Sign insurance is important.  Static billboards can be destroyed by tornados.   The digital billboard on the right was destroyed by an electrical short. One of Insider’s lending clients had a digital board destroyed by a fire on an adjacent property.

A billboard company should carry three kinds of insurance.

• An umbrella corporate liability policy for $1 million which will cover you from lawsuits related to the operation of your business.  This will protect you if your board damages someone’s property or injures someone.  Many billboard landlease agreements require you to have a corporate liability policy.

• A replacement policy on some of your boards.  If you don’t have the money or unused credit lines to rebuild signs in case they are destroyed you should buy replacement insurance.  This is crucial for digital billboards.  Replacement insurance is also helpful if you have a high concentration of static billboards in a tornado prone area or if you have static boards which were extremely costly to build.   Replacement insurance is not necessary for small boards and wood boards because they are cheap to replace.

• Key man life insurance which pays off lenders or outside investors in case you die.  This is especially important if your business is dependent on you.  Do you want a lender or your outside investors wrangling with your spouse over how your business should be run when you die.  Why not buy key executive life insurance which pays off your lender and outside investors and  passes your company into your estate free and clear of all debt?

Insurance is cheap. Insider’s $1 million corporate policy costs about $115/month. In addition I pay about $16/month per billboard for a $25,000 replacement policy. Digital billboard insurance costs more because digital boards are 5-8 times more expensive than steel.

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