Camp Insurance 101: Understanding the Fundamentals of a Camp Insurance Program

by Ian Garner

Camp directors may not always be aware of all the exposures their businesses face. Working with children presents unmatched rewards, but also creates unique risks from the insurance perspective. While camp directors or owners should consult with qualified insurance professionals to determine the protection their facilities need, they don’t have to be experts to understand the fundamentals of a good insurance program. The following short course describes the purpose and characteristics of a well-rounded insurance plan, giving you information about different types of coverage and the protection they can provide.

Lesson 1: Coverage

Insurance is available to cover many areas of your camp’s operation.

  • Liability coverage
    While good liability coverage is essential for every business, child-related businesses need specialized, high quality protection. Children’s camps need coverage that reflects their unique risks, exposures, and operations.

    • General liability provides payment for sums you become legally obligated to pay because of damage to property of others or injuries to others that arise out of your negligence.

    • Umbrella liability offers extra liability insurance above your primary liability and auto policies. This coverage is designed to protect you and your assets in the event of a catastrophic accident.

    • Sexual abuse liability will protect you from allegations of sexual abuse due to negligence in your hiring, training, or supervisory practices. Defense costs should also be covered above the policy limit, which means that you will be able to defend your reputation vigorously against these damaging assertions.

    • Child abduction liability provides payment for reasonable and necessary expenses incurred by the camp and a child’s parents following the abduction of a child from camp. Examples of covered expenses should include:

      • fees and expenses of investigative services
      • rewards leading to the recovery of the child
      • public relations and publicity costs
      • fees of independent forensic analysts
      • travel expenses and salary lost by parents during the search for a child
      • rest, rehabilitation, and psychiatric expenses for the child and immediate family members
      • medical services and hospitalization for a recovered child
         
    • Key employee replacement coverage helps you get back to business as quickly as possible following the loss of a key staff member. The camping business is often a family affair, staffed by people who have made a lifelong commitment to their camp and the children in their care. When a facility experiences the death or incapacity of one of its key staff members, it can have a devastating effect on the camp’s operations. Key employee replacement coverage can’t ease the emotional effects of the situation, but it can help the camp get back to business as quickly as possible by providing the funds for a temporary replacement and to find and qualify a permanent replacement.
    • Directors’ and officers’ liability coverage provides individual protection for camp directors and officers against wrongful act lawsuits brought by customers, competitors, creditors, and others. Camp directors and officers make business decisions every day. However, if problems result from those decisions, the facility’s general liability coverage may not protect these professionals. Courts continue to debate whether “detrimental management decisions” can cause injury as defined by most general liability policies. The professionals who manage a camp could find themselves defending their decisions in court.

    • Employment practices liability protects against the threats that employers face, such as allegations of sexual harassment, wrongful termination, and employment discrimination. In this day and age, this coverage has become more and more of a hot button for employers in all industries, especially in the social services realm.

  • Property coverage

    • Property coverage covers damage to buildings, personal property, equipment, and contents caused by specific perils, such as fire, lightning, explosions, windstorms and hail, smoke, aircraft or vehicles, vandalism, and more, as named in the policy.

    • Business income insurance covers the cost of normal business operations due to a forced shutdown of the facility. Fees lost from the unexpected shutdown of a camp because of property damage could put a significant strain on the financial resources of even the best-managed facility. The uninterrupted operation of facilities is a top priority for camp owners and that is why comprehensive and affordable property and business income coverage is so important.

  • Other types of coverage

    • Crime coverage protects you against the potential dishonest acts of your employees who handle checks, money, merchandise, or equipment at the facility or in your office, as well as theft or burglary of money or securities.

    • Boiler and machinery coverage can add protection for operations from sudden and accidental breakdowns of equipment typically excluded from property policies.

    • Commercial automobile insurance covers owned, leased, non-owned, and hired automobiles, such as vans, pickups, and buses used at your facility.

    • Workers’ compensation is intended to pay employee medical expenses and lost wages that result from injuries sustained, arising out of, and in the course of employment at your camp. This insurance meets the employer’s responsibilities as defined by state law.

    • Accident medical coverage insures campers in your care against injuries sustained at your facility.

Lesson 2: How Camp Insurance Is Sold

Before you choose the method that’s best for you, it may be helpful to understand the differences between direct writers, insurance brokers, independent agents, and captive agents.

  • Direct Writer: A licensed insurance agent who is a direct employee of an insurance company and sells its products and services. Insurance companies are increasingly offering their products directly to the consumer.
     

