Ariz. City Threatening to Shut Down Boating Company over Inadequate Insurance

The city of Tempe, Ariz., is threatening to shut down a boating company operating at Tempe Town Lake without enough insurance.

Rio Lago Cruise Company has carried $1 million of insurance for the past two years despite a contract mandating the company carry at least $5 million.

The city plans on sending the rental company a letter this week notifying it to comply within 60 days.

If it doesn’t, Tempe officials say they could close down the company and begin looking for a new vendor.

Donald Karner, a partner with Rio Lago, said he is negotiating with the city to reduce the amount of coverage because the threat of terrorism has caused insurance rates to skyrocket.

Rio Lago had signed a contract with the city in 1999, becoming the lake’s largest vendor and only boat rental business on the water.

City records show that Rio Lago followed that contract until November 2002 when the rental company lowered insurance coverage without giving 60 days notice.

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