Brian Cone of The Cone Company has been running a series in Billboard Insider on insurance.  In his last column he talked about why general liability coverage is important for an out of home advertising company.  Today he talks about property coverage.

Let’s talk property coverage. What is it, and how should operators think about it?

 Property coverage, sold on an “Inland Marine” policy, is essentially repair/replacement insurance for your signs. If a sign is damaged or destroyed, the policy covers the cost of repair or replacement.

Many owners cover all the signs they own. Some have no coverage. Most are somewhere in between and cover their property based on their own assessment of the unexpected costs they can and cannot withstand. What should operators “should think about it”? They should know that six-figure property losses occur rather frequently for out-of-homes, and they happen all over the country. But there are some smart and affordable products out there that can tailor coverage to fit each company’s needs. They should know that it’s not “all or none” and it shouldn’t be.

What’s covered on an Inland Marine policy?

We only sell what are called “special form” property policies, which means everything is covered unless specifically excluded. The alternative—basic or broad form—only covers a named list of perils. If something happens that isn’t on that list, you have no coverage, and the operator often doesn’t know that until they have a claim. The Special Form saves everybody trouble and doesn’t hide the ball. A typical policy we sell doesn’t cover damage from Flood and Earthquake, although we can sell policies that do. Wear and Tear, intentional damage, and other obvious exclusions exist, but the idea is to cover all sudden and accidental damage.

Where is the property market hardest for out-of-home right now?

Coastal areas are by far the most challenging. What is “Coastal” can vary depending on the carrier and the state. For example, in a state like South Carolina, 50 miles from the coast may be considered non-coastal, whereas in Florida, everything is coastal. Many carriers either won’t write wind coverage in those areas or will only write it at high deductibles and premiums. Operators in the Gulf Coast area are frequently being sold policies that exclude wind altogether.

Is a property policy that excludes wind totally worthless?

No, and I think it’s a mistake to treat it that way, especially for digital boards. We see nearly as many property claims from lightning and hail as we do from wind. We also see claims from vehicle strikes, vandalism, occasionally fire – including radiant heat from nearby structure fires, power surges, and other electrical issues, etc. Insurance often ends up covering the things you didn’t anticipate more than the obvious perils. Some coverage is better than none, if the price lines up with the coverage.

What is happening with lightning claims on digital boards?

We should probably devote a separate article to this topic because of its importance to operators, knowing the right ways to navigate these claims. Lightning is one of the biggest drivers of claims that we see. We had a $600,000 lightning loss and a separate $200,000 loss within the first year of our program with one carrier, and that was enough to cause them to pull back our in-house rating authority. We currently have a lightning claim under investigation. I am working with carriers and manufacturers on potential solutions for both sides –  either a cap on lightning payouts or a high lightning-specific deductible that the manufacturer offsets through a warranty or backstop. If we can crack that, I think we can bring a lot more capacity into the digital billboard market.

How can out of home operators use deductibles to manage insurance costs?

This is another topic I’d like your readers to know more about than what I can say now. The most common deductibles we see are $5000 and $10,000. But for some smaller operators, a $2500 or $1000, which is the lowest deductible we’ve seen offered, makes sense. Meanwhile, for other operators, a deductible of $25k, $100k, or higher makes the most sense. An Inland Marine policy can, and in many cases, should have multiple deductibles for different types and values of signs, and different types of losses. In some cases, it makes sense to have a “per claim” deductible, while in other cases, money can be saved by using a “per location” deductible. This could make a big difference for companies with many signs in a single geographic area. The idea with selecting deductibles is to save money where you can based on your assessment of likely claims scenarios.

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