insurance Reserve Fund so, in the event a judge finds a subdivision at fault, it can pay an impacted individual or group. Political subdivisions pay premiums based on the size of their population, the services they offer to constituents and a history of their losses, according to North Dakota Insurance Reserve Fund CEO Brennan Quintus.

The amount a subdivision can pay is capped at $250,000 per person and $1 million per incident.

A bill from Sen. Shawn Vedaa, R-Velva, would raise a subdivision’s liability limit per individuals to $1 million and per incident to $4 million.

“If I want to protect my assets, I can carry $1 million to protect my assets,” Vedaa said. “Like, for cars, my car insurance has a liability of an aggregate of $1 million. My farm and ranch has a liability of $1 million, my business has a liability of $1 million. So if little old me can be sued for $1 million, why shouldn't the political subdivisions be (liable for) more than $250,000?”

Both Godfread and Quintus said Tuesday they’re pleased legislators are having a discussion on updating liability limits.

“I think it’s always good to have this conversation and talk about these limits,” Godfread said, adding he thinks it’s also a good time to discuss state liability limits. “Because, as it stands now, essentially the political subdivision limits (if they change) will be about four times what they are to the state.”

A recent update

The last time legislators updated liability limits for political subdivisions was in 2015, when a Senate bill increased the per-incident limit to $1 million. Before then, it had been $500,000.

The per-individual limit has been in place since 1977.

A Larimore state senator brought forward the bill after a train hit a school bus that failed to yield, killing the teacher driving the bus and a high school student in early January 2015 near the city.

Families and students connected to the incident were awarded a total of $500,000 in court afterward, which lawmakers said still wasn’t enough to cover all of the resulting damages.

Vedaa said his district, which covers Renville, Bottineau and McHenry counties, recently had a similar incident. That prompted him to introduce the most recent liability limit bill.

“$250,000 doesn’t go a long ways anymore when it comes to ending up in the hospital or losing work if you end up being completely disabled or something,” Vedaa said.

Risk of higher premiums

The city of Grand Forks is insured through the Insurance Reserve Fund and will in 2019 pay a $277,149 premium for general liability insurance, a $271,001 premium for business auto insurance and a $28,565 premium for heavy equipment insurance.

“How much more will the additional coverage cost cities like Grand Forks?” City Administrator Todd Feland asked. “And it is a pretty significant jump for one year, for both limits. Is there a more incremental way we can work on this?”

The Senate committee on political subdivisions will consider the bill during a hearing on Thursday.

“The North Dakota Insurance Reserve Fund is still in process of evaluating the bill and potential impact to reserve fund and its political subdivision members,” Quintus said.

The group said it will research that impact and share its findings on Thursday, Jan. 17.