Insurance Questions

 ANSWERS TO 10 IMPORTANT INSURANCE QUESTIONS

by Nancy Sheffler

Ask any camp director and chances are, they'll agree with us when we say that insurance premiums are in the same category as death and taxes: they're inevitable. And, like taxes, they have a tendency to go up, with no promise of relief on the horizon. A random survey of camp directors listed insurance premiums as one of their major expenses; but unlike most other expenses, insurance is one line item that directors hope to never use. So why spend so much money on an item that, hopefully, won't be utilized? State regulations usually mandate auto insurance for any vehicles used in the operation of the camp, and workmen's compensation for all employees. Mortgage provisions often require mortgagees to provide adequate property insurance. Common and good business sense dictate purchasing other types of insurance, such as camper medical and injury (primary or secondary), umbrella, multi-peril, and interruption of business. During the process of conducting our random survey, a pattern of issues and questions arose. We compiled a list of the ten most important issues facing camp directors today. The answers were provided by a panel of camp directors and insurers.

1. WHAT TYPES OF INSURANCE SHOULD CAMPS HAVE? 

Ed Schirick, Senior Vice President of Markel Rhulen Underwriters and Brokers, recommends the following types of insurance: property damage, liability, umbrella, camper and staff medical/accident coverage, and workmen's compensation. Schirick points out that business interruption insurance, to cover loss of income as well as extra expenses incurred due to interruption, is written into all of his company's property damage/fire policies. Under the heading of liability, Schirick recommends coverage for all employees and volunteers, as well as insuring the camp infirmary against allegations of malpractice, and malpractice insurance for the camp doctor and infirmary employees. He also recommends that liability policies include coverage for incidents involving sex abuse/molestation. Schirick sees employment practice liability insurance as a developing area of concern in order to comply with the Americans with Disability Act and the Civil Rights Act of 1991.

2. HOW MUCH INSURANCE IS ADEQUATE? 

Steve Libbing, AAI, Account Executive at K & K Insurance, sees this as a wide open scenario. . . and his toughest challenge. For property damage/fire insurance, he recommends insuring for physical property value-with an eye towards replacement costs. For liability policies, he won't sell under $1 million, with an in-house binder. He generally recommends $25 million umbrella coverage, stating that umbrellas are often overlooked, but very useful. All other types of insurance are subject to individual circumstances. For example, business interruption or time element insurance to cover a camp if it had to interrupt part or all of its activities due to fire or weather damage would be quite different for an overnight camp with a capacity of three hundred than it would be for a day camp with a one hundred camper capacity. Similarly, automobile coverage would be different for a day camp that provided daily bus transportation for all campers, as opposed to the overnight camp that contracts with a bus company to provide transportation to and from the camp, and only relies on its own buses and vans for emergencies and/or limited inter-camp activities. Marine floaters, which he recommends to insure transportable assets of value (e.g., boats, computers, tack equipment) will vary widely, depending on the type of activities camps offer. He says that it's not his job to tell clients how much insurance they need, but to make sure that if a claim is filed, the coverage is there. Judy Bunchuk, owner/director of Le Camp in Spring Valley, New York, sums it up by saying, "You hope you have enough for the one time you might need it."

3. SHOULD YOU PROVIDE PRIMARY OR SECONDARY MEDICAL COVERAGE? 

Bunchuk used to provide primary health/accident insurance for her campers, but found that "one claim could really blow you away!" Her premiums rose, so now she provides secondary coverage, going to the camper's parents' policy first, and then using the camp policy to cover anything the parents' policy doesn't cover. While many camp directors and insurers agree with her, Bob Gentile, director of Wilbur Herrlick Camp in Patterson, New York, points out that before going to a secondary policy, you have to look at who your campers are. Gentile's camping population is mostly inner-city youths, whose families often don't have health insurance. Consequently, he provides both his campers and counselors with primary coverage. Similarly, Ken Dilling, Director, Special Risk Division of the American Income Life Insurance Company, points out that his company provides primary health and accident insurance for camps and campers all over the country. However, he suggests that camp literature clearly state that the coverage provided is a "limited medical reimbursement" policy, covering emergency and first aid services.

