2015 New York Laws
GMU - General Municipal
Article 2 - (General Municipal) GENERAL MUNICIPAL FINANCES
6-N - Insurance reserve fund.

  6-n. Insurance reserve fund. 1. a. "Municipal corporation," as used
  in this section, shall mean  a  municipal  corporation,  as  defined  in
  section  two  of this chapter, school district, except a school district
  in a city with a population of one hundred twenty-five thousand or more,
  board of cooperative educational services,  fire  district,  a  district
  corporation  and  a  special improvement district governed by a separate
  board of commissioners.
b. "Judgments", "actions" and "claims", as used in this section, shall
  mean  those  judgments,  actions  and  claims  against   the   municipal
  corporation   that   arise  out  of  those  kinds  of  risks  for  which
  expenditures may be made pursuant to subdivision two of this section.
2. (a) The governing board of any municipal corporation may  establish
  a  reserve  fund  to  be  known  as the insurance reserve fund. Upon the
  creation of the fund, the municipality may make  expenditures  from  the
  fund  for  any  loss,  claim, action or judgment for which the municipal
  corporation is authorized or required to purchase or maintain insurance,
  except those kinds of risks for which insurance is  authorized  pursuant
  to  paragraph  one,  two,  three, fifteen, sixteen, seventeen, eighteen,
  twenty-two or twenty-three of subsection (a) of section one thousand one
  hundred thirteen of the insurance  law,  or  for  payments  in  lieu  of
  contributions under article eighteen of the labor law; provided however,
  that  no  municipality  shall make an expenditure from such fund for any
  loss, claim, action or judgment for which the municipal corporation  has
  established  a  reserve fund under any other provision of law; provided,
  further that in the case of the Scarsdale union free school district, an
  insurance reserve fund may be established and such school  district  may
  make  expenditures from such reserve fund for any loss, claim, action or
  judgment for which the school district  is  authorized  or  required  to
  purchase  or  maintain  insurance  for  the  kinds  of  risks  for which
  insurance is authorized pursuant to paragraph three of subsection (a) of
  section one thousand one hundred thirteen of the insurance law.
(b) Notwithstanding any other provision of law to the contrary,  where
  a  municipal corporation has previously established a reserve fund under
  another provision of law for a type of risk for which  expenditures  may
  be   made  under  paragraph  (a)  of  this  subdivision,  the  municipal
  corporation may, by resolution, discontinue such other reserve fund  and
  transfer  any  unexpended  balance to the reserve fund established under
  this section; provided, however, that  to  the  extent  such  unexpended
  balance  is  subject  to any liabilities incurred or accrued against the
  other reserve fund, any unexpended balances so transferred shall only be
  used for such incurred or  accrued  liabilities  including  expenses  in
  connection  therewith.  Prior to the discontinuance of the other reserve
  fund, the fiscal and legal officers of the municipal  corporation  shall
  certify  to the governing board thereof the amount that may be necessary
  to satisfy all liabilities incurred or accrued against it.
3. There may be paid into such fund:
a. Such amounts as may be provided by budgetary appropriations;
b.  Amounts  from  any  other  fund  authorized  by  this  chapter  by
  resolution subject to permissive referendum; and
c. Such other funds as may be legally appropriated.
4.  The  amount  paid  into such fund during any fiscal year shall not
  exceed the greater of thirty-three thousand dollars or five  per  centum
  of the total budget for such fiscal year.
5.  The  moneys  in  such  fund  shall be deposited and secured in the
  manner provided by section ten of this article. The governing board,  or
  the chief fiscal officer of such municipal corporation, if the governing
  board  shall  delegate  such  duty to him, may invest the moneys in such
  fund in the manner provided by  section  eleven  of  this  article.  Any

