Disaster Sparks Insurance Coverage Reviews

September 10, 2013 by · Comments Off on Disaster Sparks Insurance Coverage Reviews 

Editor’s Note: Woodall’s Campground Management (WCM) contacted several campground insurers to comment on the fires in the West. Following are excerpts from their comments.

When it comes to forest fires, there are a few different coverages that apply, noted Damian Petty, an agent for Leavitt Recreation and Hospitality Insurance. Insurance can pay one of two ways:

•  “If the fire actually comes onto the property and catches a building on fire, most people have some type of business income coverage. However the key is the building or item has to be covered by the policy to trigger the business income coverage. For example, let’s say you have 40 sites that are on the back portion of the property but no buildings caught on fire. It would not trigger the coverage. However having just a few things insured like fences, outdoor equipment, pedestals or something like that is always a good idea because this could trigger the cancellation of business income coverage.

“With this being said and if coverage was available, most people don’t understand that the insurance will only pay for Net Profit, Continuing Expenses, and, if purchased, Extra Expenses. It will pay until the buildings are replaced or repaired and normally only up to 12 months. Most people think that it pays for Gross Income and this is what causes most of the problems when people get the check from the insurance company because it is much less than the gross income they thought they were going to get.

So, how does the insurance company go about determining the loss?

“Normally, they will look back on prior years’ taxes or accounting records to determine actual loss and compare them to your records during the time you were closed.

•  “The other Business Income that is on almost every policy is one for Civil Authority. If the forest fire is headed your way and civil authority requires you to leave your property, you have coverage for two weeks. Some companies are extending this to three and sometimes four weeks. However, one of the key parts to this coverage is you have to be required to leave your property as well as be gone for 72 hours before the coverage is triggered. They will pay you for your loss of income back to the first day you were required to leave, but the 72 hours is a deductible. For example, if you were required to leave like in the Canon City fires in Colorado this year, they were allowed back in and could open within the 72-hour period so no coverage would be offered. Some companies are doing right by people and paying because the road was closed for 68 hours but they don’t have to, according to the policy terms. However, the South Fork Fires in Colorado this year were a little different. They were required to leave for 8-10 days depending on where the business was located. This will pay for the entire time they were closed.”

Things that are not covered:

• You might be requested to prepare to be evacuated. The policy does not cover you for this time.

• Cancelation of reservations for future dates. Let’s say the fire is in June but people cancel for August. It will not pay for these.

• Maybe your resort is not closed but the highway that is mainly used to get to you was closed but people can drive around and still get to your resort.

• Extra Expenses might not be covered depending on the language in the policy.

• Your buildings burn on Sept 30 and you close for the season on Oct 10. They will only pay for loss of income for 10 days.


Tom Gerken

Tom Gerkin, an independent consultant for USI Insurance, reported, “Business interruption insurance or loss of income coverage is definitely a coverage option which most park owners take advantage of. Some insurance companies include some limited coverage in their policies with no additional premium charge, and with an option to purchase higher limits. Others offer it only as an option. Some carriers require you purchase a specific dollar amount of coverage while others leave this area wide open with ‘actual loss incurred’ policy language.

“The important thing for business owners to be aware of is that this is coverage for net income plus ongoing expenses, it does not cover their gross income. Oftentimes, lenders will ask park owners to provide coverage limits equal to their gross income. This is not prudent, as the premiums can be significant. Park owners should be certain their coverage is adequate, but not excessive. Most policies have a deductible for business interruption insurance as well. Instead of a dollar amount, the most common deductible I have seen is a 72-hour deductible, meaning there will be no coverage provided for that initial time frame. As with any insurance, the intent is to place you in the condition you were in prior to the loss.”


Campgrounds can guard against the loss of business while they are forced to close if they carry “business income and extra expense” coverage, also called “business interruption” coverage.

Lucas Hartford

This insurance covers the campground if there are government ordered closures that affect the business, explained Lucas Hartford, president of Evergreen USA.

“Most typically, we see this with wildfires in the West or hurricanes on the East Coast. Most companies usually have a deductible period of one to three days of closure before the coverage begins but after that the business is compensated for their net income loss,” Hartford said.

He estimated that 35% to 45% of campgrounds do purchase this coverage with limits varying from $5,000 of coverage to $5,000,000 of coverage.  But the average campground buys $50,000-$200,000 of coverage, he said.

“So far this year, Evergreen has been very fortunate and had very few large natural disasters affect its campgrounds that it insures,” he said. “The biggest natural disasters we have had have been some localized severe thunderstorms in the Northeast and Midwest. But we are remaining cautiously optimistic as hurricane season is upon us which is typically the greatest peril we face for our insureds.”