4. IS IT BETTER TO PURCHASE WORKMAN'S COMPENSATION INSURANCE PRIVATELY, OR USE STATE INSURANCE POOLS? 

Libbing states that he will provide whatever kind of insurance a client wants, but notes that private workmen's compensation policies are generally more expensive than contributing to the state pool. The states dictate what percentage of an employee's wages must be allocated for compensation, with most falling between 4% and 11%, but often going higher. However, since camp counselors fall into higher risk categories and are usually seasonal workers, insuring them is a losing process for most carriers. As a result, private workmen's compensation insurance is expensive, and most camps go into a state pool, which is highly regulated, and far less expensive than private coverage.

5. WHAT CAN BE DONE TO LOWER PREMIUM PAYMENTS? 

Bunchuk advises camp directors to look for the company that will give you the most at the least expense-comparison shopping is the key here, with the informed consumer benefiting the most. She also refers to her switch-over from relying on her camp to provide primary health/accident insurance. Since going to the parent's policy first, and the camp's accident insurance policy second (or if parents don't have insurance), her premiums have gone down dramatically. Schirick adds that by providing-and using-camper and staff medical/accident insurance, a camp director can avoid using liability insurance as a primary source of funds. By insulating the liability pool, a camp director can demonstrate stability in liability claims. This stability is key in keeping premiums in check. Gentile points out that it is important for camp directors to work closely-as partners-with their insurance agents to keep lines of communication open, and premiums down. He points to an incident that occurred several years ago. Like most camp directors and insurers, Gentile finds that, regardless of the level of supervision and other precautions, accidents happen. This was the case when a child, playing on a supervised swing set, fell off and broke his wrist. The counselor followed camp policy and filed a thorough written report. The parents of the injured child cited lack of supervision on the part of the camp and considered legal action. Shortly thereafter, Gentile met with his insurance agent. The agent and his supervisor visited the camp to review various policies and procedures that were in place, verifying that the counselor and the camp had not been negligent. As a result of this partnership-between Gentile and his agent-and the proper execution of emergency policies and procedures, the following year, instead of seeing his premiums rise, they were, in fact, lowered. Libbing would undoubtedly agree with Gentile. He advises that camp directors talk to their carrier, and ask specifically what would assist them in lowering insurance premiums. He urges directors to give their insurance agent or company "reason to credit you. The more information you provide, the better chance you have of getting credit. Don't leave anything to the benefit of the doubt," he cautions. "Show safety plans, signage, evacuation plans, evidence that you have well-trained counselors, hiring guidelines, plans for going over everyday routines, information regarding sprinklers, extinguishers, and so on."

Failure to provide this information can lead to higher premiums. Libbing also suggests that you insure only those buildings you need to; for example, don't insure a shed that wouldn't be replaced if damaged or burned down. Finally, he says to be as specific as possible. "Don't just say 'miscellaneous boats'. Describe the model, make, serial number." Keep lines of communication open and be as clear and precise as possible in order to lower premiums. Brother Thomas Lee of Camp Marist in Center Ossipee, New Hampshire, feels that using mature, experienced staff is a way of keeping premiums in check. All of his staff are over 21, and for specialized activities-e.g., riflery, horseback riding-he only hires trained, experienced people who are often certified in their area of expertise. The use of mature staff is a definite "plus factor" in Schirick's eyes: the judgment and breadth of life experience of a 25 or 30 year old individual would far outweigh that available to the average, younger counselor.