  interest  earned  or  capital gain realized on the money so deposited or
  invested shall accrue to and become part of such fund.
6.  The  chief fiscal officer shall account for this fund separate and
  apart from all other funds of the municipal corporation. Such accounting
  shall show: the source, date and amount of each sum paid into the  fund;
  the interest earned by such fund; capital gains or losses resulting from
  the  sale  of investments of this fund; the order, purpose thereof, date
  and amount of each payment from this  fund;  the  assets  of  the  fund,
  indicating  cash balance and a schedule of investments. The chief fiscal
  officer, within sixty days of the end of each fiscal year, shall furnish
  a detailed report of the operation and condition of  this  fund  to  the
  governing  board.  The  chief  fiscal officer shall also keep a separate
  account for each kind of risk funded pursuant to subdivision two of this
  section.
7. Notwithstanding any provision of law  to  the  contrary,  municipal
  corporations  shall  not  have the power to enter into agreements, among
  themselves or one for the other, to pool their reserve fund  established
  pursuant  to  subdivision  two  of  this  section  for  the  payment  of
  judgments, actions and claims.
8. Any action  or  claim  shall  be  compromised  or  settled  by  the
  governing  board,  officer  or  employee  of  the  municipal corporation
  authorized to settle or compromise actions or claims on  behalf  of  the
  municipal corporation.
9. An expenditure may be made from this fund for the payment of all or
  part of the cost, including interest, of:
a. Judgments;
b.  Actions  that  have been compromised or settled and that have been
  approved by the court in which the action or proceeding is pending;
c. Claims that have been settled or compromised  and  that  have  been
  approved  by  a justice of the supreme court of the judicial district in
  which the municipal corporation is located;
d. The uninsured  portion  of  any  loss  to  property  owned  by  the
  municipal  corporation  if  such  loss  arises  out  of  a  kind of risk
  described in subdivision two of this section.
e. Expert or professional services rendered  in  connection  with  the
  investigation, adjustment or settlement of claims, actions or judgments.
10. The order of the court or the justice approving such settlement or
  compromise  may  be granted upon motion of the body, officer or employee
  of the municipal corporation  authorized  to  do  so,  supported  by  an
  affidavit  setting  forth  the  cause  of  action  or  claim against the
  municipal corporation and also such other information which, in  its  or
  his   opinion,  will  enable  the  court  or  justice  to  arrive  at  a
  determination that such compromise or settlement is just, reasonable and
  to the interest of the municipal  corporation.  Such  body,  officer  or
  employee  may  also present the affidavit of other persons in support of
  such motion. The court or the justice, in order  to  arrive  at  such  a
  determination,  may  require  such  body, officer or employee to present
  additional information by a supplementary affidavit or affidavits or may
  require  other  persons  to  present  additional  information  by  their
  affidavits.
11. Notwithstanding subdivisions eight and nine of this section or any
  other  provision  of  law  to  the  contrary,  the governing body of any
  municipal corporation may,  without  judicial  approval,  compromise  or
  settle  any action or claim and make an expenditure from this fund where
  the amount of such settlement or compromise does not exceed  twenty-five
  thousand dollars.
12.  The  members  of  the  governing  board  shall  be  guilty  of  a
  misdemeanor if they:

a. Authorize a withdrawal from this fund for  any  purpose  except  as
  provided in this section; or
b.  Expend any money withdrawn from this fund for a purpose other than
  as provided in this section.
13. If,  after  the  establishment  of  such  fund,  the  municipality
  determines  that  such fund is no longer needed, the moneys remaining in
  such fund may be transferred to any other reserve fund of the  municipal
  corporation authorized by this chapter that is comprised of moneys which
  were  raised  on  the  same  tax  base as the moneys in the reserve fund
  established under this section or section thirty-six  hundred  fifty-one
  of  the  education  law, only to the extent that the moneys in this fund
  shall exceed the sum sufficient  to  pay  all  liabilities  incurred  or
  accrued against it. Prior to the discontinuance of such fund, the fiscal
  and  legal  officers  of such municipal corporation shall certify to the
  governing board thereof the amount that may be necessary  to  retain  in
  such  fund to satisfy all liabilities incurred or accrued against it and
  such sum shall be retained in the fund for payment of  such  amounts  or
  until later certified that such funds are no longer needed.