Berkeley Municipal Code Ch. 7.14 Catastrophic Loss Trust Fund

The purpose of this chapter is to protect the City from severe financial hardship and disruption of ongoing services occasioned by the award of a public liability judgment in excess of two hundred fifty thousand dollars. (Ord. 5757-NS § 1, 1986)

A. The council finds as follows:

1. Since October 1, 1985, the City of Berkeley has been unable to secure insurance above the self-insured retention of two hundred fifty thousand dollars.

2. Cities in California and throughout the nation are currently having difficulty securing liability insurance and are finding it is prohibitively expensive to secure such insurance.

3. The council finds it is necessary to create a catastrophic loss trust fund to protect the City of Berkeley from claims larger than two hundred fifty thousand dollars in order to protect the City and its programs from sudden unforeseen expenses which would have the potential of destroying vital City services and programs.

4. The council finds it necessary to cooperate with other cities and share risk in the Bay Cities Joint Powers Insurance Authority. (Ord. 5757-NS § 2, 1986)

There is established in the City Treasury a catastrophic loss trust fund. In each fiscal year, commencing with fiscal year 1985-86 there shall be deposited in such trust fund the sum equal to one percent of the total operating funds as reflected in the annual appropriations ordinance adopted and amended by the City Council. Such sum shall be deposited thirty days after City Council adopts the annual appropriations ordinance each fiscal year. The monies placed in the catastrophic loss trust fund shall be held in trust in an interest bearing account. Not more than two million dollars shall be placed in the account although it may accumulate interest in excess of two million dollars. City expenses attributable to third-party administrator fees will be debited against said trust fund. (Ord. 5720-NS § 3, 1986)

Expenditures from the catastrophic loss trust fund shall be made solely and exclusively for the purpose of paying public liability claims under this chapter and annual premium payments to the Bay Cities Joint Powers Insurance Authority. All costs associated with claims in excess of two hundred fifty thousand dollars including investigation and adjustment costs and legal defense costs shall be paid out of the public liability fund, Berkeley Municipal Code Section 7.12.020. Payment of any settled public liability claim or judgment in excess or judgment up to two hundred fifty thousand dollars shall be paid out of the public liability fund, Berkeley Municipal Code Section 7.12.020; that portion of the claim of judgment above two hundred fifty thousand dollars shall be paid out of the catastrophic loss trust fund. Nothing in this section alters the requirement in Berkeley Municipal Code Section 7.12.020 that payment of any settled public liability claim, the amount which is five thousand dollars or more, shall be authorized by the City Council. (Ord. 5757-NS § 4, 1986)

The catastrophic loss trust fund shall remain in existence, and the monies contained in said fund shall not be used or available for any other purpose until the City Attorney certifies that (1) the statute of limitations has expired for all actions which accrued during the period the City was self-insured and (2) that all actions which have been filed covering said period have been settled or finally resolved by the judicial system and all monies due and owing thereon have been paid. (Ord. 5757-NS § 5, 1986)