by Ian Garner
Camp directors may not always be aware of all the exposures their businesses
face. Working with children presents unmatched rewards, but also creates
unique risks from the insurance perspective. While camp directors or
owners should consult with qualified insurance professionals to determine
the protection their facilities need, they don’t have to be experts
to understand the fundamentals of a good insurance program. The following
short course describes the purpose and characteristics of a well-rounded
insurance plan, giving you information about different types of coverage
and the protection they can provide.
Lesson 1: Coverage
Insurance is available to cover many areas of your camp’s operation.
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Liability coverage
While good liability coverage is essential for every business, child-related
businesses need specialized, high quality protection. Children’s
camps need coverage that reflects their unique risks, exposures, and
operations.
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General liability provides payment for sums you become
legally obligated to pay because of damage to property of others
or injuries to others that arise out of your negligence.
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Umbrella liability offers extra liability insurance above
your primary liability and auto policies. This coverage is designed
to protect you and your assets in the event of a catastrophic
accident.
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Sexual abuse liability will protect you from allegations
of sexual abuse due to negligence in your hiring, training, or
supervisory practices. Defense costs should also be covered above
the policy limit, which means that you will be able to defend
your reputation vigorously against these damaging assertions.
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Child abduction liability provides payment for reasonable
and necessary expenses incurred by the camp and a child’s
parents following the abduction of a child from camp. Examples
of covered expenses should include:
- fees and expenses of investigative services
- rewards leading to the recovery of the child
- public relations and publicity costs
- fees of independent forensic analysts
- travel expenses and salary lost by parents during the search
for a child
- rest, rehabilitation, and psychiatric expenses for the child
and immediate family members
- medical services and hospitalization for a recovered child
- Key employee replacement coverage helps you get back
to business as quickly as possible following the loss of a key
staff member. The camping business is often a family affair,
staffed by people who have made a lifelong commitment to their
camp and the children in their care. When a facility experiences
the death or incapacity of one of its key staff members, it can
have a devastating effect on the camp’s operations. Key
employee replacement coverage can’t ease the emotional
effects of the situation, but it can help the camp get back to
business as quickly as possible by providing the funds for a
temporary replacement and to find and qualify a permanent replacement.
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Directors’ and officers’ liability coverage
provides individual protection for camp directors and officers
against wrongful act lawsuits brought by customers, competitors,
creditors, and others. Camp directors and officers make business
decisions every day. However, if problems result from those decisions,
the facility’s general liability coverage may not protect
these professionals. Courts continue to debate whether “detrimental
management decisions” can cause injury as defined by most
general liability policies. The professionals who manage a camp
could find themselves defending their decisions in court.
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Employment practices liability protects against the threats
that employers face, such as allegations of sexual harassment,
wrongful termination, and employment discrimination. In this
day and age, this coverage has become more and more of a hot
button for employers in all industries, especially in the social
services realm.
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Property coverage
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Property coverage covers damage to buildings, personal
property, equipment, and contents caused by specific perils,
such as fire, lightning, explosions, windstorms and hail, smoke,
aircraft or vehicles, vandalism, and more, as named in the policy.
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Business income insurance covers the cost of normal business
operations due to a forced shutdown of the facility. Fees lost
from the unexpected shutdown of a camp because of property damage
could put a significant strain on the financial resources of
even the best-managed facility. The uninterrupted operation of
facilities is a top priority for camp owners and that is why
comprehensive and affordable property and business income coverage
is so important.
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Other types of coverage
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Crime coverage protects you against the potential dishonest
acts of your employees who handle checks, money, merchandise,
or equipment at the facility or in your office, as well as theft
or burglary of money or securities.
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Boiler and machinery coverage can add protection for
operations from sudden and accidental breakdowns of equipment
typically excluded from property policies.
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Commercial automobile insurance covers owned, leased,
non-owned, and hired automobiles, such as vans, pickups, and
buses used at your facility.
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Workers’ compensation is intended to pay employee
medical expenses and lost wages that result from injuries sustained,
arising out of, and in the course of employment at your camp.
This insurance meets the employer’s responsibilities as
defined by state law.
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Accident medical coverage insures campers in your care
against injuries sustained at your facility.
Lesson 2: How Camp Insurance Is Sold
Before you choose the method that’s best for you, it may be helpful
to understand the differences between direct writers, insurance brokers,
independent agents, and captive agents.
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Direct Writer: A licensed insurance
agent who is a direct employee of an insurance company and sells
its products and services. Insurance companies are increasingly offering
their products directly to the consumer.
