Intermunicipal Agreements for Liability Insurance Purposes
A municipal corporation may, in the name of a municipality, contract with an insurance company to secure all forms of liability insurance. See 24 V.S.A. 1092.
When a municipal corporation purchases a liability insurance policy under 1092, "it waives its sovereign immunity from liability to the extent of the coverage of the policy and consents to be sued." 29 V.S.A. 1403.
The Legislature, however, has specifically authorized municipalities to enter into intermunicipal agreements for liability insurance purposes, see 24 V.S.A. 4942, participation in which does not constitute a waiver of immunity. See id. 4946. T
he statute specifically provides that:
two or more municipalities may form an association under the laws of this state to develop and administer an intermunicipal risk management program, having as its purposes reducing the risk of its members; safety engineering; distributing, sharing, and pooling risks; acquiring insurance, excess loss insurance, or reinsurance; and processing, paying, and defending claims against the member of such association. Id. 4942
Furthermore, such "participation by a municipality in an agreement or association established hereunder shall not create joint and several liability as a result of any act or omission of any other municipality or association, nor shall such participation constitute a waiver of sovereign immunity under 29 V.S.A. 1403." Id. 4946.