Billboard Insider ran an article last week about the high cost of digital billboard replacement insurance in the southeast. We have heard of quotes of as high as $4,000/month for replacement insurance on a digital billboard in Florida. At that cost it might make sense to consider self insuring at least until digital billboard rates return to a normal level. To self insure you keep enough money on hand or in an unused revolving line of credit to replace a portion of your digital billboards if they get damaged. A $250,000 self insurance line of credit will only cost $5,000/year versus $50,000/year for insurance.
One drawback of self insurance is that if you have to fund replacement under the self insurance line of credit, you’ll have incurred a $250,000 debt obligation. A second drawback is that many conventional lenders will require replacement insurance as a condition of a loan.
When deciding what to self insure, keep in mind that it’s unlikely that you’ll have to replace your entire structure. A well built steel monopole will probably withstand lightning or a hurricane or a fire even if the digital billboard is a loss. This means that a double sided 10’6″ by 36′ digital billboard and steel monopole with a $300,000 total project cost might only need $150,000-200,000 in self-insurance. Want to explore self insurance options. Call Ken Altena at Billboard Loans, 206-636-8478, kenaltena@billboardloans.com.
Chris Cowlbeck tells Billboard Insider that his company self insures…
We at LOOK Billboards self insure except on the digitals which we carry at the lowest replacement cost allowed. Bassler has been very good to work with and has a very affordable GL only policy. We further have a separate LLC entity that handles “risky” activities to further protect assets that are free and clear thus no lender covenants. Downside with this strategy is organic growth only, and the occasional wind storm in Okla. I don’t think this would work in hurricane alley however. PS. My ranch insurance jumped massively too.
Does your company self insure? Email info@billboardinsider.com and we’ll run a followup post.
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