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Insurance Brokers: Brokers may place
business with any admitted or state-licensed and approved insurance
company and are not appointed by specific companies. The regulation
of brokers varies by state, but they must be licensed.
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Insurance Agents: Agents are licensed
by the state and must be appointed by each insurance company they
represent before placing business with that company. Agency appointments
and licenses can be verified with your state Department of Insurance.
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Captive Agents: Licensed agents who
are appointed by only one insurance company and select coverages
from that company’s portfolio to fit a customer’s need.
Lesson 3: Choosing an Insurance Company
Sometimes it seems like there are insurance companies everywhere — from
small, local companies focused on one product or group of customers to
huge, diverse organizations involved in everything from life insurance
to real estate. Selecting an insurance provider can be an overwhelming
task. Here are some tips to help you choose the insurance company that’s
right for you.
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Investigate your options
Begin by investigating the companies and insurance programs currently available.
Make certain you feel comfortable with the explanations and descriptions
for each of the items that follow.
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Look for experience
Because the risks and exposures of children’s camps are so unique,
finding an experienced insurance company is critical. You want a company
that understands your business and is willing to partner with you over
the long term. Many insurers enter the insurance market to take advantage
of short-term opportunities to build premiums and exit the market when
losses start to emerge.
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Understand the quality and scope of the coverage
offered
No two camps are exactly alike, and a company offering cookie-cutter coverage
is likely to leave you without the protection you need. There are companies
that specialize in a particular type of insurance or a program of insurance
with unique or specific coverage not found in a generic program.
Look for a total insurance program from a reputable insurer. Then
ask about the coverages and address the specific risks and exposures
you face, such as:
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liability coverage for allegations of sexual abuse
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property protection for items like playground equipment
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liability protection for medical, counseling, and other professionals
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protection from loss of business income due to food contamination
or communicable disease
Compare limits of liability (that’s the maximum that your insurance
policy will pay if a liability loss occurs), deductibles, exclusions,
and other policy terms before making your final decision. These variables
can have a significant impact on the price of your insurance program.
Beware of insurers who offer coverage at deep discounts. This can be
a signal that coverage is not as complete as it should be, that there
is a corresponding lack of commitment to customer and claims service,
or worse yet, that an insurer may be more susceptible to financial
difficulties caused by unexpected claims.
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Find out who will be handling claims and
how
Claims that involve children are among the most difficult and emotional
claims to handle. So much can be at stake — your reputation, your
business, and the trust you have so carefully built with children and parents.
Many insurance companies employ claims management companies and other third
parties to manage their customers’ claims. Sometimes, these companies
lack the ability and motivation to properly represent a facility’s
best interest. Therefore, ask who will be handling your claims.
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Look for support with risk management and
loss control
Insurance is essential, but coverage alone is not enough. To be fully protected,
you need to have sound safety and loss control programs in place. Find
out how a prospective insurer will help you make your camp safer for the
children in your care.
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Check the financial stability of recommended
carriers
Financial stability is a key concern because you want your insurer to be
able to pay claims promptly and completely. Fortunately, there are several
sources available to find out about an insurer’s financial condition
and claims paying ability:
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A.M. Best Company, Inc. provides information about insurance
companies and issues ratings based on a comprehensive annual
analysis; Web site: www.ambest.com.
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Duff and Phelps rates insurers’ claims paying ability;
Web site: www.dcrco.com.
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Standard and Poor’s provides an assessment of a company’s
financial security; Web site: www.standardandpoors.com
Check these ratings for any prospective insurer, and be alert for
qualifiers that might indicate an emerging, negative trend in an insurer’s
financial stability.
The above definitions and tips have hopefully helped to clarify the
fundamental components of a quality insurance program. Because it is
just that — a program of insurance, not just a policy — coverage
is just the start. Value-added services, such as risk management and
loss control (i.e. newsletters, safety tips, training, and personalized
consultations), and experienced and professional claims handling, are
all just as important. Now, with a basic understanding of available coverages
and possible insurance resources, you are equipped to begin your search
for an insurance partner or to reevaluate your camp’s needs.
The relationships you build with your insurance partners are key to
the successful implementation of a quality insurance program. As an advisor,
a qualified insurance professional can recommend the best program for
your facility based on your unique exposures. Therefore, the need for
continuous communication, education, and evaluation is imperative to
running a safe and successful business. After all, the quality of your
insurance program is a reflection of the work you very proudly do every
day.
Originally published in the 2001 July/August
issue of Camping Magazine.
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