Golf Association of Philadelphia and Bollinger Club

Insurance Programs

President’s Council MeetingMarch 15, 2005

Presented by: Tom Walker

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Does your Club have the insurance coverage it needs

to protect it if a disaster strikes?

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Property Coverage– Buildings & Personal Property– Business Interruption & Extra Expense– Equipment Breakdown/ Boiler & Machinery– Demolition Costs– Ordinance or Law (increased cost of construction)– Debris Removal Expense– Land Improvements– Personal Property of Members & Guests– Golf Course Playing Surfaces– Tree Debris Removal Expense– Maintenance Equipment, Golf Carts, Computers

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Liability Coverage– General Liability for the Club’s premises

& operations– Liquor Law Liability– Business Auto Liability– Employee Benefits Liability– Pollution Liability– Directors & Officers Liability– Umbrella Liability

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Property Coverage

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When insuring Club property (buildings and contents), it is

critical to determine the proper insurable value.

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Insurance to Value

• Allows for an agreed amount of insurance coverage

• Avoids co-insurance penalties at the time of loss

• Can assist in expediting the claim settlement process

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How are insurable values determined?

• Cost estimators such as Marshall & Swift• Agent/Broker recommendation

Caution: These methods are generally not sufficient to address the values of most clubs. In addition, they should not be relied on for older (and/or larger) clubhouses.

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What method is recommended?

• Utilization of a qualified appraisal service (such as Industrial Appraisal Company, Pittsburgh PA) to determine the replacement cost of buildings and contents.

• Annual updates with increases for inflation.• A full appraisal performed at a minimum of

every 7 years.

NOTE: The appraisal cost is based on square footage of buildings and can include contents and maintenance equipment.

Sample AppraisalSample Club/NJ Total Exclusions Inclusions

BLDG#1-ClubhouseBuilding $4,250,51

0($264,850) $3,985,660

Architect Fees $297,536 $297,536Telephone System $22,500 $22,500Permanent Fixtures $349,684 $349,684Total Building $4,920,23

0($264,850) $4,655,380

Equipment (contents)

$663,332 $663,332

Office Furniture $37,322 $37,322Office Machinery $22,274 $22,274EDP Equipment $44,214 $44,214Fine Arts/Trophies $11,400 $11,400Total Equipment $778,532 $778,532BLDG #1 Total $5,698,76

2($264,850) $5,433,912

Sample Appraisal (Cont’d.)

Sample Club/NJ Total Exclusions

Inclusions

BLDG #1 Total $5,698,762

($264,850)

$5,433,912

BDLG#2-MaintenanceBuilding $900,000 ($54,000) $846,000Architect Fees $61,000Equipment (contents) $162,000BLDG #2 Total $1,123,00

0($54,000) $1,069.000

Sample Blanket Building & Contents Limit:

$6,502,912

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Statement of Values

• Based on the appraised replacement cost value, a statement of values should be completed annually by the Club and Agent

• Sign-off by Club GM or officer• Updated during the policy period if

values change

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Business Income

The Net Income that would have been earned had there been no covered loss* PLUS

continuing normal operating expenses, including payroll.

*resulting from damage to buildings/contentsand/or the golf course.

A Business Income worksheet should becompleted annually.

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Business Income

• Income lost from:– Food & beverage– Initiation fees– Greens fees– Golf cart rental– Membership dues?

• Continuing operating expenses:– Golf course– Golf shop– Administrative & general– Real estate taxes– Payroll taxes– Benefits

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Extra Expense

Following a covered loss*, the cost to minimize the suspension of business and to enable continuation of operations.

*resulting from damage to buildings/contents and/or the golf course.

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Extra Expense

• Temporary facilities such as trailers to house the kitchen, locker rooms, rest rooms and snack bars

• Tents for banquets, weddings and golf outings

• Generators to provide power

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Equipment BreakdownBoiler & Machinery

• Coverage should include:– All HVAC equipment, deep well and other pumps,

refrigeration equipment, motors and water heaters.– Food spoilage and breakdown due to off-premises

power interruption.

• Coverage limit should equal the blanket building & contents limit.

• Coverage should be part of the property contract.

