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Insurance renewal review: new 2% catastrophic deductible and $3.5 million equipment shortfall
Summary
County staff reviewed the ICAP insurance renewal: a new 2% wind-and-hail deductible triggers for ISO-declared catastrophic storms; staff reported equipment replacement values are about $3.5 million below current replacement estimates and recommended updating values rather than buying a deductible 'buy-down' policy.
MADISON COUNTY
County officials and the insurance representative reviewed the upcoming ICAP renewal, due July 1, and discussed two decisions: whether to purchase a deductible 'buy-down' policy and whether to increase equipment replacement-cost valuations.
The insurer described a policy change that would make wind-and-hail loss deductibles equal to 2 percent of a building's value if the storm is declared catastrophic by ISO; otherwise standard deductibles would apply. The representative said only a minority of recent storms have been declared catastrophic and that widely isolated hail events are unlikely to qualify.
Staff discussed a buy-down option that shifts deductible exposure to another policy but warned the additional premium for that coverage could be costly (estimated in the transcript at 7—0% of the coverage amount in some examples).
County staff reported that a recent review of equipment replacement costs (road graders, heavy trucks and other county equipment) showed the county's values were approximately $3.5 million below current replacement estimates, which would increase annual premiums by an estimated $20,500 if corrected. Staff recommended updating replacement values and said they did not favor purchasing the buy-down policy because of the high premium.
The board directed staff to proceed with updating replacement values and to bring a finalized renewal and recommendation back to the board in two weeks for approval.
