Local governments obtain liability protection through commercial insurance, self-insurance, or participation in an intergovernmental risk pool.
Pools are membership organisations formed under intergovernmental cooperation statutes. They are generally not insurance companies and are not regulated as such, which affects the remedies available in a coverage dispute and whether bad faith doctrines apply.
Coverage lines. General liability, law enforcement liability, public officials errors and omissions, employment practices, property, auto, and cyber. Public officials coverage is the one most often misunderstood — it typically responds to wrongful acts in an official capacity, with exclusions for intentional misconduct and for claims seeking only injunctive relief.
Defence obligations. Whether the pool controls counsel, whether the member may select from a panel, and how conflicts between the entity and individual officials are handled.
Immunities and coverage. A claim barred by governmental immunity may still require a defence, which is where much of the value lies.
Indemnification of officials. Statutes and ordinances typically require the municipality to defend and indemnify officials acting within the scope of authority, with exceptions for wilful misconduct. The interaction between that obligation and the coverage terms should be understood before a claim arrives.
Notice obligations are short and are the most common source of coverage disputes.