Here’s a screenshot of a conversation which a Florida out of home company executive had with an insurance underwriter about the feasibility of digital billboard replacement insurance.

Billboard Insider hears stories that replacement insurance is hard to find in the gulf states or is prohibitively expensive.  While there do not seem to have been many out of home claims, insurers are pulling back in the gulf states due to storm related real estate damage claims.

If replacement insurance is not available, consider self insuring.  Keep enough spare debt capacity to replace one or more of your digital billboards in the event of a storm.  Billboard Loans provides self insurance lines of credit to out of home companies.  The self insurance line has  has a single purpose: to fund the replacement of billboards which become damaged in a storm.    The line is secured by any billboards purchased with line advances and sometimes additional collateral.  The line does not bear interest unless it is drawn.  Draws amortize over 10 years.  There is an annual commitment fee for the line but the fee is much cheaper than any insurance premium.

The drawback of self-insuring is that the debt you incur to replace your digital billboard will increase the liabilities of your company.  With conventional insurance the insurance underwriter agrees to supply a replacement billboard in exchange for the underwriting premium.  But at least you’ve put a financial plan in place to get back operating as soon as possible after a disaster.  To learn more about self-insuring your billboards contact Ken Altena (206-636-8478, kenaltena@billboardloans.com).

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