6. HOW DO YOU GO ABOUT CREATING A SAFER CAMP ENVIRONMENT? 

In addition to providing a mature, qualified staff, Lee fosters a safe camp environment by assuring that adequate numbers of staffers are there to work with the campers. Camp Marist has a 3:1 camper/staff ratio. But beyond that, Lee assures that the people who work with the campers during the day will be well rested. Consequently, CIT's, counselors, and special activity people do not spend nights with boys in cabins, but are housed separately. A brother is assigned to each cabin to supervise the campers at night, and the people who work with the children during the day are housed in dormitories, with one or two people in each room. Following up on Gentile's and Libbing's suggestions outlined above, it is important to have policies and procedures in place, showing routine inspections for all equipment-and then following through on those inspections to assure that the procedures and routines are implemented. Libbing also speaks of having adequate supervision; accidents are more likely to happen when kids are just standing around. The better the supervision, the less likely a child will wander off or fool around with other children.

7. DOES ACCREDITATION COUNT? 

"Absolutely," says Libbing. "Accreditation is very, very important." He goes on to say that, if a camp has ACA accreditation, then three-fourths of his homework is done. Libbing places tremendous weight on a camp's accreditation status, saying that it streamlines his paperwork process and assures that standards are being met and monitored on a regular basis. Although Schirick will insure camps that do not have ACA accreditation, he says that meeting ACA standards is "a great educational process," insofar as business and risk factors are concerned. He finds that ACA provides a disciplined approach to risk management; for those camps who have evaluated and acted on their risks (per ACA guidelines), he has seen a direct impact on the outcome of losses experienced. Dilling doesn't require accreditation, but in assigning risk (he uses an experience type rating on the basis of losses), the insurer "definitely knows that accredited camps are tip-top." He cites ACA's requirement for security guard rails on top bunks as being a simple safety requirement "that's worth something!" One of the camps interviewed said that their insurer rarely looks at their camp because he is not a camp specialist. However, the insurer trusts the guidelines of ACA; as long as the camp keeps being accredited, they'll be insured. Similarly, Gentile, who is insured by a company that specializes in camp insurance, states that his insurance agent takes into account if the camp director is certified.

8. WHAT ARE THE HIGH RISK AREAS? 

There seems to be a consensus that horseback riding is the number one area of concern, with confidence courses running second, and water activities ranking third. The assignment of such high risk to horseback riding is a topic that generates heated discussion among camp directors. Mike Baer, director of French Woods in Hancock, New York, is particularly rankled by this. His camp has not had a major claim in over 25 years, yet his premiums have not been lowered. Because of this, he thinks insurance is based more on potential than actual loss. Gentile agrees with this assessment. "Horseback riding seems to be considered a separate entity," he says. "No matter how safe it is, no matter what precautions you take, the insurance company considers it a risk." Many of the precautions he takes involve common sense and experience, and he also follows ACA mandates and regulations set forth by his local Health Department. Among other safety precautions, Gentile employs a mature, qualified program director. He also has a sufficient number of horses, usually twelve, so that several horses can be resting while others are out on the trail. The typical procedure at his camp is for five or six children to go out horseback riding with two counselors. One counselor leads the way, and the other counselor rides at the rear. While they are out, the remaining horses are able to rest in their stables. Gentile also makes sure that he follows ACA guidelines to have proper, safe equipment. This includes having certified helmets, and making sure that children wear heeled shoes-no sneakers! And before the children mount, they receive a lot of training. (Generally, the children at his camp are beginners.) There are rules and specific procedures for how the children mount the horses, where they mount, and where they go. There are clearly marked safe trails which the counselors check out before going out each day. The tack room is organized so each horse's equipment is specified and clearly marked so that the horse will be as comfortable as possible. Gentile tries to predetermine his risks and minimize them to the extent possible. Nonetheless, despite the precautions and lack of claims, lowering premiums has been an uphill battle. He says the insurance company argues that a horse is an animal and an animal can do anything-regardless of precautions taken-without warning.