Risk Managers Tell How to Prepare for the Next Disaster

July 19, 2011 by · Comments Off on Risk Managers Tell How to Prepare for the Next Disaster 

Some of the damage from a tornado that decimated the Village Green Family Campground on June 2.

Read this and other stories in the July issue of Woodall’s Campground Management going out this week to more than 13,000 campgrounds in North America.

One of the more severe storm and flood seasons in recent years has caused concern among the nation’s RV park and campground sector and the risk management firms that insure them.

As of mid-June, at least 1,300 tornadoes had struck the U.S. this year, leaving numerous deaths and billions of dollars in destruction in their wake in Alabama, Kentucky, Massachusetts and elsewhere. Add in some rampaging floods along the nation’s rivers from Minot, N.D., to Natchez, Miss., wildfires out West and elsewhere, trees falling on public park campers in New Jersey and the start of what is projected to be a tough hurricane season throughout the Gulf Coast, and, well, you get the picture.

Here’s a rundown on calamities, past and future.

“It’s been the worst season in the U.S. for tornadoes since 1974,” said Lucas Hartford, president of Lewiston, Maine-based Evergreen Insurance, a leading insurer of campgrounds. He estimates 20 campgrounds, including six Evergreen clients, have sustained tornado damage already this year and many others have sustained lesser wind and storm damage. “As for tornado damage, it’s been a record year,” he added.

Leavitt Recreation & Hospitality Insurance Inc., based in Sturgis, S.D., which insures 1,200 RV parks and campgrounds, counts just two clients on the list of campgrounds hit by tornadoes so far this year — a North Carolina KOA and a Kentucky Yogi Bear park.

USI Insurance, based in Cincinnati, reported similar results. “Two of our clients were hit by tornadoes or microbursts, both in the Northeast section of the country,” reported USI Consultant Tom Gerken. “These just happened at the end of May. Fortunately no one was hurt and it appears the majority of the damage is to trees and landscaping, some real property damage with the resultant debris removal.”

The Village Green Family Campground in Brimfield, Mass., took a direct hit from a June 1 tornado, destroying 95 of 97 RVs parked at the campground and killing a camper, 52-year-old Virginia Darlow.

Jimmy Tumblin

All the trees on what was a wooded campground were blown down.

It was perhaps the worst tornado damage thus far this year at a U.S. campground, made even more rare because it struck a facility in central Massachusetts. But it could have been worse.

Campground owner Lester Twarowski said there were a dozen campers and another 10 family members at the campground when the storms hit, The Republican reported. Having received a phone call warning of the storm’s approach, Twarowski and his maintenance worker informed everyone and herded all but a few into the basement of a house on the property. “We stood in an area the size of a pickup bed, huddling and hugging,” Twarowski said.

After the storms, those on hand formed human chains to help firefighters lift the few injured people up inclines, said Twarowski, adding that he feels bad for those who left their campers at Village Green because some lost important belongings. But he is also grateful that the storms came when there were only a dozen campers and not on the previous weekend when there were 500 people there.

On June 13, a woman and her grandchild were killed when a tree fell on their camper while staying at a campground in northern Mississippi, and a storm-related death was also reported at an Iowa park.

Now Let’s Take a Look at Hurricane Season Prospects

Atlantic Hurricane Forecasts for 2011. Chart shows forecast of NOAA, Colorado State University and Weather Services International. Chart courtesy of Weather Services International.

The Atlantic hurricane season officially began June 1 and, according to reports, has the potential to affect RV parks and campgrounds from the tip of South Texas to the Maine coast and even the Canadian Maritime Provinces.

The National Oceanic Atmospheric Administration (NOAA) projects six to 10 hurricanes will hit U.S. landfall this season with three to six of them termed major, Category 3 or higher. That would put the season slightly above average, the insurance people note. (See chart at left)

Outperforming other, primary, public forecasters on named storms by 25% since 2006, Weather Services International (WSI), a Weather Channel company, predicts 15 named storms, eight hurricanes and four major hurricanes (Category 3 or greater).

The U.S. has been largely spared the last two years, with no hurricane landfalls since 2008, a relatively rare occurrence. According to WSI, we’ve not gone through a three-year period without a hurricane landfall since the 1860s. “Our recent good fortune in avoiding landfalling hurricanes is not likely to last,” said Todd Crawford, WSI chief meteorologist.

Jimmy Tumblin, vice president and co-owner of Leavitt Recreation and Hospitality Insurance Inc., who grew up in Florida and maintains his office in Calabash, N.C., is a hurricane veteran and takes an informed view of the disaster threat. Personally, he would rather face a hurricane than a tornado, he said.

