Having saved more than $260,000 on its insurance bill, Yorktown, N.Y., officials have decided to return the savings to taxpayers.

The town board cut the 2.6% tax increase it approved weeks ago down to 2%, according to The Journal News (White Plains, N.Y.), using some of the money it saved under a new insurance agreement.

The town recently awarded a $440,285 insurance coverage bid to San Antonio-based Trident Insurance Group, the first time in 14 years it has sought a new provider. This year, the town paid more than $701,000 for liability, property, umbrella and other coverage, according to the report.

The majority of the savings comes from an anticipated drop in insurance rates reflected in the 2010 adopted budget.  When the winning bid from Trident was $92,000 under budget, town officials decided to reopen the budget and return the savings to residents.

The town’s longtime insurance broker, Robert Spadaccia, who also submitted the winning bid, said most Westchester County municipalities saw 35% to 40% savings on insurance this year without seeking competitive bids, according to The Journal News.

The bid process did allow him to review every detail of the town’s coverage, Spadaccia said, and he liked that Trident provided free employee safety training and carried no deductible for automobile accidents.

The move was not without controversy, however, as some town leaders had reservations about using the money for a purpose other than insurance.