Avoiding Hidden Coverage Limitations in Property Insurance Programs
Higher education institutions are some of the world’s largest landowners, with campuses and buildings sprawling across state and even national borders. Transferring the risk of loss or damage to portfolios that often include hundreds of buildings, thousands (if not millions) of acres of land, and facilities of every imaginable kind and use is, to put it lightly, complex. This is especially so in a risk landscape where natural disasters are increasing in frequency and intensity, and the costs of construction, clean-up, and remediation have never been higher.
Transferring Risk through Property Insurance
Traditionally, colleges and universities have transferred facilities and landholding-related risks through commercial property insurance programs. Evaluating which insurer or set of insurers is right for a specific institution is an iterative process that often involves intensive information exchange. Most significantly, insurers want to know the institution values of each piece of property to be insured. Institutions typically convey their valuations through a Statement of Values, which is then filed with the insurance company as part of issuing the policy.
There are several ways to calculate how a property is “valued” for insurance purposes, but that is a story for another day. What is important to know is that, amid a changing insurance market, the value of each property listed on the Statement of Values has become critically important.
- Insurers historically used the stated value of a property solely to calculate the premium charged for a specified policy and then issued policies providing “blanket” coverage across the institution’s entire portfolio.
- “Blanket” coverage provides a single (often very large) aggregate limit of insurance coverage under a single insurance program that insures multiple properties.
- The alternative to “blanke