Reviewing Your Property Casualty Insurance Premiums
Vol. 6 No. 6
Risk management is more than simply having any property and casualty insurance. Protecting your school and its students starts with your general knowledge of what’s protected and what’s vulnerable when—not if—loss occurs when considering policies.
However, insurance policies are not easy reading for the less experienced. To help you manage your school’s risks, here are some points you should review in your school’s policies.
Specific Insurance Coverage Policy Review Items Liability
Review your policy for the audit practices of the insurance company. Insurance policies charge a premium based on the amount of exposure. For example, Workers' Compensation is based on Payroll; General Liability is based on the Average Daily Attendance and Number of Volunteers; Employment Practices Liability is based on the number of faculty and staff; Public Area Premises Liability is based on square footage or revenues; and Products Liability is based on sales revenues.
Your policy should be reviewed so that the property limits are adequate and appropriate for the claim adjustment valuation method. Undervaluation of property could cause a co-insurance adjustment, which causes the claim damages to be shared between the insurer and the insured. Review your coverage limits for Business Interruption, Extra Expense, Flood, Earthquake, Inland Marine, Fine Arts, Musical Instruments, Fidelity, Fiduciary and Crime.
You should also review your savings in premium for using higher deductibles. The increased deductible premium savings should pay for the difference in deductibles within five years.
Look for credits that reflect good loss-control measures, such as alarm systems, fire sprinkler systems, fencing, and lighting. These can provide premium rating credits.
Make sure your list of owned vehicles and drivers are up-to-date. Review usage of vehicles, garage location, and radius of operations, as well as the value of covered vehicles and maintenance schedules. The use of older vehicles is an increase in risk and can warrant a higher premium.
You should also have general knowledge of the non-owned auto list, the cost of hired vehicles, and the value of vehicles for physical damage coverage. Review coverage for personal use of business vehicles and authorized drivers.
Review your workers' compensation rating, history of claims over the past 5 years, and monitor any open claims for accurate claims adjusting and reserves practices.
Review your policy for appropriate coverage, which should include directors’ and officers’ errors and omissions; educators’ legal liability; employment practices liability; and fiduciary coverage. Review the policy’s claims reporting procedures, retro date on claims made coverage, claims adjusting procedures, optional higher retention/deductibles, and defense costs coverage.
The policy application should be reviewed and signed by the Board President.
Reading your property and casualty policy’s fine print can be overwhelming. If you find yourself intimidated by the jargon while reviewing your policy, schedule extra time with your insurance broker during renewal season to review your school’s policies together. Remember, the first step in managing your school’s risks is awareness.
Additional ISM resources:
The Source for Trustees Vol. 10 No. 4 Finding Savings in Your Health Insurance Plans
Additional ISM resources for Gold Consortium members:
I&P Vol. 34 No. 5 Reducing Insurance Costs: Property and Casualty Insurance
I&P Vol. 37 No. 14 Facilities Rentals Yield Benefits—As Long As You Cover Costs
I&P Vol. 40 No. 7 The Board and Employment Practices Liability Insurance
I&P Vol. 35 No. 9 How to Scrutinize an Insurance Policy