A Country Club Faces Co-Insurance Issues After Fire Destroys Its Golf Cart Storage Facility

On August 21, 2013, a patrolling police officer reported a fire at the Hampshire Country Club in Dowagiac, Michigan. Before firefighters could extinguish the flames, an outlying building that housed the 53-year-old family-owned facility’s golf carts and maintenance equipment had burned to the ground.

The devastating fire engulfed 120 golf carts as well as valuable maintenance equipment for the vehicles. This disaster was eventually determined to have been started by arson.

When Globe Midwest Adjusters International’s team arrived on the scene, they soon realized the owners would be facing a co-insurance problem. The family-owned 36-hole golf course country club was covered under a blanket commercial policy that included provisions for co-insurance on their Building, Business Personal Property, and Inland Marine coverages.

Co-insurance is a property insurance provision that imposes a penalty on an insured’s loss recovery if the limit of insurance purchased is not at least equal to a specified percentage of the value of the insured building. In other words, Co-insurance penalties are triggered when a policyholder has not purchased enough insurance to cover the value of their insured property. For the country club, this meant that adequate coverage had to be placed on all of their property including the five unaffected buildings, the business personal property stored in those buildings and the remaining scheduled inland marine items.

Would it end up that Hampshire Country Club did not meet the coverage requirement amount and would have to incur a very large penalty on their settlement?

Policyholders commonly misunderstand the role that Co-insurance plays in their policies. In this case, it made filling the claim for all of the damages especially challenging, as the undamaged golf carts, valuable maintenance equipment, and building could have been valued at a higher price point than were actually worth, forcing the owners to pay a co-insurance penalty.

Globe Midwest Adjusters International’s experts worked diligently to prove the value of the undamaged building, business personal property, and golf carts to be within the required amount of coverage that Hampshire Country Club had in place. Through a lot of legwork and research, they were able to prove to the insurance company that the loss should be valued within their coverage limits — taking the Co-insurance penalty off the table.

Globe Midwest Adjusters International was able to successfully settle the business’ personal property claim for $247,405.30 the building damage for $372,986.72 and the inland marine golf carts claim for the limit of $170,794.58 – totaling almost $800,000. By pricing the items using the above described methods, the value of the items not damaged was kept low and the value of the total loss items was maximized to what those items could actually be replaced for, at the current market price. As the Co-insurance penalty no longer applied, Hampshire Country Club did not have to pay a fine to the insurance company and was able to keep the full amount of the proceeds.

Rolly Wells, who received the final check approximately one year after the fire, said that having expert help from the Globe Midwest Adjusters International team made all the difference in helping his business recover from the devastating golf course fire.