Agenda Item Wording:
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Property Insurance Replacement Coverage - Approve City’s participation with the Alliant Property Insurance Program effective July 1, 2025, and authorize payment of the policy in the amount of $477,873.38.
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Deadline for Action: 7/21/2025
Submitting Department: Administration
Contact Name and Phone Number: Andrew Guzman, Risk Manager, (559) 713-4335 andrew.guzman@visalia.city; Shonna Oneal, Administrative Services Director, (559) 713-4053 shonna.oneal@visalia.city
Department Recommendation:
Staff recommends the approval of the City’s participation in the Alliant Property Insurance Program (APIP) for property insurance coverage, replacing the non-renewed Fireman’s Fund Insurance Company policy, effective July 1, 2025.
Background Discussion:
On May 28, 2025, the City’s broker of record, AJ Gallagher, notified the City that Fireman’s Fund Insurance Company (Allianz), elected not to renew the City’s property insurance policy, effective June 30, 2025. The policy provided comprehensive property insurance coverage for the City’s buildings and machinery. The non-renewal was not based on any City-specific claims or risk factors, but rather reflects the current hard insurance market conditions, as carriers continue to withdraw from California markets following significant losses from recent flooding and wildfire events.
The City’s expiring property insurance policy with Fireman’s Fund Insurance Company (Allianz) provided a blanket limit of $250,000,000 for the City’s covered properties. This limit represents the maximum amount Allianz would pay for any covered loss event, regardless of the number of buildings or types of property involved. Blanket coverage means that our insurance limit applies collectively across multiple properties, rather than assigning individual limits to each location. For example, rather than having separate limits for the City Administration Building, Recreation facilities, and Police substations, the $250M limit can be used across any or all locations as needed, up to the stated value listed on our property schedule.
The expiring insurance policy had a Total Insured Value (TIV) of $375,000,000. TIV represents the combined replacement value of all properties and assets covered under the City’s insurance policy.
AJ Gallagher, notified the City that it would begin marketing the City’s properties for replacement coverage; however, a warning was provided that the premium may be increased when marketed with other companies due to the hard-market conditions.
The City is a member of the Authority for California Cities Excess Liability (ACCEL) JPA for excess general liability insurance. ACCEL offers its members other lines of insurance coverage, including property insurance through the Alliant Property Insurance Program (APIP). The City has previously declined coverage with APIP because the placement with the Fireman’s Fund (Allianz) was considered a favorably priced policy. Considering the sudden notice of non-renewal and the potential for a premium increase, the City’s Risk division contacted the ACCEL program administrators and asked them to market the City’s property insurance through APIP as an option for replacement coverage.
The City received a quote for APIP on June 26, 2025, in the amount of $477,873.38. The APIP policy provides a $375,000,000 limit of insurance per occurrence, which is 50% higher than the expiring policy. In addition to the higher policy limit, APIP offers broader coverage compared to the expiring policy. Loss of Business income and Extra Expense coverage, which includes costs such as temporary relocation and equipment rental while a building is being repaired or replaced, increases from a $9,999,995 sublimit to $50,000,000 under APIP. The APIP policy includes dedicated coverage for pollution liability, $100,000,000 in equipment breakdown protection, and expanded terrorism coverage, none of which are included at comparable levels in the expiring policy. For example, pollution and equipment breakdown are excluded under the expiring policy and coverage would only apply if those events led to a covered cause of loss. APIP treats pollution and equipment breakdown as covered perils, included within its $100,000,000 limit. Additionally, APIP offers automatic coverage for newly acquired properties up to $50,000,000, compared to only $1,000,000 under the expiring policy.
The City received a quote for replacement coverage provided by Fireman’s Fund, Arch Insurance, on June 27, 2025, in the amount of $536,954.00. The Arch policy is nearly identical to the cancelled policy and is approximately $59,000 more expensive than the APIP policy.
Quote Comparison - High-Level Summary
Cancelled Policy Fireman’s Fund/Allianz Insurance
Policy Year: 7/1/2024 - 6/30/2025
Total Premium: $523,570.00
Limit of Insurance: $250,000,000
All Risk Deductible: $50,000
Fireman’s Fund/Arch Insurance Policy (Replacement Coverage)
7/1/2025 - 6/30/2026
Total Premium: $536,954.00 (+$13,384 from previous year)
Limit of Insurance: $250,000,000
All Risk Deductible: $50,000
APIP Policy (Replacement Coverage)
7/1/2025 - 6/30/2026
Total Premium: $477,873.38.00 (-$45,696.62 from previous year)
Limit of Insurance: $375,000,000
All Risk Deductible: $50,000
An RFP for broker services (RFP 23-24-54 Insurance Broker Services) is in process and will close on July 15, 2025. Future property renewals will be conducted by the broker selected from that RFP.
Fiscal Impact:
$477,873.38 paid from the Property Insurance fund. This amount is within budget for the fiscal year.
Prior Council Action: N/A
Other: N/A
Alternatives: 1) Bind property insurance coverage with Arch which is not recommended because it is more costly and provides less comprehensive coverage.
2) Do not approve the placement of our property insurance with Arch or APIP, which is not recommended because it would leave the City’s properties uninsured, including the loss of business interruption coverage.
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to approve the placement of the City’s property insurance with the Alliant Property Insurance Program, effective July 1, 2025, and authorize payment of the APIP policy in the amount of $477,873.38.
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Environmental Assessment Status: N/A
CEQA Review: N/A
Attachments: 1) Notice of Non-Renewal. 2) APIP Quote. 3) Arch Quote