Coverage and values!

“It’s the hardest property market we’ve seen in a generation.”  Oof. That is not what I wanted to hear as I start my new  position with the SDPAA. Hard property market means that  carriers are taking a hard look at what their customers have for  property values, how they are writing property coverage and  how to price it. Each year at renewal, we ask our Members  to review their property schedules and check for a few things:

1. Do you still own all the items on your schedules?

2. Is the value associated with the items still  appropriate?

3. Are you comfortable with the associated valuation  (replacement cost vs actual cash value)?

4.  Do you have any items to add to your schedule?

A major part of any property program is the real property  section. This would be your buildings and their fi xtures. Your  structure’s value should be reviewed each year to ensure that  you are comfortable that the building could be rebuilt for the  value that you have associated with the property. For those  readers who are not Members of the SDPAA, it is especially  important for you to review your property values and then  determine if you have values which are within the parameters  of any applicable co-insurance clause that your carrier may  associate with any or all your locations. The SDPAA does  not have a co-insurance clause. It is very important to  remember that your property value takes into consideration  those specialty equipment items that are attached to or are  a part of your structure. Waste and water treatment plants,  lift stations, bath houses, pump houses, and locations with  coolers will have an increased value beyond that of the basic  structure due to those specialty fi xtures.

Next, with each location you have on your property schedule,  you should review and consider if the location has contents  that need to be covered. Most carriers will not afford coverage  for contents if none is associated with the scheduled location.  Contents are described as smaller pieces of property, which  typically do not leave the property. An example we give to  our Members is, if you pick up this building and shake it, and  it falls out, then it is likely contents, with a few exceptions of  course! In your City Hall or Administration building, anything  that isn’t bolted our mounted permanently to the structure  would be considered contents, unless it is a larger piece of  equipment, such as a vehicle, mower, or equipment accessory.  We’ll cover those in a bit. As I look around my offi  ce, my  contents include my computer desk, printer, monitors, all  the consumables I use to conduct day to day operations etc.  Things that are not contents would be the sign that is fi xed  to the front of a building, or a special pump or cooler that is part of the structure or foundation (those lift station pumps  are mounted to, or a part of the foundation, and their control  panels are mounted to the walls). Those items need to have  their values associated with the structure value.

If you have small tools and electronic equipment that travel  around from location to location, you will want to consider  scheduling those on a mobile equipment schedule. Generally  we recommend to our Members that for electronic data  processing (EDP) equipment (laptops, computers, voting  machines and the like) that you schedule those on an EDP  hardware schedule. This offers coverage for those items  wherever they are and offers some upgraded coverage  as well. For items such as mowers and their accessories, tractors, graders, drills, portable radios, bunker gear, etc - we would recommend that these items be scheduled on a mobile equipment schedule. The values associated with each of these items should be reflective of the type of coverage associated. If you have coverage at replacement cost, then you certainly want the limit to reflect what the replacement cost of that item would be with like kind and quality products.

Vehicles and large machinery each have their place on your property schedules. Vehicles for the SDPAA would constitute any motorized vehicle which carries a passenger and is licensed for road use. That means that typical motorized vehicles such as pickups, cars, buses, dump trucks, ambulances, and fire trucks are all easy to identify vehicles. The SDPAA also will cover your trailers on the vehicle schedule. You should double check that the vehicles on your schedule are the ones you own, and that you intend to cover for Auto Physical Damage (comprehensive and collision) coverage. Commercial carriers will also require you to list any vehicle that you intend to cover for liability only. For those larger pieces of equipment and ATV/UTVs, those items should be listed on your mobile equipment schedule with the SDPAA. Again, ensuring that the values associated with each piece of equipment is appropriate is important in the event of a claim, as the limit associated with that piece of equipment is the most that would be paid in a loss.

I hope this article has given you some insight into how to review your property schedules for your upcoming renewal. Of course we encourage you to reach out with any questions that you may have regarding property values, how to classify property, or if you have any changes to make to your current SDPAA coverage! Visit our website at www. sdpaaonline.org! ■