Resolution No. 09987 1 RESOLUTION NO. 9987
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
3 VERNON APPROVING AND AUTHORIZING THE PURCHASE OF
4 COMMERCIAL INSURANCE POLICY (PROPERTY, CONTINGENT
EXTRA EXPENSE-AND BUSINESS INTERRUPTION) THROUGH
~ ARTHUR J. GALLAGHER & CO.
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WHEREAS, the City's current Commercial Insurance Program
8 consisting of a Property Policy (including earthquake and .equipment
9 breakdown)., General Liability and first and second excess liability
10 policies, Employee Benefit- and Excess Workers' Compensation insurance
11 policies expires on July 1, 2009;-and
12 WHEREAS, the City employed the services of Arthur J.
13 Gallagher & Co. Insurance Brokers of California, Inc. ("Arthur J.
14 Gallagher") to act as-the City's broker to structure and obtain the
15 appropriate insurance .coverages for the period July 1, 2009 through
16 July 1, 2010; and
17 WHEREAS, due to the current economic climate, the .recent
18 changes in the City's schedule of properties and the .Station A
19 breakdown in 2003, Travelers. Property Casualty .Company ("Travelers"j
20 submitted a quote in the sum of $398,000.00 for the property insurance
21 Portion of the Commercial Insurance Program; and
22 WHEREAS, the quote from Travelers includes Flood, Boiler and
23 Machinery, excludes earthquakes, and adds Contingent Extra Expense and
24 Business Interruption in the event the Malburg Generating Station goes-
25 down (collectively, the "Property Policy"); and
26 WHEREAS, the City desires to .purchase a Property Policy to
27 protect the City; and
28 WHEREAS, the City .Council of the City of Vernon has
1 determined that, pursuant to the provisions of subsection (a) of
2 Section 2.27 of the Vernon City C"ode, it is in the public interest and
3 necessity to approve the purchase of the Property Policy through
4 Arthur J. Gallagher.
5 NOW, THEREFORE, BE IT RESOLVEDBY THE CITY COUNCIL OF THE
6 CITY OF VERNON AS FOLLOWS:
7 SECTION 1: The City Council of the City of Vernon hereby
8 find s. and determines that the-recitals contained hereinabove are true
9 and correct.
10 SECTION 2: The City Council of the City of Vernon hereby
11 approves the purchase of the- Property Policy portion of the Commercial
12 Insurance Program consisting of a Property Policy, Flood, Boiler-and
13 Machinery, excluding earthquakes, Contingent Extra Expense and
14 Business Interruption insurance policies through Arthur J. .Gallagher &
15 Co. and authorizes the City Administrator, or his designee, to execute
16 any and all documents. necessary for the purpose of securing the
17 Property Policy and to .implement and carry out .the purposes specified
18 im this Resolution on behalf of the City of Vernon.
19 SECTION 3: The City Council of the City of Vernon hereby
20 approves the payment of the annual. premium for the Property Policy in
21 accordance with the terms of the insurance purchase in an estimated
22 .amount of $398.,000.00 plus fees, if applicab]_e.
23 SECTION 4: The City Council of the City of Vernon hereby
24 directs the City Clerk, or her designee, to send a copy of this
25 Resolution to:
26 Arthur J. Gallagher & Co.
Insurance Brokers of California, Inc.
27 Attn. Nasreen.Kopecky, Account Manager
28 15 Enterprise, Suite 200
Aliso Viejo, CA 92656
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l SECTION 5: The City Clerk of the City of Vernon 'shall
2 certify to the passage of this resolution, and thereupon and
3 thereafter the same shall be in full force and effect.
4 APPROVED AND ADOPTED thin 29th day of June, 20p9.
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6 c~ /J
7 Hilario Gonzales.
Name:
8 ! Title :Mayor /r-=".- , D m
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ATTEST:
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14 M NUELA GIRON, Cit Clerk
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1 STATE OF CALIFORNIA )
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2 COUNTY OF LOS ANGELES )
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4 I, MANUELA GIRON, City Clerk of the City of Vernon, do hereby
5 certify that the foregoing Resolution, being Resolution No. 99.8.7, was
6 duly adopted by the City Council of the City of Vernon at a regular
7 meeting of the City Council duly held on Monday, June 29, 2009, and
8 thereafter was duly signed by the Mayor or Mayor. Pro-Tem of-the City of
9 Vernon.
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MANUELA`GIRON; City Clerk
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13 (SEAL)
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4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811
June 29, 2009
Arthur J. Gallagher & Co.
