Insurance costs triple in Newport

June Casagrande

NEWPORT BEACH -- Last year’s terrorist attacks have had a serious

repercussion for city finances. Liability insurance costs for the city

have tripled from last year.

Last year’s premiums for liability insurance were $331,000 for up to

$25 million in coverage. But to renew the coverage, the city will pay

$944,107 for $21 million in coverage for the coming fiscal year.

“We’re finding ourselves here today in a very difficult situation,”

Mayor Tod Ridgeway said during a City Council study session on insurance

coverages. “This is a big hit.”

The city buys its liability insurance through broker Cal Surance,

which seeks out the best deal for the city. Mark Zahoryin, the city’s Cal

Surance account executive, said the Sept. 11 terrorist attacks caused the

increase.

“Newport Beach has some factors that insurance companies don’t like,

mainly, its own police and fire departments,” Zahoryin said.

The increased possibility of future terrorist attacks on American soil

has caused the insurance industry to recalculate its risk in insuring any

city. Further, cities that contract police and fire services from other

agencies don’t present as big a risk to insurance companies, Zahoryin

explained, because of the potential loss of life of workers, as well as

the fact that the city could be held responsible for damages.

An option to cut premium costs by reducing coverages was shot down by

council members and staff alike. The option would have bought the city

$16 million worth of general liability coverage for an annual premium of

$737,607 a year.

“In this day and age, it seems to be the greater wisdom to be overly

conservative rather than underly to save money,” City Manager Homer

Bludau said.

The city also took a hit on the costs of renewing its property

insurance, because of Sept. 11. Last year’s premium was $399,796. The new

rate is $636,239 -- a 59% increase.

* June Casagrande covers Newport Beach and John Wayne Airport. She may

be reached at (949) 574-4232 or by e-mail at o7

june.casagrande@latimes.comf7 .