Council insurance will pay legals
LEGAL stoushes such as those between Byron Shire Council and Belongil property owner John Vaughan will not cost ratepayers a cent under the council’s insurance arrangements.
A single company covers most of NSW’s local government insurance needs – picking up the tab for court actions such as those pursued by Byron against Mr Vaughan and Woolworths in the Land and Environment Court.
The Australian arm of global colossus Jardine Lloyd Thompson manages the Statewide Mutual fund, which includes 150 councils in NSW and most across Australia.
It covers the public liability and professional indemnity aspects of a council’s insurance, under which litigation costs would fall.
The size of the fund means claims and legal actions are not likely to affect premium levels,according to Ballina Shire Council general manager Paul Hickey.
The issue has been brought into focus as Byron residents fear they will have to foot the bill for the recent drawn-out legal actions.
But the shire’s general manager, Graeme Faulkner, said ‘ratepayers would not face an impost’ as a result of the litigation.
Council was indemnified by its insurers for all costs associated with the case against Mr Vaughan, the general manager said.
“Since June 29, 2009, council has only been responsible for a $12,500 excess on the policy. All costs are being met by the insurers, not shire ratepayers,” he said.
Mr Faulkner said the council’s annual insurance premium would also not increase as a result of its court cases.
Byron Shire’s premiums are on a par with other councils in the region, at $525,055 for 2009/10, $552,690 for 2008/09 and $534,000 for 2007/08.
In Ballina, the premium for the insurance cover was $504,000 this year, and $531,000 in 2008/09.
The year before that it was $517,000, Mr Hickey said.
Tweed Shire Council manager of corporate governance, Neil Baldwin, said the figure for his council was in the vicinity of $670,000, which had been consistent over the years.
Tweed pays an excess of $25,000 in any case it might pursue.
“We pay a premium at the beginning of the year and we have not been called upon to pay any additional premiums (as a result of other councils’ legal costs),” Mr Baldwin said.
“The premium gave Tweed $400 million cover for public indemnity and $300 million for professional indemnity.”
The same cover is extended to the Lismore City Council, which paid a $566,500 premium in 2007/08, $586,300 in 2008/09 and $556,985 in 2009/10.
Mr Faulkner said the Byron council had ‘subrogated all rights’ in the case against Mr Vaughan, and it was the insurers who would decide the course to take in any future litigation with him.
This was a standard arrangement in many areas of insurance, JLT managing director of risk service, Stephen Penfold, said.
“The Mutual acts on the councils’ behalf to defend any case taken against them,” he said.
Meanwhile, the Insurance Council of Australia yesterday said the cost of public liability premiums had dropped 27pc in five years to 2008, while the number of policies written had increased by more than 20pc.