.Insurance Brokers of California, Inc.
ATTN: Nasreen Kopecky, Account Manager
15 Enterprise, Suite 200
Aliso Viejo, CA 92656
Re: Commercial Insurance Policy (Property, Contingent Extra
Expense and Business Interruption)
Dear. Ms. Kopecky:
Transmitted herewith is a copy of Resolution No. 9987 that was
approved by City Council on June 29, 2009.
If you have any questions-regarding this matter, please call Ms.
Avigal Horrow at (323) 583-8811 ext. 315..
Very truly yours,
Kelly G'r n
City-Clerk
NG:dj
c: Willard Yamaguchi
Karina Rueda
Resolution No. 9987
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STAFF REPORT
CITY CLERK S OFFICE
Risk Management APPROV~~ ~ 9 CIS' COUNCIL.
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Date: June 4, 2009 p ~ ,
To: Honorable Mayor and City Council
From: Willard G. Yamaguchi, Risk Manager
Subject: Property Insurance Renewal/Contingent Extra Expense 2009-10 '
The City's current property insurance will expire on June 30, 2009. Presently, Commonwealth
Insurance Company and Liberty International insure the City's properties related to utilities.
Lexington Insurance Company and Landmark American Insurance Company insure the City's
properties related to non-utilities. Risk Management has obtained one quote from Travelers
Property Casualty Company. To date, other carriers have declined to quote due to recent
changes in the City's schedule of properties and the pay out on the Station A breakdown in 2003.
Our broker, Arthur J. Gallagher & Company, provided the proposal from Travelers Property
Casualty Company.
Travelers Property Casualty Company
For 2008-09, the total cost for property insurance was $380,000. Travelers submitted a bid for
$385,000. Please note that despite the 1.3% increase in premium, the City has a 48% increase in
property values from $154,414,959 to $228,817,864. Further, the Travelers quote includes
Flood, and Boiler and Machinery, excluding earthquakes.
Further, since Vernon is dependent on MGS providing power, we are including a $5,000,000
Contingent Extra Expense and $10,000,000 Business Interruption Policy that includes a 72
deductible. That is, if MGS were to go down, then after 72 hours, the policy would pay for the
difference in what the City pays for power on the open market. The BI covers the lost revenues
until MGS comes back on line. The cost of said policy is $13,000.
Recommendation
Risk Management recommends that the City accept the bid from Travelers Property Casualty
Company in the amount of $385,000 for property insurance and the Contingent Extra Expense in
the amount of $13,000, for a total of $398,000.
cc: DonalO'Callghan
Avigal Horrow
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CITY CLERK'S OFFICE Risk Management
Date: -June 4-2009
To: Donal O'Callaghan, City Administrator
From: Willard G. Yamaguchi, Risk Manager
Subject: Property Insurance Renewal/Contingent Extra Expense 2009-10
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Attached is a Staff Report to the City Council recommending Travelers Property Casualty
Company for property and contingent extra expense insurance for 2009-10. Previously,
Commonwealth Insurance Company and Liberty International insured the City's properties
related to utilities. Lexington Insurance Company and Landmark American Insurance Company
insured the City's properties related to non-utilities. Our broker, Arthur J. Gallagher &
Company, provided a proposal from Travelers Property Casualty Company.
To date, other carriers have declined to quote due to recent changes in the City's schedule of
properties and the pay out on the Station A breakdown in 2003.
Recommendation
Risk Management recommends that the City accept the liid from Travelers Property Casualty
Company in the amount of $3$5,000 for property insurance and the Contingent Extra Expense in
the amount of $13,000, for a total of $398,000.
cc: Avigal Horrow
JUN ~ ~ 2x09
BY: