Budget Box: Property and Casualty Insurance
One of the most important responsibilities for The Landings Association is ensuring we have proper policies and coverages in place should an accident or property damage occur. That coverage proved invaluable during 2016’s Hurricane Matthew, which destroyed Delegal Creek Marina’s floating docks.
Working closely with our insurance brokers from USI, we successfully navigated the claims process, resulting in a total of $1.3 million toward the replacement of the docks as well as lost revenue during the rebuild.
Such piece of mind is not, cheap, though. For the past six years, the average annual cost for property and casualty insurance has been $550,000. This expense is budgeted in The Landings Association’s operating fund.
How does the Association determine appropriate types of coverages, amounts, and deductibles? We have a dedicated Insurance Committee composed of insurance professionals that works with staff and our brokers. Each year, this committee reviews changes in the insurance products, such as new policy options (like cyber claims), the impact on premiums from taking higher or lower deductibles, changes in values in insured properties, and other variables. This all is balanced against the risk of self-insuring (or taking higher deductibles) vs. the Association’s ability to cover potential losses. In other words, having the right insurance policies in place protects the community from unexpected, and unbudgeted, expenses.
Once the Insurance Committee finalizes and votes on its recommended coverages for the next year, the Association’s Finance Committee and Board of Directors do the same. The total cost for the next 12 months (starting April 1, when most policies renew) will be approximately $590,000.
For reference, here are the various types of coverages for the Association: commercial property, commercial general liability, commercial inland marine, commercial auto, umbrella, commercial crime/fiduciary liability, directors and officers, employee practices liability, boiler and machinery, storage tank liability, fire, flood, cyber liability, liquor liability, drones, and workers compensation.