  • Insurance Brokers: Brokers may place business with any admitted or state-licensed and approved insurance company and are not appointed by specific companies. The regulation of brokers varies by state, but they must be licensed.
     

  • Insurance Agents: Agents are licensed by the state and must be appointed by each insurance company they represent before placing business with that company. Agency appointments and licenses can be verified with your state Department of Insurance.
     

  • Captive Agents: Licensed agents who are appointed by only one insurance company and select coverages from that company’s portfolio to fit a customer’s need.

Lesson 3: Choosing an Insurance Company

Sometimes it seems like there are insurance companies everywhere — from small, local companies focused on one product or group of customers to huge, diverse organizations involved in everything from life insurance to real estate. Selecting an insurance provider can be an overwhelming task. Here are some tips to help you choose the insurance company that’s right for you.

  • Investigate your options
    Begin by investigating the companies and insurance programs currently available. Make certain you feel comfortable with the explanations and descriptions for each of the items that follow.

  • Look for experience
    Because the risks and exposures of children’s camps are so unique, finding an experienced insurance company is critical. You want a company that understands your business and is willing to partner with you over the long term. Many insurers enter the insurance market to take advantage of short-term opportunities to build premiums and exit the market when losses start to emerge.

  • Understand the quality and scope of the coverage offered
    No two camps are exactly alike, and a company offering cookie-cutter coverage is likely to leave you without the protection you need. There are companies that specialize in a particular type of insurance or a program of insurance with unique or specific coverage not found in a generic program.

Look for a total insurance program from a reputable insurer. Then ask about the coverages and address the specific risks and exposures you face, such as:

  • liability coverage for allegations of sexual abuse

  • property protection for items like playground equipment

  • liability protection for medical, counseling, and other professionals

  • protection from loss of business income due to food contamination or communicable disease

Compare limits of liability (that’s the maximum that your insurance policy will pay if a liability loss occurs), deductibles, exclusions, and other policy terms before making your final decision. These variables can have a significant impact on the price of your insurance program. Beware of insurers who offer coverage at deep discounts. This can be a signal that coverage is not as complete as it should be, that there is a corresponding lack of commitment to customer and claims service, or worse yet, that an insurer may be more susceptible to financial difficulties caused by unexpected claims.

  • Find out who will be handling claims and how
    Claims that involve children are among the most difficult and emotional claims to handle. So much can be at stake — your reputation, your business, and the trust you have so carefully built with children and parents. Many insurance companies employ claims management companies and other third parties to manage their customers’ claims. Sometimes, these companies lack the ability and motivation to properly represent a facility’s best interest. Therefore, ask who will be handling your claims.

  • Look for support with risk management and loss control
    Insurance is essential, but coverage alone is not enough. To be fully protected, you need to have sound safety and loss control programs in place. Find out how a prospective insurer will help you make your camp safer for the children in your care.

  • Check the financial stability of recommended carriers
    Financial stability is a key concern because you want your insurer to be able to pay claims promptly and completely. Fortunately, there are several sources available to find out about an insurer’s financial condition and claims paying ability:

    • A.M. Best Company, Inc. provides information about insurance companies and issues ratings based on a comprehensive annual analysis; Web site: www.ambest.com.

    • Duff and Phelps rates insurers’ claims paying ability; Web site: www.dcrco.com.

    • Standard and Poor’s provides an assessment of a company’s financial security; Web site: www.standardandpoors.com

Check these ratings for any prospective insurer, and be alert for qualifiers that might indicate an emerging, negative trend in an insurer’s financial stability.

The above definitions and tips have hopefully helped to clarify the fundamental components of a quality insurance program. Because it is just that — a program of insurance, not just a policy — coverage is just the start. Value-added services, such as risk management and loss control (i.e. newsletters, safety tips, training, and personalized consultations), and experienced and professional claims handling, are all just as important. Now, with a basic understanding of available coverages and possible insurance resources, you are equipped to begin your search for an insurance partner or to reevaluate your camp’s needs.

The relationships you build with your insurance partners are key to the successful implementation of a quality insurance program. As an advisor, a qualified insurance professional can recommend the best program for your facility based on your unique exposures. Therefore, the need for continuous communication, education, and evaluation is imperative to running a safe and successful business. After all, the quality of your insurance program is a reflection of the work you very proudly do every day.

Ian Garner is the national director of camp and youth relations at Markel Insurance Company in Glen Allen, Virginia. He has also been a camp director and ACA standards visitor. He currently serves on the board of the ACA Virginias Section.

Originally published in the 2001 July/August issue of Camping Magazine.

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