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New Insurance Legislation Places Added Requirements on Municipalities

Oct 14 | 2014  by

Municipalities be advised! Municipalities as “additional named insured” is not enough anymore when contracting for services. The Michigan Legislature passed Senate Bill 715 (2014) earlier this year. Essentially changing insurance laws for communities and placing additional requirements on cities and townships.

Senate Bill 715 (2014)

This new law aims to ensure localities have proper insurance coverage when contracting out for services. By requiring the actual policy documentation, it allows local cities and townships to review and understand the extent of their coverage before entering into contracts.

In the previous system, requests to add an insured party were submitted without going through the process of obtaining actual policy documentation. Municipalities often discovered their coverage was not as extensive as they initially believed after an incident occurred.

One of the main benefits of this new law is that it promotes transparency and accountability. By requiring insurance companies to provide the actual policy documentation, it prevents any misunderstandings or misinterpretations of coverage. This helps to protect both the municipality and the insurance company, as it ensures that both parties are aware of the terms of the policy.

Impacts on Municipalities

However, many view this new insurance legislation as yet another burden imposed on local cities and townships. While the intention is to ensure local governments have proper insurance coverage, the process of obtaining and reviewing the actual policy documentation can be time-consuming and tedious for already resource-strapped local governments. It requires additional time and effort to ensure compliance with the new law.

It may lead to delays in obtaining necessary services as municipalities navigate the complexities of insurance policies. Potentially straining the already limited resources of local governments, making it more challenging to efficiently and effectively provide essential services to their communities. Needless to say, it will be interesting to see how this shakes out in the upcoming years. 

Contact Fausone & Grysko, PLC Today

Fausone & Grysko, PLC has a team of experienced municipal attorneys. We have worked with several cities/townships across Southeast Michigan. Including Westland, Wayne, Rockwood, and Northville Township. To consult with one of our attorneys, please call (248) 380-0000 or visit our website.