Unlike tornadoes, hurricanes come with considerable warning, giving campgrounds and their guests a relatively good amount of time to seek safety. “You can board up your windows and anything with a Class 3 or below you can easily survive,” he said.

As for Those Rampant Floods and Wildfires

Lucas Hartford

Heavy winter snows and record-breaking late spring snowfall in the Rockies and elsewhere in the West have created record floods in Washington and along the Missouri and Mississippi rivers in the Great Plains and downstream from there.

As for flood frequency, 2011 has been an “above average season but if you look at the past 16 years, three years have been worse than this in terms of flood claims, so it’s not a horrible flood season,” Hartford reported. “But for those campgrounds along the Mississippi or the Missouri rivers, they’re getting hit hard.”

Floods pose a special risk to campgrounds.

“Flood insurance is separate from all other insurance,” Tumblin noted. “Most of it is underwritten by the National Flood Program, which may go through some major changes. Realize from an insurance standpoint, flood insurance doesn’t do a campground owner a lot of good. Flood insurance is basically for four-walled buildings. In a flood the major damage is to sites and grounds and you can’t even purchase coverage through the National Flood Program. That’s the ‘down and dirty’ way to put it: four walls and a roof.”

“You can go to a broker like Lloyds of London and buy ‘differences in conditions’ coverage that will bridge the gap but most campgrounds won’t bother with that. They can’t afford it. With flood insurance, there is a cap on any one building, so a lot of damage from floods is not covered.”

Meanwhile, with wildfires making a lot of headlines lately, Tumblin said the major claim stemming from wildfires is loss of income – income disrupted when wildfires force campgrounds to close until the fire threat has subsided.

So, What Advice Do These Experts Offer Park Owners?

“There are three big things we suggest in regard to natural disasters,” Evergreen’s Hartford told Woodall’s Campground Management.

  • In the short-term, secure anything that is loose, such as canoes, picnic tables and awnings. They can become “flying missiles” in storms and pose damage to property and people.
  • In the long-term, preventative tree-trimming is important. “Falling trees and falling limbs have become the No. 1 claim as far as frequency,” he said. “It used to be ‘slips, trips and falls.’ I think campers out there expect a different level of tree care and care in general throughout the campground.”
  • And formulate a disaster plan. “Some states are starting to require disaster plans on hand,” said Hartford. “No state is enforcing it, but it’s becoming important. Campground owners should discuss how to handle staff and their campers and have a general plan.” Hartford, whose company will present a seminar on this topic at the 2011 ARVC Conference in Savannah, Ga., also suggested that park owners consult for a good understanding of how to draft a disaster plan.

In addition, Evergreen advises campgrounds to have handy pre-printed instruction sheets to hand out to campers in case of evacuation. These notices should include handy information such as the locations of storm shelters, evacuation routes and key phone numbers to avoid traffic bottlenecks if campers have to evacuate.

Evergreen does not discourage the construction of storm shelters at campgrounds, but concedes that the cost to do so is usually prohibitive. “With the tornadoes,” Tumblin added, “the key is not to leave things lying around and have a plan in place. The federal government has some great preparedness plans. That’s about all you can do.”

Flood prevention? Other than sandbagging, there really isn’t much you can do, he added.

Tom Gerken

Gerken, for his part, offers this advice: “Park owners should have a well thought out and very thorough emergency disaster plan in place. All staff should be trained on what to do in the event of a natural disaster or other emergency situation, which may occur. Flood, fire, medical emergencies and weather-related (circumstances) are just a few of the areas to consider. The plan should include procedures to cover everything from early warning to disaster recovery after the fact.

“Three primary areas to consider are protection of people, protection of property and protection of income, and the ongoing revenue stream,” noted Gerkin, an industry veteran. “When going through the planning process, park owners should consider all the various scenarios that might impact the smooth ongoing operation of the business, cause injury to guests or employees or damage to property. Applying common sense to the development of an initial plan you may look first at ‘What is the worst that is likely to happen?’ An occasional ‘drill’ for handling various situations is also a good idea.”

Business Interruption Insurance Among Other Valid Considerations

Hartford also recommends campgrounds carry “business income and extra expense

insurance, also known as “business interruption coverage.” This coverage comes in handy when a business isn’t able to remain open, or is partially closed, such as when a camp store burns.

“About two-thirds of campgrounds carry business income coverage,” Hartford estimated. “It’s especially important in the campground industry where a lot of parks are family-owned and this is their sole income. They really need to make sure they have this coverage.”

Tree loss insurance? Trees can make the difference in a campground, and when they are damaged, the loss can be compounded. Most companies offer a limit on coverage for tree loss, usually $25,000.

The goal of this whole conversation, of course, is the prospect of life after a disaster strikes, and, as insurers are well aware, there’s plenty of examples of that.