As a summer dominated by street demonstrations against racism and police brutality winds down, more than 40 legal claims have piled up against Seattle for its handling of the protests.
But money is tight at City Hall as the COVID-19 pandemic has demanded emergency spending and sapped revenues. Insurance coverage that Seattle may need to settle claims was recently slashed, and two insurers threatened to drop their policies entirely, apparently because of concerns over law enforcement and public safety.
The city isn’t in dire straits yet, but its problems are multiplying.
Claims have been filed by protesters injured by police, businesses damaged during demonstrations, residents exposed to tear gas and relatives of people killed amid the tumult.
Some cases already have made headlines, and could lead to big payouts, including the father of a child who was sprayed in the face with Mace by police at a protest; residents and business owners in the Capitol Hill Organized Protest zone that descended into chaos over several weeks; the father of a 19-year-old fatally shot in the zone; and the parents of a protester who was hit and killed by a driver when Interstate 5 was supposed to be closed.
Seattle provides its own insurance for individual losses of up to $6.5 million. Last year the city spent about $19 million on liability claims and related expenses; the city budgeted $28 million for this year but now could end up spending more.
For losses over $6.5 million, the city relies on “layers” of excess liability insurance. Each layer is designed to kick in when the previous layers have hit their limits. The city currently has layers provided by six insurers.
Attorney Karen Koehler represents dozens of people hurt at Seattle protests who’ve joined together for a single lawsuit. She doesn’t expect the claims to overwhelm Seattle completely. When damages would otherwise exceed a city’s insurance limits, the parties can agree to reduce the claims to match the limits, she said.
Something like that happened last year, when Seattle agreed to a record $65 million settlement with the family of a lawyer whose car was hit by a Fire Department ambulance driver. The city’s insurers paid $60 million.
“You’re not looking at bankrupting a city,” Koehler said.
Still, the market for municipal liability insurance has tightened. Juries have been awarding larger losses, causing insurers to pull back, said Allison Frey, insurance and contracts manager at King County.
Some insurers have pulled out of the market, leading the remaining companies to increase their premiums, said Melissa Mixon, a spokesperson for Seattle’s Finance and Administrative Services (FAS) department, in an email.
Consequently, Seattle has less coverage than it used to. For the year ending May 30, the city was insured for losses up to $100 million per occurrence. For the current term, that limit has dropped to $35 million.
King County also is more exposed, with a current limit of about $68 million, down from about $113 million, Frey said.
To make matters worse for Seattle, two of the city’s six insurers — Axis Surplus Insurance and an insurer that FAS declined to name — recently said they would be canceling their policies.
The city asked the insurers to rethink their decisions, and both rescinded their notices.
The Axis cancellation would have taken effect on Sept. 29, according to the company’s July 27 notice, which cited “a material change in exposures.” Axis declined to comment.
“Generally, the companies expressed concern following national media coverage of events in Seattle,” Mixon said, adding, “Some of the national coverage of events in Seattle was actually false.”
A recent memo from the Seattle Police Department to FAS also mentioned “the state of unrest in Seattle (as nationally)” in connection with the cancellations.
According to the SPD memo, Axis wanted to know what the city was doing to “restore the rule of law” and to keep residents, businesses and visitors safe. In response, SPD raised concerns about a push by the City Council to reallocate money from policing to other services.
Bond rating agencies recently noted civil unrest related to the city’s criminal justice system, and a related increase in fiscal risk, but they continued to give Seattle their highest credit ratings.
It’s unusual for an insurer to cancel a policy midterm, said Derek Bryan, executive director of the Washington Counties Risk Pool, an insurance association for smaller counties. Typically, an insurer would wait until a term expired to not renew a policy, if a government’s risks changed.
King County’s insurers, for example, voiced anxiety this spring about the area becoming a COVID-19 hot spot, county budget director Dwight Dively said. When Seattle initially contemplated opening a drug consumption site, insurers raised questions.
While Bryan declined to comment on Seattle’s specific situation, he said, “There’s certainly a feeling that law enforcement provides a benefit and the removal of it could pose a risk.”
Cities often shop around for policies to get better rates, said Janet Ruiz, spokesperson for the Insurance Information Institute, an industry group. Seattle could theoretically find new insurers to cover any layers it might lose. But the market conditions could make that more difficult.
City officials don’t believe the current legal challenges will lead to more insurance problems.
“The realistic outcomes of the claims and lawsuits associated with recent events are unlikely to affect the city’s risk profile,” Mixon, the DSHS spokesperson, said in an email.
Before filing a lawsuit that seeks damages, a complainant must usually file a claim and wait at least 60 days; the city can investigate and settle a claim during that time. Claims only sometimes name a dollar amount.
Each claim tells a story. Nikita Tarver was at a May 30 protest, holding a sign with the names of Black people killed by police, when a pepper ball shot by a police officer struck her left eye. Someone had apparently thrown a fire extinguisher at officers as the crowd dispersed. She didn’t see the pepper ball coming.
“I immediately just started screaming, ‘My eye is burning. My face!’ ” said the 36-year-old, who still cannot see out of the eye.
Tarver already has undergone one surgery, and she may need up to two more. Doctors can’t yet determine how much of her sight she might regain, and she hasn’t been able to work.
Jordan Pickett, a 23-year-old journalist who recently graduated from the University of Washington, doesn’t expect to win a huge payout. He’d been taking photos and posting updates on Twitter on Capitol Hill on June 7, wearing a homemade press insignia, when he was shot in the leg by police with a 40-mm sponge round.
“When I got home there was blood everywhere,” he said about the resulting wound. “It hurt so bad … It was hard to walk and sit down for days.”
The general manager of a Capitol Hill gas station, who declined to share his name because he was worried about retaliation, estimates the business incurred about $30,000 in damages this summer, including a broken window and door.
While some people participated in nonviolent demonstrations for Black lives, police allowed other people to engage in property destruction, he said.
“There were no police around, nothing,” he added.
He said the city needs to get its act together. “Where there is no order, there is chaos,” he said. “And where there is chaos, there are damages.”
Staff reporter Sara Jean Green contributed to this story.
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