Colorado Springs liability insurance rarely used despite spikes in price costing taxpayers
COLORADO SPRINGS, Colo. (KRDO) - Liability insurance premiums for both the City of Colorado Springs and El Paso County have skyrocketed in the last five years. However, KRDO13 Investigates found the city's insurance is rarely used, despite costs to taxpayers.
Excess liability insurance can be used for many different coverages, from trips and falls to cyberattacks. Another use is to cover lawsuit settlements. This allows municipalities to only pay a portion of a settlement, while the insurance covers the rest.
According to data obtained by KRDO13 Investigates, the total premium price for these liability insurances has increased significantly since 2020.
The city’s premiums have jumped from $682,830 in 2020 to nearly $4 million in 2023 — about a 600% increase. El Paso County is seeing a similar upward trend with premiums increasing from $662,436 to $1,645,306 in the same timeframe.
“Insurers are trying to recover their costs,” said Ryan Talmage, the city’s risk manager. “They've been running at a loss for a few years. So we're seeing adjustments up every year until they and the regulators decide that they have enough reserves to handle the claims that may come in.”
However, there is one major difference between the county and the city when it comes to liability insurance. The county has been able to use theirs in six of the last eight settlements approved by the Board of County Commissioners, including a $3 million settlement for a death in the El Paso County Jail. The county paid $500,000 in that settlement, while the insurance company covered the rest.
The city’s liability insurance on the other hand is rarely used for settlements because it often doesn’t meet its deductible of $1-1.5 million, depending on the coverage. Talmage said this deductible is similar to other municipalities. El Paso County said its deductible is $500,000.
Since 2019, the city has settled 31 lawsuits. Only one was paid for with liability insurance. That lawsuit was for the fatal shooting of De’Von Bailey, a 19-year-old who was shot in the back by Colorado Springs Police. According to the agreement, the city paid less than $1 million, while the insurer covered the rest of the nearly $3 million settlement.
The other 30 settlements were entirely paid for by the city, despite premiums increasing every year. These premiums are paid out of the general fund, meaning any rise in costs leaves less money for other services, like roads.
“It's not a huge increase, but it is an increase,” Talmage said. The dollars that could be spent on streets or parks do get diverted to pay for this.”
Talmage said these premium spikes happened at municipalities across the country following George Floyd’s death in Minnesota in 2020. He said insurance companies no longer wanted to cover law enforcement and those that did jacked up their prices.
“That caused liability rates, specifically in law enforcement liability, to increase enormously,” he said. “It was just the conditions on the market. Nothing happened with the city that caused that to happen.”
Talmage said these increases aren’t just reserved for local governments either. Premiums are rising for coverages across the board, like home and auto. The city will receive its renewed 2024 premiums in the next month, which Talmage said will likely increase again.
“We're experiencing the same market that all of our taxpayers and homeowners here are experiencing,” he said. “You may not have done anything wrong, but you're still going up and we're seeing the same thing.”
