While clubhouse fires are not the common occurrence they were 100 years ago, when they happen today the consequences can be far more devastating, and the recovery process far more complicated. So it’s no surprise that many other club managers have been eager to learn all they can from how Bogey Hills bounced back so quickly from its fire. And while Angel Walters Likens has been busy rebuilding her club, she’s also been generous in taking time to share what’s she learned about the process with her colleagues.
Here are some of the key points that Walters Likens conveyed in one seminar for St. Louis-area club managers that was held at Bogey Hills; for a more detailed look at her tips for effective Disaster Preparedness and Recovery, see the online version of this article at www.clubandresortbusiness.com.
What to Do Immediately
- Begin retrieval of information on Cloud, appoint one person as main contact, and designate a team to focus on “all things insurance,” so your focus (as primary manager) will be on the rebuild and on resuming operations. It is very useful to make sure someone with accounting expertise is on this team.
Beginning the Insurance Claim Process
- Begin to identify your “buckets” (including buildings, extra expense, business personal property, personal property of members and staff, business interruption, etc.)
Understand What Replacement Cost Means
- Insurance is obligated to replace the damaged/destroyed structure with like kind and quality, up to the policy maximum (if a frame building is destroyed, they will not pay to replace it with a masonry building).
- If it is not your intention to replace a destroyed structure with a similar structure, you can insure it differently.
- If your intention is not to replace the destroyed structure, the maximum that the insurance carrier will pay is the actual cash value, regardless of the replacement cost limit on the policy. Actual cash value closely approximates market value.
- If your intention is to replace the building, be diligent in assuring the limit on the policy reflects the true replacement cost value.
- Building costs have skyrocketed—if you do not know the replacement cost value of your property, hire a replacement cost appraiser.
- Most insurance policies include “coverage enhancements” that afford additional buckets of coverage above and beyond the limit on your policy.
Business Personal Property
- Take video of what is in your building in every room; don’t rely on accounting records—most items have been depreciated, but are still in the building. Also, many items may have been expenses, vs. capitalized—these can still be claimed and covered
- Most policies limit the personal property of members that is in your care, custody and control. Golf bags, for example, may have a specific limit, and there may also be an aggregate limit (maximum that insurance will pay). Assure the limit contemplates a total loss—if you have 300 golf bags in storage and assume $5,000 per bag, the maximum limit should be no less than $1,500,000.
Business Interruption (BI)
- This is the least straightforward coverage and there is much room for difference of opinion. Know your policy limits of amount and the time period covered—12 months is not enough.
- When working with your claims adjuster to reset member pricing (for existing golf and social dues, locker and other fees, guest green fees and cart rental, new member discounts, and treatment of lost dues from resigning members), be sure to document agreements before announcing any changes to members.
- Prepare your own calculations for what you believe your BI payments should be. Don’t just send your financial statements and rely on whatever the forensic accounting firm hired by the insurance adjuster will recommend—they will offer you much less than what you expected.
- “Projected” revenues [from the adjuster and forensic accountant) will likely seem low vs. your budget—make the case for raising them. “Projected” expenses will likely seem high vs. your budget—make the case for lowering them.
- Manage your ongoing expenses but do not beat yourself or your staff up to lower them; this merely reduces your BI recovery. Make sure to also include BI recovery items that are very valuable to your employees, such as lost commissions and tips, and lost lesson revenues for golf and tennis pros.