The spate of suits and countersuits arising from the bitter controversy over alleged misconduct in Alexandria's Public Safety Department could damage the city's "insurability" at a time when two of its major insurance contracts are out for bids, an official of one insurance company has warned.

The warning came in a letter from Betsy Headd, a claims analyst with Inapro, a New York-based insurance carrier that has a public official liability policy with the city. Saying the current litigation has been "reduced to the level of mudslinging," Headd complained that "a case of this nature seriously jeopardizes the possibility of buying future insurance. There is a possibility that no carrier will be interested in insuring such a risk."

Headd made her comments in a letter sent May 6 to Public Safety Director Charles T. Strobel, City Council member Donald C. Casey and City Attorney Cyril D. Calley.

Inapro informed the city in March that it will not renew the city's present policy covering liability for city employes when it expires July 1, because the company has decided not to offer that type of insurance any longer, company officials said.

In addition, the company covering law enforcement liability, Imperial Casualty and Indemnity, has told the city it will not provide zero-deductible coverage for the Public Safety Department in any future contract. City officials say this is a matter of company policy. Imperial's policy also expires July 1.

City officials said, however, that they do not expect any problems in getting bids for the new policies. "I believe we will receive bids on the deadline of June 21," said Calley.

One of the city's brokers, P. Jefferson Place, said he is negotiating bids now to replace the Inapro policy and that "one market has expressed strong interest."

Place added that the city also is shopping for new policies at a time when there is "a very difficult, tight insurance market." He said this was a bigger problem than the current litigation for Alexandria.

Legal bills connected with a special grand jury investigation earlier this year into allegations of misconduct in the city police department already total more than the $10,000 deductible the city must pay under its Inapro policy, according to Calley. The city attorney said he considers the $10,000 "as gone."

Since Strobel, former city manager Douglas Harman and police Lt. John R. Stedman were cleared of any wrongdoing, the City Council has the discretion to pick up their legal bills. Harman's lawyer was paid about $2,000.

Strobel's lawyer, David A. Fiske, has sent the City Council a bill for $8,000, and Stedman's lawyer, Philip J. Hirschkop, is charging $5,400. The council has not yet agreed to pay the two bills.

Other legal bills are piling up in court cases stemming from the controversy. The City Council recently rejected settlement offers from both sides in two of those cases. None of the parties has agreed to discuss details of the offers, but sources said the amount of money involved is the main problem.

Two police officers and a former detective have sued Strobel and the city for $850,000 in federal court alleging that their civil rights were violated by the way Strobel runs the police department. Strobel countersued the trio in circuit court for defamation, asking $2 million in damages.

Because the defendants in each suit are city employes or were at the time of the alleged violation, Inapro has hired lawyers for them, putting the company in the position of defending both sides in the controversy. Inapro has agreed to cover the city's legal costs for the next two years in suits filed before the July 1 expiration of its policy, Calley said.

If there is no out-of-court settlement in the litigation, such a procedure is likely to be one of Mayor-elect James P. Moran's first tasks when he takes over July 1.

"I would like to have everybody come into the conference room and have no one leave until it's all hammered out, but each day it gets harder and harder to do that . . . there is too much hard feeling," Moran said recently.

Moran said he also is concerned about setting a precedent of settlements involving large sums of money for court cases in which some city employes sue others. By settling, "we're inviting any other city employe to get into a legal situation," he said.

"I hate to buy them off, it's such a lot of money," he said. CAPTION: Picture 1, Charles T. Strobel . . . legal bill for $8,000 ; Picture 2, Cyril D. Calley . . . $10,000 deductible is gone