Accounting for Loss

By | September 21st, 2017

Bogey Hills Country Club, St. Charles, Mo.

Bogey Hills CC is on a fast track to recovery from a devastating clubhouse fire. Along the way, its owners have learned valuable lessons about sound insurance practices that every club should follow.

Shortly before midnight on February 16 of this year, fire companies from St. Charles, Mo., and surrounding communities responded to reports that the three-story, wooden clubhouse of Bogey Hills Country Club was fully engulfed in flames.

The flames from the blaze eventually reached as high as 50 feet, some onlookers estimated to the St. Louis Post-Dispatch. It took three hours for more than 50 firefighters from four departments to eventually put out the inferno.

Not surprisingly, when the smoke finally cleared, the clubhouse was deemed a total loss. The fire wiped out a building that had sections dating back to 1926 (with additions made in 1972, 1982 and 1990). But it also sparked a new chapter in the history of Bogey Hills CC, which was founded by the Walters family in 1962 on the site of an older golf course that had been closed since World War II and dated back to a Wayne Clark design in the early 1900s.

The Bogey Hills CC clubhouse that was destroyed in a February fire was a three-story wooden structure that included sections that dated back to 1926. Over 50 firefighters from four area companies responded to fight the blaze, which at one point shot flames 50 feet high into the air and took three hours to extinguish. An official cause of the fire has yet to be determined, but an electrical malfunction has been cited as the likely reason.

Under the Walters’ family ownership, Bogey Hills had expanded from a nine-hole operation to 18 holes in 1972. It became a private club in 1980, hosted the largest non-PGA golf tournament in the U.S. during the late 1980s and early 1990s, and had grown into a vibrant operation with more than 350 members and an extremely active wedding and events calendar (just three days after the clubhouse fire, the General Manager of a neighboring club told a local TV station that he had already received calls from at least 70 couples seeking new sites for their weddings).

So it also wasn’t surprising that the Bogey Hills ownership and membership wasted little time rallying to start the club’s recovery from the fire. Within days, Dennis Walters, President of the ownership company and whose father bought the building destroyed by the fire 55 years earlier, was announcing plans to rebuild.

“We’re going to turn a new leaf, a new chapter in the history of Bogey Hills Country Club,” Walters then said at the groundbreaking for a new facility, which took place less than six months later, at the beginning of August.

The tentative completion date for the new clubhouse is May 2018. It will be the first total rebuild of a club in the St. Louis area in 20 years, says Dennis Walters, Jr., who is now part of the Bogey Hills management team, serving as Tournament Director for a staff headed by his sister, General Manager Angel Walters-Likens.

A Test of Sanity
In the midst of accommodating members and displaced event customers while getting as many aspects as possible of the club up and running again and also planning for the new clubhouse, Walters-Likens has also been the primary point person at Bogey Hills CC for helping fire officials complete their investigation (the loss was large enough to require involvement by the Missouri state fire marshal’s office). She’s also been the main contact for the various entities involved with the club’s insurance coverage during the process of assessing damage and honoring claims.

The Walters family (left to right, Tournament Director Dennis Walters, Jr., General Manager Angel Walters-Likens, and President Dennis Walters) has taken Bogey Hills CC’s ownership into a third generation and seen the club grow to over 350 members.

While an official cause of the fire has yet to be determined and may never be (an electrical malfunction has been identified as the most likely reason), Walters-Likens gives high marks to the club’s primary insurance carrier for being responsive and supportive as it’s helped to assure a settlement that has allowed Bogey Hills to proceed with its rebuilding plan in timely fashion, and without having to cut any corners for its new facility.

At the same time, Walters-Likens admits she had no idea of all that would be involved in fully documenting the club’s loss and with filing claims—and from her experience, she offers some very specific advice to fellow club managers for how they can be better prepared if they must unfortunately ever be part of a similar situation. Six months into the process, Walters-Likens says she is still sorting out details and dealing with the insurance aspects of the fire at least once daily, and often much more frequently. “The whole thing has really been pretty insane,” she says.

By the Bucketful
The first aspect of settling the claim that surprised Walters-Likens was how much detail was first needed to go into separating the loss of the physical structure from business-interruption loss, and then into the various subcategories associated with each of those aspects.

The difficulties involved with settling on the value of all of the physical damage that was incurred, Walters-Likens reports, was first complicated by the fact that the clubhouse had been “pieced together over time” with so many different additions made over the course of 60 years.

Each of those sections then had to be documented separately and treated as individual structures, she says. And in each case, she had to develop a new understanding of what “FF&E” (furniture, fixtures and equipment) entailed, compared to what she had always taken that definition to mean when planning and specifying purchases.

“FF&E [for an insurance claim] is not just anything that’s inside the building,” she explains. “You have to think of it in terms of taking the building, turning it upside down, and shaking it. Anything that’s attached, like a chandelier, is considered part of the building and not part of FF&E.”

Demolition of the old, burned structure also “comes out of the building coverage,” she notes, and may need to include soil samples and other tests to determine if the site is safe for reconstruction.

Groundbreaking for the new building was held less than six months after the fire, and completion and a grand reopening is scheduled for May 2018, 15 months after the February 2017 blaze.

Understanding all of the operative definitions and classifications, Walters-Likens says, is critical in determining how all aspects of a claim have to be categorized according to specific “buckets.” “There are buckets for staff’s personal property, members’ property, the golf professional and many more,” she says. “The parking lot is covered under a separate policy. It all becomes a very detailed exercise in forensic accounting.”

And of course, determining what should go into each bucket and specifying the details of all that was lost becomes further complicated after such destructive incidents as the Bogey Hills fire.

“Many of the records we needed [to properly establish the value of lost items] were burned up,” Walters-Likens reports. “As a result, it’s more difficult to get apples-to-apples replacement for exactly what was lost. You have to find and show links to [product information] to help establish replacement costs.

“We are certainly making it a point to scan all that [purchasing] information now and to back it up on the Cloud,” she adds. “I’d also recommend, especially for older clubs, to take photos of your china, glassware, couches and other special or one-of-a-kind items you might have, and also store those on the Cloud, [as well as] on backup disks and flash drives that can be kept somewhere off-site as well.”

Documenting and processing business-interruption claims “is a much different story,” Walters-Likens says. “There’s a lot of back-and-forth and you have to make a good case for the level of business you think you would have done [if the fire hadn’t occurred], and also for how your cash flow has been affected [because it did].”

Overall, the experience has driven home the importance of being ever-diligent about “crossing Ts and dotting Is,” Walters-Likens says. While the new clubhouse will have a state-of-the-art fire-suppression system (the old building had none), she says she will be much more comfortable and able to focus on reestablishing the club to its previous, active status with the knowledge that everything related to the operation is properly backed up and easily recovered and recreated.

“We are very thankful to our members who have stayed with us during a tough time and also for the response and help we’ve received from our insurance companies and other suppliers,” Walters-Likens says. “We’re going to build something everyone can be proud of.”

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