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Staff says insurance for San Rafael and Beach Road levies is cost-prohibitive; recommends maintenance and grant-seeking
Summary
Staff found one traditional insurer quote (~$150,000/year for $3 million limited coverage with a 15% deductible) and estimated full coverage near $1.9 million/year; parametric insurance was even more expensive. Staff recommended continued levy maintenance, detailed inspection records, and pursuing grants instead of buying insurance.
City manager Robert Zadnik presented the committee with staff's year-long review of insurance options for the city's levies on San Rafael Avenue and Beach Road and concluded commercial insurance is not practical under current market conditions.
Zadnik said markets returned only one traditional insurer quote: "only 1 insurer provided a quote, which was about 150,000 annually for limited coverage of $3,000,000, which included a significant 15% deductible." He said expanding coverage to adequately protect the levies drove estimated premiums up to roughly $1,900,000 per year, which staff judged cost prohibitive for the city's budget. Staff also evaluated parametric insurance (automatic payouts based on earthquake intensity) and reported it would cost nearly twice traditional insurance in this case.
Zadnik warned about an interaction with federal disaster aid: "Having insurance on their levies could delay FEMA's reimbursement and reduce the net benefit from federal assistance, giving that FEMA only covers uninsured losses after insurance settlements are finalized." Given the cost and potential FEMA complications, staff recommended focusing on regular levy maintenance, keeping detailed inspection records, and continuing to seek state and federal grants for larger projects. Committee members supported clear public messaging about the study's conclusions.
No formal action was taken at the meeting; staff will maintain inspections and pursue grant opportunities.
