Lessons Learned from the 2007 Insurance Roundtable Discussion, Part 2: Hedging Your Bets — When Adequate Is Not Enough

by Gaetana De Angelo

Will the insurance coverage you have purchased be adequate enough to protect your assets in the event of a loss? If you suffer a loss, are you willing to settle for adequate instead of whole—especially if the loss is your dining hall or camper cabins? How long has it been since you reviewed your coverage with your insurer? Have you built new buildings, renovated, updated old buildings, or replaced your pool with a new one? Each year as you prepare for your insurance renewal, you should be asking yourself these questions.

The American Camp Association's® (ACA) National Insurance Committee hosts an annual roundtable discussion with our insurance business partners and other insurers of camps. The committee has a charge to help educate members in areas related to risk management, and the roundtable provides a starting point for many issues. This article—Part 2 of lessons learned from this important roundtable discussion—features the importance of reviewing your insurance portfolio—before a loss. This review could mean the difference between being able to continue delivering the program you want to offer and delivering what you can with what you have left.

Can You Afford to Be Underinsured?

Sometimes we delude ourselves by thinking that if we purchase insurance it will make us whole again in the event of a loss – and that is what it could and should do—if you have the right coverage. But making sure you have enough coverage is just as much your responsibility as it is your insurance agent or broker. Your agent or broker generally relies on you to give him the information needed to create an insurance package suitable to your needs; unfortunately insurance is an area in which many of us are willing to hedge our bets. Insurance can be expensive if you own a large number of assets or offer high risk programs—but not enough or not having the right coverage can be exponentially more expensive. This basic primer of some coverage available for purchase and some suggestions can help you control potential losses. You should consult with your agent or broker to make sure that you have the coverage you need.

Property, Business Interruption, and Extra Expense Coverage

Hurricanes, raging wildfires, paralyzing snow storms, floods, severe droughts, septic systems backing up, mold, and power losses are just a few of the threats to our facilities and infrastructures. Hurricane Katrina and the wildfires last year were devastating events that caught many camp owners off guard and underinsured. In come cases, along with the property loss came the complete loss of use of their camps. What happens if your camp is not operational for a month or an entire season? How do you cover your expenses and keep your full-time staff on the payroll without an income source?

Property coverage under the basic form covers fire, lightning, windstorm, hail, smoke, sprinkler leakage, vandalism, and more. These are some of the more common losses that camps experience. The broad form coverage includes all that the basic form covers along with damage from falling objects, weight of ice or snow, and water damage. Special form includes losses resulting from theft. Coverage can be further broadened by adding endorsements to the special form. It is very important to read your entire policy as the basic form will include exclusions—some of which can be added back through the broader forms of coverage. Business interruption coverage and extra expense coverage are just two broader forms that can be added by endorsement to the special form.

Business interruption and extra expense endorsements would be used to help keep your camp in operation if damage covered by your policy occurs to your property. This could include such things as loss of use because of property damage, expenses related to hiring extra staff for short-term emergency needs, excess cost of building materials because of supply shortages, building code changes, etc. Not all expenses may be covered, and all potential losses should be considered and discussed with your agent or broker to help ensure that you have broad enough coverage. These special endorsements are often overlooked by camp owners and directors.

Flood and Earthquake Coverage

Other special coverage may be available for flooding and earthquake damage. If you live in a flood zone, you may already have purchased flood insurance. If you have been the owner of your property for a long time and, at the time of purchase it was not considered in a flood zone, you may want to do some research to be sure that the flood risk has not changed over the years. Have you seen growth in the area around your property with new homes, businesses, or roads? Extensive development in what was once considered a nonflood zone could change the conditions for potential flooding. If you live in an area that is susceptible to earthquakes, you may want to consider that coverage, also.

A Special Note About Fire Prevention

Coverage for fire damage can replace your buildings, but it can’t replace your forest in the event of a forest fire. While the devastating wild fires of the past few years were at times almost unstoppable by human force, there are ways to help protect your property in the event of a fire—such as selecting building materials that do not burn easily and practicing basic forest management. When building new structures or renovating old ones, consider using some of the available building products that are better able to withstand fire and other natural elements.

Metal roofs and masonry structures help to retard and slow the spread of fire from building to building. If your local fire department response time is more than fifteen minutes, consider having your maintenance staff trained in basic fire fighting and installing hydrants around the camp in key locations. If you own a lake, have a pump installed in it so that the fire department can connect and pump water if needed. Having a basic forest management program will also help to reduce or slow the spread of fire. Trees and growth close to your buildings and along your roadways should be kept trimmed, and vines should be discouraged. Have a registered forester visit your property to give you an assessment of your forest’s health and ability to withstand a fire—and implement any recommendations.

There is a wide range of insurance coverage available for purchase. It can be an overwhelming task trying to ensure that you have the right coverage for your program and business. It is up to you to partner with your agent or broker to discuss potential for loss and some of the optional coverage available. Special liability coverage is available, including cyber liability coverage for protection against trademark infringement and secure transference of credit card information or Director’s and Officer’s Liability (D & O) coverage. You hold the key to the continuance of your camp and program in the event of a loss. Insurance is one of your vehicles—put the key in the ignition, and press the gas.

The insurance committee is pleased to provide members with easily understood and useful educational resources related to risk management and insurance. Questions related to your individual insurance coverage should be directed to your broker or agent. However, if you have an insurance-related question or concern that you would like to dialogue about with an impartial party, feel free to contact one of the insurance committee members. Visit www.ACAcamps.org/volunteers/insurance for committee contact information. For a listing of ACA partners and business affiliates in the insurance industry and other helpful risk management and insurance information, go to www.ACAcamps.org/vendors.

Originally published in the 2007 Fall issue of The CampLine.