by Toni Shibayama
It is likely every GM of every Club in Southern California watched in horror as wildfires ravished through Altadena, leaving in it fiery wake rubble that once was the Altadena Town & Country Club. The fire displaced 120 employees, but the collateral damage was even worse; many of those same employees lost not only their jobs but also their homes.
Every GM’s heart went out for this horrific tragedy. But what if it was your Club? How vulnerable would your Club be if this happened to you?
Club management is always prepared for the eventuality of a fire breaking out; electricity gone haywire, an errant match, a mishap in the kitchen, etc. But are you prepared for Mother Nature’s fickleness? Will this be the last wildfire (earthquake, flood) we see? It is doubtful.
Therefore, it is imperative your Club have the necessary protection in place to handle the monumental task of rebuilding as soon as possible, to mitigate the financial strain on members and employees. Here is what you need to know.
Action to take now:
- Is your broker keeping you updated? Has your broker reached out to the underwriter? What is their position today? Has it changed?
- It’s important to have the right dollar amount per square foot. Being under-insured could cripple your Club if you needed to rebuild. Estimated should be around $500-$700 depending on your location.
- When the calendar hits 90-120 day prior to renewal – get renewal commitment. Remember; premium is secondary to finding coverage, and rate increases are inevitable (as high as 20-30%). “Shopping around” could result in significant savings. What are you trying to accomplish with your renewals? Did you consider that your insurance company may not want to renew with you (especially if you filed a claim last year)? Are you prepared if that happens?
- Do they cover all significant risks your company faces at adequate levels? Do they really cover what you think they cover? Carefully review coverage provisions, endorsements, and exclusions. Has your coverage grown with your business? Don’t rely on just carrying your coverage over from one year to the next. When your business changes and expands, your coverage must change and expand with it
- Take inventory of all of your coverage. Do you have all the insurance you need to cover your significant risks? Are your coverage limits adequate to protect the business? Are your officers, directors, and employees adequately insured?
- Know what the notice requirements are in each of your policies and have systems in place for providing notice. Know what constitutes a claim that must be reported under the terms of your policies. Know what your policies require regarding submitting proofs of loss, and the timing of such submissions.
- Communication – Keep everyone informed, especially Board members. Do you have systems in place so that those responsible for providing notice to insurers are aware of claims or potential claims that must be reported?
What underwriters will look for should there be a disaster:
- Wildfire exposure – how close are you?
- Aggregation of risks – how many club do the underwriter insure by zone? This can further restrict ability to write new business.
- How much property values at risk (typically 80% of total values are at the Clubhouse). How much does the underwriter want to retain?
- Capacity restrictions – cutting back limits offered. You could be looking at 100% Probable Maximum Loss scenarios.
- Is there a need for a layered program using multiple carriers? This adds cost to the program.
How to mitigate the loss:
- Use of fire-resistant building materials (roof, glass, concert tile, etc).
- Moving-up replacement schedules.
- Brush clearing
- Sprinkler system – grounds, on roof
- On site hydrants and hoses
Do you have an Emergency Plan and/or Disaster Recovery Plan in place in order to get back up in business and to minimize the business income loss? Always consider worst case scenario, and be prepared to deal with them.
Toni Shibayama is a Broker/Risk Consultant for S&K Insurance in Southern California. She has more than 15 years experience in risk management, job safety, Workers’ Compensation, wellness and HR consulting. Toni is also the author of “The Private Club General Manager’s Big Game Playbook.”
She can be reached at toni@sk-insurance.com and by phone at 213.627.5204.
