Navigating through the numerous obstacles of a property insurance claim can be a daunting task, especially in an environment as complex and regulated as a college or university campus. Being aware of common obstacles as well as those unique to higher education, and having a claims management plan in place from the onset will lead to a faster and more comprehensive recovery.
Initiating the Claim
An institution’s initial response after an event, whether it is a natural disaster such as a tornado or flood, or more commonly, an event like a fire or mechanical failure is critical. Guidelines to consider:
- Contact the agent or broker – Decide whether to file a claim. Consider probable factors in a university risk management plan such as high self-insurance exposure and deductibles, multiple policies, and margin clauses limiting agreed value blanket policies, as well as numerous contractual policy obligations and liability exposure.
- Request in writing a certified copy of the insurance policy – Get to know every standard, optional, additional and hidden coverage, as well as any exclusions and financial limitations and how they may affect your claim recovery strategy. The policy is the roadmap used to navigate the entire claims process.
- Assemble a Claims Management Team – Comprised of senior campus leadership and members of Risk Management, Health & Safety, Legal, Campus Security, Facilities Management and Information Technology, all information should flow through one designated leader and the team should meet routinely to ensure a consistent, coordinated approach. A mismanaged insurance claim could negatively impact college funding sources, future enrollment, and key faculty and staff retention.
- Initiate a Public Relations Program – Communicate to students, faculty, staff, parents, alumni, banks, donors, vendors, suppliers, funding sources, news outlets, and local community contacts appropriate developments regarding the claim.
- Identify ownership or responsibility for damaged property – In a campus setting, there is property owned, leased or controlled by the institution, students, faculty, staff, vendors, research partners and others, with potentially overlapping policies to navigate.
- Mitigate Damages – Take reasonable actions to preserve and protect all insured property, with a focus on campus safety and continuity of regular campus business. Mitigation may include water and mold remediation, emergency board up, demolition or shoring up of damaged structures, and protecting hazardous areas with signage and security personnel.
- Initiate an Emergency Plan – If the event is widespread, you may be required to address temporary student housing, classrooms, and essential services such as medical and dining. The insurance policy may contain extra expense and business interruption provisions; both are funding sources that expedite the recovery and mitigate financial loss, albeit with specific requirements and limitations. Work closely with the insurance company and broker to ensure the proper allocation of funds.
Navigating the Claim
After the claim has been filed, the team put in place, and the emergency response coordinated, the waters may get choppy and obstacles may begin to multiply. This is the result of the institution having to balance ongoing day-to-day business with issues such as damage assessment, asset valuation, cash flow management, student and faculty service interruptions, oversight from governing bodies, bids, permits, debris removal, and other post-disaster issues. Navigational tools to consider:
- Properly value campus assets – Colleges tend to abound with specialized buildings and equipment, antiques, and high-tech science and computer laboratories, and have unique valuation challenges such as non-reproducible research, intellectual property, branded items, and libraries with rare books, microfilm, and microfiche requiring environmental preservation. Negotiations regarding replacement cost and depreciation (money the insurance company will withhold) will profoundly impact the recovery. Obtain your own expert opinions. The insurance company will often hire outside experts such as engineers, equipment specialists, architects and accountants; the institution should engage consultants and valuation experts who can independently offer opinions from the institution’s perspective.
- Document everything – We cannot stress enough how vital proactively assembling, organizing, and presenting all necessary claim support documentation is, as the responsibility of proving damages solely rests with the institution. Put everything in writing and take numerous photographs: a picture says a thousand words, therefore hundreds of labeled, organized and sourced pictures both pre- and post-event will speak volumes.
- Give special consideration to IT – Recovering electronic information, hardware and software is essential to campus business, and may require restoration of back-up data.
- Manage claim finances – Create a separate general ledger account to track all claim-related costs. Work within your policy provisions to account for continuation of ordinary payroll and related continuing expenses if business is disrupted. Closely monitor all subcontractors to ensure the work being completed is aligned with the scope of damages and repair amounts agreed upon.
- Be aware of applicable building codes and other standards – Historic campus buildings may be picturesque, but if damaged, these same buildings may have to be brought up to current building codes, which can be an expensive proposition. Additionally, governing bodies such as OSHA, ADA, NIH, DEC, and USDA may implement standards and reporting or inspection criteria concerning asbestos, lead paint, accessibility, debris disposal, etc. Coverage may be available, but often contains restrictions and requires negotiation and planning.
- Research non-insurance funding sources – Depending on the type and severity of damage, there may be alternate funding sources for recovery for any under- or unfunded portions of your claim. Grants, low interest loan programs, and FEMA funding (if damages result from a declared disaster) may be available. Coordinating the insurance claim with other funding sources requires careful attention and specialized programmatic knowledge.
Setting a Course Now for Smoother Future Sailing
Begin planning today to avoid many of the issues that may delay or diminish your ability to fully recover from a property insurance claim. A few tips to consider:
- Have a Claims Management Team and Emergency Management Plan in place now, with regularly scheduled meetings to account for changes to the campus community.
- Evaluate your policy and review your broker relationship every two years to ensure your coverage and level of attention reflects any fluctuations in enrollment, expansion, inflation, etc.
- Pre-screen the services of mitigation companies, emergency service firms, professional loss consultants, valuation experts, and related professionals whose support you may consider enlisting in the event of a disaster.
- Compile documentation, with photographs, on all campus structures and property, update frequently, and keep a copy stored off site.
The volume of information that must be managed when initiating and navigating a property insurance claim for a higher learning facility can be overwhelming. These guidelines can help your higher learning institution in formulating or updating your claims management plan in advance of an event that stretches your available resources.
—Gregory P. Raab is a licensed public adjuster and Manager of Integrated Services at Adjusters International, Inc, a leading disaster recovery consulting organization.