Los Gatos to switch insurance pools for broader coverage and lower net cost, council approves

The Los Gatos Town Council voted unanimously on Dec. 2 to authorize the town manager and town attorney to end the town's membership in its current regional joint powers insurance authority and join the California Joint Powers Insurance Authority (CJPIA), town staff said.

Town staff told the council the proposed switch would increase liability limits to $50 million (from the town's current $30 million level), eliminate the $50,000 self-insured retention for liability — providing first-dollar coverage on that line — and include additional services such as cyber-response assistance, an on-call employment-law attorney, emergency public-information support and training programs. The staff presentation said CJPIA also offers a higher reinsurance tower (up to $50 million) and broader coverages including earth-movement claim coverage, pollution/environmental coverage, and expanded crime limits.

The town's fiscal forecast presented at the meeting estimated that under the CJPIA quote the town's premiums could drop from roughly $1.48 million to about $1.37 million, a 7.4% reduction in direct premium expenses; when accounting for lower budgeted self-insured-retention (deductible) payments and other program inclusions, staff estimated a potential net savings of about $259,000 in the annual budget. Staff cautioned the estimate is conditional on claims experience and market conditions between now and a July 1 start date.

Tim, the CJPIA risk manager who visited Los Gatos as part of the underwriting evaluation, told council members there are no separate "search charges" tied to the number of claims and explained how CJPIA sets rates by payroll and five-year loss experience. "There's no specific search charge for the amount of claims provided," Tim said in response to a council question.

Councilmember Padami moved adoption of the resolution authorizing termination and CJPIA membership; the motion was seconded and passed unanimously. Council members praised staff for the due diligence and said higher coverage and certain services at net lower cost made the change attractive. One council member said, "Better coverage at a lower cost is hard to turn down."

What happens next: The town manager and town attorney will execute termination and membership agreements; the notice of termination to the current JPA is due by Dec. 31. The change would take effect at the end of the fiscal year, June 30, 2026, as set out in the adopted resolution.