School Districts, Blanket Limits, and Margin Clauses | Making sense of your district’s insurance plan
Do you know how your properties will be covered?
By Douglas Cook, CIC, CPA
For the average business, property coverage can be relatively straightforward. For a school district with multiple properties, there are a few more factors and options to consider.
With standard property coverage, our clients can insure their buildings for the amount they would cost to repair or replace. Policyholders do this by having an assessor or another third party take a look and determine how much the building would cost to replace should something catastrophic happen to it. Then they insure it on a property policy for that amount.
Sometimes that estimate (and therefore, the policy limit) can be inaccurate, particularly if the assessment was done a long time ago or the economic conditions have changed. For example, economic conditions after a hurricane change rapidly in hardest hit areas. The cost of materials rises significantly there simply because of basic supply and demand. That’s not even mentioning inflation, old/new materials, and rising labor costs.
Because of this danger, school districts with lots of buildings that have such important impacts on their communities in times of tragedy may consider looking into blanket coverage. Blanket coverage involves gathering the values of each building on the policy and having an agent request that the carrier add blanket coverage with an endorsement. The endorsement is a statement that establishes and describes the blanket coverage terms and conditions. Usually that means if anything were to happen to any one of its buildings, the school district would be completely covered regardless of inflation, market conditions and other factors, up to the blanket limit.
Those considering blanket coverage should also be aware of margin clauses and how those would impact their coverage limit. Margin clauses put a limit on how much of the total value of the blanket coverage can apply to any one building, and can build in additional coverage at the same time.
Blanket coverage can also be applied to both the building and contents, either as a combined limit or separately. However, for blanket coverage to apply to a building or contents these must be list and clearly described on the statement of values before the loss – otherwise they won’t be covered by the blanket. Simply having blanket coverage does not automatically cover the building or building’s contents.
If you have any questions on blanket limits, margin clauses or your school district’s property coverage, give OneGroup a call