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Additional Property Coverages

• Demolition Costs – the cost to demolish undamaged portions of the building(s).

• Increased Costs of Construction due to an ordinance or law– An elevator is required to comply with ADA– Updated fire codes require a new sprinkler

system

• Debris Removal Expense• Tree Debris Removal Expense

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Types of Real Property• Land Improvements• In addition to buildings, the insurance

definition of “Real Property” includes:

Bridges, towers, pipes, dams, exterior light fixtures & poles, in-ground sprinkler systems and equipment, tennis courts, satellite dishes and antennas, fences, bulkheads, pilings, piers, wharves, retaining walls, roadways, walks, patios, other paved surfaces, outdoor signs, lightning detection/warning systems and pools.

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Additional types of Property

• Personal property of members and guests in the club’s care, custody and control

• Golf course greens and grounds– Tees, driving ranges, cut fairways, greens,

bunkers, cut and maintained roughs and other cut and maintained playing surfaces

• Coverage at a minimum should include perils of lightning, aircraft, vehicles, vandalism, windstorm and hail.

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Maintenance Equipment and Golf Carts

• A schedule of equipment including manufacturer, model and replacement value should be kept on file and updated annually.

• Coverage provided should be on a replacement cost basis.

• Coverage should automatically include newly acquired equipment, which is bought, leased, rented or borrowed.

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Computers, Valuable Papers andAccounts Receivable

• Keep a schedule of computers on file and update it annually.

• Keep valuable records and data in afire-proof safe.

• Make frequent back-ups of data and store duplicates off premises.

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Liability Coverage

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General Liability

Coverage you are legally obligated to paydue to bodily injury or property damage caused by an occurrence and arising out of the ownership, maintenance or use of your premises and operations.

• Minimum recommended limits = $1,000,000 per occurrence and $3,000,000 aggregate

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General Liability• Personal & Advertising Liability;

$1,000,000 minimum limit– Covers libel, slander, defamation of character

• Medical Expense; $15,000 minimum limit– Provides coverage for injuries to members

and athletic participants

• Supplemental Accident coverage• Incidental Medical Malpractice

– Provides coverage for use of AED’s

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General Liability

• Extend coverage to employees, club members, volunteer workers, golf and tennis professionals

• Extend coverage on an excess basis to non-employee golf cart operators

• Include coverage for errant golf balls

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Liquor Law Liability

• Minimum recommended limits = $1,000,000 per occurrence and $1,000,000 aggregate

• Maintain a strong Club policy on service of alcoholic beverages

• Require mandatory TIPS Training for all servers and sellers of alcoholic beverages

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Business Auto Liability

• Minimum recommended limit = $1,000,000• Hired & non-owned autos• Garagekeepers Legal Liability for valet

parking• Request MVR’s on all drivers of Club vehicles.

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Employee Benefits Liability

• Protects against legal liability in the “administration” of the Club’s employee benefits programs including group life, accident & health, profit sharing, pension plans, workers compensation and disability insurance.

• Minimum recommended limit of $1,000,000

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Pollution Liability

• Covers the liability exposure resulting from application of pesticides & herbicides to the golf course.

• Minimum recommended limits = $2,000,000

• Include off-premises clean-up• Above and below ground storage tanks

pose additional exposures

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Directors & Officers Liability

• Limits of $5,000,000 or higher• Umbrella to cover excess of D&O limits• Defense costs in addition to the limit of

liability• Coverage should include “membership

discrimination”.• Full “Prior Acts” coverage

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Directors & Officers Liability

• Named Insured to include:– Past, present &

future directors, officers and trustees

– Committee members

– Employees– Volunteers

• D&O Employment Practices Liability provides coverage for:– Wrongful termination– Discrimination– Sexual or workplace

harassment– Mental anguish– Emotional distress– Breach of contract

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Umbrella Liability

• Limits of at least $5,000,000• Provides excess liability coverage over and

above:– General Liability– Employee Benefits Liability– Auto Liability– Liquor Liability– Employers Liability– Directors & Officers Liability

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Industry Changes

• Board Governance

• Agent/Broker Duties

• Understanding Market Cycles