Bunchuk's experience has been similar, but she has chosen to keep insurance for horseback riding activities separate by purchasing a multi-peril policy which covers saddle animals, and areas that may not fall under general liability and property policies (e.g., picnic area and out-buildings). Libbing agrees that you open yourself up to greater exposure when animals are introduced to a situation. No matter what precautions are taken and what controls are in place, children sometimes forget that they aren't supposed to touch the animals, and that is where many problems arise. Where proper barriers are in place, equipment is checked to assure that it isn't brittle and is well maintained, and rules and regulations are in place and followed, there is usually no problem. It is not the horses, but horseplay that is more likely to cause accidents. Once again, proper supervision is key. Dilling's concerns center around the trust/fall aspect of confidence courses. He sees this area as one that is open to charges of negligence; he points out that it is not unusual to have two hundred pound campers going on confidence courses. It doesn't matter if the camp or activity director has taken the precaution of hiring an expert to run the course, and properly maintains all of the ropes and special equipment used. If you wind up having a one hundred-thirty pound person catching a two hundred pound camper, you've got a problem. In this situation, there is no need to look to charts to determine statistical probability. This type of risk management demands that the camp director exercise common sense and good judgment. For this and other high risk activities, Dilling endorses Bunchuk's practice of obtaining special policies. Beyond his misgivings about confidence courses, Dilling, like Libbing and Schirick, says that accidents don't necessarily occur where you might expect them to, or in areas where an inherent risk may exist. He points to the area of rifle ranges, where you may expect claims. Nonetheless, in the last five years, he hasn't had a single claim involving a rifle-but he has had plenty of claims where campers have tripped and fallen on their way to the rifle range, or tripping over a horse tackle, or the ropes used for confidence courses!

This has also been the situation at French Woods. Mike Baer says that his camp's circus activities, where you might expect to find great risk, is probably the safest area because the greatest precautions are taken here. "You're more prepared for problems," he says. He points out that all circus acts at his camp use guide lines and wires. This includes the single and double flying trapeze, the high wire (that's 20 feet off the ground), and the Lyra Act (which is a huge silver ring to hang from), among others. Baer points out that, when he and his partner were setting up the circus program, they were among the first to teach circus skills, and had to demonstrate the safety precautions they were instituting to insurance companies. They relied on common sense, rather than charts and statistics to determine what to use to be safe. Insofar as waterfront activities are concerned, insurers seem to find that precautions can be made to minimize risk. The use of PFD's, properly maintained boats, and employment of a sufficient number of lifeguards go a long way in keeping swimming from being a high risk area. Still, many camp directors agree with Bunchuk when she says that the pool area is her number one concern, and Schirick maintains that due to the frequency of exposure-most camps have hundreds of campers who swim at least once a day-aquatics and horseback riding are on a par as far as risk is concerned. Both, he says, offer the opportunity for unexpected events.

9. WHY IS IT DIFFICULT TO LOWER PREMIUMS? 

Like any other company, insurers are facing increases in health and legal costs as well as feeling the inflationary pinch. Today's litigious society produces more claims to defend. The severity of claims and damages sought are both on the rise. Finally, one area that was traditionally not an issue, but is given more weight recently, is insuring against charges of child abuse. If good hiring and supervisory procedures and controls are in place, the operator of a camp involved in a child abuse situation would be covered under their liability policy or umbrella policy. (However, since the perpetrator's actions were intentional, he/she would not be covered.)

10. SHOULD CAMPS CONTRACT OUT FOR SOME HIGH RISK ACTIVITIES?

Schirick and Libbing suggest that camps subcontract any high risk activity area they do not have expertise in. No one will insure you if there is a lack of proper training. In order to assure that adequate safeguards are in place, Libbing's company sends out loss control surveyors to assess competence. Typical areas where camps contract out are wilderness training, white water rafting, mountaineering, confidence courses, and horseback riding. The bottom line is that camping, like insurance, is a business-and in order to run it profitably, camp directors must explore every avenue to lower insurance costs while covering all bases. Working in tandem, camp directors and insurance agents can assure that camps can be safe, fun,-and profitable. Please be sure to discuss any issues, ideas or suggestions presented in this article with your insurance agent in order to determine how they might impact on your facility.