Insuring your camp's buildings and contents.Buying proper insurance to protect the full value of your camp buildings and contents is fundamental to good risk management. However, many camps overlook this issue and run the risk of being incompletely reimbursed for damages under their insurance policies. Why is this issue missed by many camp directors in the risk management process? One reason is that most people tend to respond only to the most visible items the ones crying out for attention at any given time. Some of these issues are urgent and important. But sometimes the apparently urgent and important items obscure other equally important issues. Property insurance value is a risk area that doesn't cry out for attention but that requires attention and diligence. Inflation is another reason camps often neglect property value. Unless your camp has recently undergone renovation or new construction, you may be unaware of the current costs of labor and material. In addition, camp directors may not understand certain terms or they may be confused about how insurance values are determined. Actual cash value Actual cash value is an insurance valuation method that starts with the replacement value of a building or its contents. Then, the insurance company subtracts the item's depreciation. Deprecation dep·re·cate tr.v. de·pre·cat·ed, de·pre·cat·ing, de·pre·cates 1. To express disapproval of; deplore. 2. To belittle; depreciate. is based upon the item's age and condition, which can sometimes be complicated to determine. Most older camp buildings are fully depreciated Fully depreciated An asset that has already been charged with the maximum amount of depreciation allowed by the IRS for accounting purposes. fully depreciated Of or relating to a fixed asset that has been depreciated to a book value of zero. by accounting definitions, but not by insurance definitions. Consequently, even though a building is 50 years old, it may not be depreciated Depreciated may refer to:
Factors that reduce depreciation include proper maintenance, renovation, and repair practices. While there is some subjectivity in determining depreciation and actual cash value, detailed records of repair, maintenance, and improvements will help you negotiate successfully on this issue. Replacement cost valuation Replacement cost valuation, in contrast, theoretically replaces damaged property with material of like kind and quality, without deduction for depreciation. In essence, it replaces the old with new. Replacement cost settlements are complicated by the fact that some camp buildings are constructed from materials that are no longer available. Consequences of too little insurance to value Depending on how your property insurance is set up, you might incur a penalty on a loss if you are caught short on insurance to value. Under these circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or you might be paid a proportion of your total loss. This amount usually bears a relationship to the amount of insurance you had versus the amount you should have carried. If you plan to rebuild and have not planned properly to secure full value for your loss, you might be forced to borrow money or spend money you have set aside for other purposes. This situation could have severe financial implications for your business and your future. Avoiding surprises What should you do to avoid property insurance valuation surprises? Obtain estimates You can obtain estimates of construction costs to replace camp buildings from local building contractors building contractor n → contratista m/f de obras building contractor n → entrepreneur m (en bâtiment) building contractor or real estate appraisers. Be cautious if you do use professional appraisers. The commercial appraisal systems generally used today do not have information that translates completely to camp buildings, especially unique buildings. Consequently, estimates of insurable in·sure v. in·sured, in·sur·ing, in·sures v.tr. 1. a. To provide or arrange insurance for: a company that insures homeowners and businesses. b. values may be misstated. Valuation estimates prepared through these professional appraisal sources should be checked against common sense and, when available, recent actual replacement cost expenditures. Your insurance company can help you test the accuracy of these estimates. Insure personal property values Markel Insurance Company's claims department consistently finds that camps underestimate the value of their personal property. Resident camps should consider a limit of 25 percent of their real property (buildings) insurance for personal property. Day camps should consider between 15 to 20 percent of their real property limit for contents. Remember, these figures are not absolutes. Consider creating a personal property inventory and ask your suppliers to help develop current values for your personal property. You may be surprised at what you discover. Buy the right amount of insurance Buy an appropriate amount of insurance to comply with the provisions of your property insurance policy. Ask your agent to explain the coinsurance A provision of an insurance policy that provides that the insurance company and the insured will apportion between them any loss covered by the policy according to a fixed percentage of the value for which the property, or the person, is insured. clause and its relationship to your total property insurance limit. On subsequent renewals of your property insurance, increase the values slightly to keep pace with inflation, about 4 percent today. Obviously, if you add new buildings or make additions or repairs to existing buildings, you should change your property values. Renovations do not necessarily directly increase the value of your buildings. It is a good idea to ask your contractor for advice about added value Added value in financial analysis of shares is to be distinguished from value added. Used as a measure of shareholder value, calculated using the formula:
Keep information in a safe place Keep the square footage, a brief description, and pictures of each building in a safe place. You can also videotape videotape Magnetic tape used to record visual images and sound, or the recording itself. There are two types of videotape recorders, the transverse (or quad) and the helical. your facilities while describing each building and its content. By preserving evidence of your facilities, you will make it easier to prove your loss if your property is damaged. Keep information current Once you have established proper insurance to value, commit to keeping the values up to date. Preserving the financial integrity of your camp through proper risk management requires teamwork (product, software, tool) Teamwork - A SASD tool from Sterling Software, formerly CADRE Technologies, which supports the Shlaer/Mellor Object-Oriented method and the Yourdon-DeMarco, Hatley-Pirbhai, Constantine and Buhr notations. and coordination. Enlist en·list v. en·list·ed, en·list·ing, en·lists v.tr. 1. To engage (persons or a person) for service in the armed forces. 2. To engage the support or cooperation of. v. your insurance agent, insurance consultant, accountant, real estate appraiser A person selected or appointed by a competent authority or an interested party to evaluate the financial worth of property. Appraisers are frequently appointed in probate and condemnation proceedings and are also used by banks and real estate concerns to determine the market , suppliers, and others. Buy adequate insurance to cover full values. Don't risk a lot - the financial integrity of your camp - for a little - the additional property insurance premium. Ed Schirick is senior vice president of the Markel Insurance Company camp and youth recreation division. He is a charted property casualty underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. and a certified insurance counselor In the United States, Certified Insurance Counselor (CIC) is an insurance agent professional certification designation. The CIC certification program was started by the National Alliance for Insurance Education & Research in Austin, Texas in 1969. . Send your risk management inquiries to: Ed Schirick, c/o Markel Insurance Company, 4600 Cox Rd., Glen Allen Glen Allen is the name of several places in the United States of America:
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