Extraordinary Expense Coverage

Published: November 15, 2020

Members of the League of Minnesota Cities Insurance Trust can use the Trust’s extraordinary expense coverage if they have an eligible expense. This coverage provides funds that allow members to pay unexpected costs over time.

Eligible expenses

Expenses must meet four basic criteria. They must be:

  1. Greater than what normal costs would be.
  2. Something that couldn’t be reasonably expected.
  3. Necessary either to meet legal responsibilities or to protect public health and safety.
  4. Something that’s not covered under any other coverage.

Examples include:

  • Added police costs for a significant criminal event.
  • Uninsured flood damage to a member-owned building.
  • Extra snowplowing costs in a year with heavy snowfall.

Cost

Members can submit up to $250,000 for unexpected expenses. Members repay that amount to the Trust over a period of up to five years. The repayment is made in the form of an extra charge that is added to future premium payments.

If the repayment is made within a year, there is no interest. If more than one year, a 3% interest rate is added beginning in the second year. If a member leaves the Trust, the entire amount is immediately due.

Coverage limits

The total amount available to all members under this coverage is $5 million per year. There is a limit of $250,000 per year per member, which applies regardless of the number of claims or events a member has.