Request By:
Mr. George L. Atkins
Auditor of Public Accounts
Capitol Annex
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You have noted that in OAG 66-49 we concluded that a county court clerk may not purchase "Errors and Omissions" insurance and charge the premium thereon as a reimbursable office expense. It was pointed out that such insurance is primarily designed for officials and professional persons to guarantee the policyholder [officer] against personal loss in the event he fails to perform a professional act required of him, or in the event that he performs the required act in an improper or erroneous manner. The opinion was based upon the ruling of
Hennessy v. Stewart, Ky., 283 S.W.2d 719 (1955) 721, that in the absence of an express statute, insurance designed to cover the personal loss of an officer should be paid for by the officer himself. With that in mind, you raise three questions.
Question No. 1:
"Can a Fiscal Court authorize payment for Errors and Omissions Insurance for County fee officials from the County General Fund? "
To begin, such insurance involves the official acts or omissions of the officer. Such insurance would not be necessary if he were not in public service. Thus the public cannot be separated or isolated from the practical meaning of his official performance or nonperformance. The public has a definite interest in the quality of the official's performance of his public duties. It is our view that adequate "Errors and Omissions" insurance, though it immediately benefits the officer, ultimately benefits the public by making it possible for good officers and those who work in good faith to continue to effectively function for the public and in a better psychological frame of mind than would be the case if no insurance coverage of that type were afforded. And importantly, as you suggest, such insurance operates in the protection of public monies. We conclude that under an appropriate ordinance the fiscal court may authorize the premiums on such insurance for county fee officers to be paid out of the county general fund, subject to proper budgeting as required by KRS Chapter 68. The authority for the ordinance would be KRS 67.083 [Home Rule law], which vests certain police powers in the fiscal court, including the welfare and convenience of the county citizens. We are not aware of any statutes in conflict with this view. Further, the conclusion is not incompatible with Hennessy, above, since a proper implementation of KRS 67.083 provides an explicit statutory authorization.
Question No. 2:
"Can a Fiscal Court authorize payment for Errors and Omissions Insurance by County Officials from excess Fees?"
We believe the answer is "yes", since the ordinance would be authorized by KRS 67.083, and excess fees are ultimately county money. See
Funk v. Milliken, Ky., 317 S.W.2d 499 (1958) 506.
Question No. 3:
"If the answers to the above questions are negative or in the absence of Fiscal Court approval of the payment, is there any other remedy available to County fee officials?"
In the event that the fiscal court does not take the permissive action stated above [i.e., authorize payment for the insurance out of the county treasury or excess fees] , we are not aware of any other solution to the problem. In such latter situation the official would have to pay for the insurance out of his personal assets.
OAG 66-49 is modified accordingly.