Rolling Hills : City Without Insurance

The city’s liability insurance lapsed Wednesday and there is a strong possibility that any new insurance carrier selected will not cover the city for landslide damage, a longstanding problem.

City Manager Terrence Belanger told the council Monday that insurance brokers have indicated that two companies are willing to underwrite Rolling Hills’ general liability, pending completion of negotiations within the industry to set rates at which companies can reinsure some of their risk.

Neither company offers landslide coverage, Belanger said. Rolling Hills has been plagued by a slow-moving slide in the Flying Triangle area for about five years. Thirty-six residences are in the slide area, and 16 claims were filed against Landmark Insurance Co. when slide activity resumed in 1981. Those cases will not be heard until later this year.

Until industry negotiations have been completed, “Our exposure now is zero to infinity. We don’t have any insurance now, simple as that,” Belanger said.

Though Rolling Hills has experienced no claim losses since 1980, it was notified in October by Chicago Insurance Co. that the company was leaving the municipal underwriting business.

To protect itself, Rolling Hills has established a municipal self-insurance reserve fund of $130,000. Another $50,000 has been set aside for premiums in the event the city locates a company to underwrite its liability risk. The money comes from the city’s former flood and fire insurance fund and its general fund.

The council ordered the city staff to begin a series of safety inspections of city property, including the tennis courts and horse-riding rings.

Belanger said Rolling Hills is suffering the same insurance woes as 35 to 40 other California cities, including Pasadena and Beverly Hills, which have been notified by insurance carriers that they no longer provide municipal liability coverage. The problems are the result of the high awards insurance companies have had to pay when injured parties sued cities, even though the cities often bear only a small amount of responsibility for the injury, Belanger said.