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Are Your Excess Liability Limits High Enough?

Updated: 8/21/2023

When purchasing liability coverage, you may assume standard limits are enough, however each district is different. The basic limits are intended to be the start of a conversation rather than the end. The amount needed will depend on many factors such as your district’s type of operation, the size of your district, and contractual obligations.

So How High Should Our Limits Be?

We get this question often. Like we said, it varies. But this rule of thumb always applies: your limits should be high enough to cover your assets if someone wants to sue you for everything you’re worth.

Liability Limits

As you may already know, claims filed under state law are subject to the Colorado Governmental Immunity Act (CGIA). The CGIA places caps on the liability faced by a public entity. Tort liability is capped at $424,000 for injury to one person and $1,195,000 for injury to multiple people in any single occurrence. This falls well within the Pool’s basic liability limit of $2 million per occurrence. This might mislead you into thinking the basic coverage is enough, but it’s only half the story. Payouts from claims made under state statute make up only a small percentage of losses for Pool members.

Your liability limits should be high enough to cover potentially expensive scenarios such as employment-related claims (sexual harassment, discrimination, hostile work environment, etc.). These claims can rack up big legal fees, and the CGIA won’t protect you, since employment claims are often brought under Federal statute. These types of claims have the potential to explode well into the millions of dollars and can be long, dramatic, embarrassing, and destructive. Unless you’re prepared to pay big settlements and legal fees out of pocket, it is wise to purchase excess liability limits.

Your district may enter into contracts that include a requirement to carry higher liability limits than the basic amounts. Current and future agreements should be reviewed to determine if landlords, equipment rental companies, car rental companies, etc. require limits in excess of the basic $2 million.

Also consider incidents that could happen outside of Colorado. For example, let’s say a district employee is traveling by car for work to an out-of-state conference or training event and is involved in an accident. The CGIA does not extend protection outside Colorado, so the district would be subject to another state’s motor vehicle laws, where you could be held liable for much higher amounts.

After evaluating your exposure, if you feel the $2 million limit is not sufficient, you can increase it by purchasing Excess Liability coverage. You can buy up to $8 million in excess limits, for a total limit of up to $10 million per occurrence.

Below we have created a useful table depicting how many members purchased excess limits at each tier in 2023. You can use this information to compare your district with your peers. This can help you benchmark what a good limit for your district might look like.

Making an informed decision about the right limits will not just protect your district’s assets, it can also safeguard the public’s trust in you.

If you would like more information, we have representatives ready to chat with you about what coverage limits are best suited to your organization. Email us at pc@csdpool.org to inquire today.

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