New editorial, water main

I admit that I am puzzled by the City’s actions regarding the busted water main. I’m going back and forth on the issue. On one hand we have the property damage and other losses, and on the other we have the city’s $1000 goodwill payment.

Add to the mix the City’s insurance carrier. The City apparently has a liability insurance policy. Generally speaking, liability insurance covers the insured for bodily injury or property damage for which the insured is found legally liable. Although this is the general principle, we don’t know what the policy language says. It may have some exclusion that applies.

The City’s insurer has taken this very position, publicly announcing that there is no coverage. It’s worth noting that this is not the same thing as denying an actual claim; it seems more like a pre-emptive strike to minimize future losses. We don’t know if property owners have actually submitted claims and been denied.

However, just because the insurer says the damage isn’t covered doesn’t mean that is the end of the issue. Property owners could complain to the State Auditor’s office, which oversees insurance in Montana. I assume the city's insurer is subject to the Auditor's oversight. This is a powerful motivator for insurers, because the Auditor is the gateway to doing insurance business in Montana. An insurer would not want their authority to transact business impeded in any way, so they might choose to cover the losses in order to retain their authority to sell insurance in Montana.

But let’s assume that there is an unambiguous exclusion in the policy which lets the insurer off the hook. The absence of coverage does not mean an absence of liability. A property owner might choose to take the City to court. The court’s affirmative decision would certainly establish legal liability for the loss, so the City would then be obligated to pay all damages caused by the broken water main.

But here is where I get confused. The City is apparently acting on the insurer’s denial and offering each owner a $1000 payment (or more in some cases). This strikes me as odd. Why insult people with an inadequate payment? If the City is offering this payment they must have some sort of sense that they ought to help pay for the damage. But why would they do that if they don’t believe it’s their fault? Either they’re liable or they are not. If they are liable, they pay for everything; if they are not, they pay nothing.

And by making the token payment it may mean they are assuming liability, a situation their attorneys should have warned them about. One might wonder if there is a level of incompetence at work here.

This payment scheme was a quick announcement, like there was a midnight meeting or something. They were ready with this $1000 awfully fast. I can imagine sleepy-eyed commissioners having a conversation, like: “OMG, what are we gonna do?” “Hey, how about $1000 each?” “Yeah, then we just say that we wanted to treat everyone equally.” “I like that. We show our compassion in the face of that eeeevil insurance company denying claims.”

This is a scheme that could only be dreamed up by government. No matter what the individual situation, no matter who is at fault or who deserves what, no matter how much damage, the payment is $1000. Funded by taxpayers, of course. Like so many government programs which pay people regardless of need or merit, this payment is nothing more than a feel-good moment for the governmental elites.

And they expected that there would be no criticism of their offer? One might wonder if the city leaders are living in the real world.