Cutting property coverage in half could help a Louisiana school board save nearly $60,000 in overall insurance premiums this year. That’s the recommendation from the Tangipahoa Parish School Board’s Finance Committee.
The Advocate reports the committee on Tuesday suggested dropping coverage on its $244 million worth of buildings and contents from $50 million down to $25 million.
John Norris, an insurance consultant, told the committee the reduction will require a waiver from the Louisiana commissioner of insurance.
Escalating premium rates following Hurricane Katrina in 2005 have forced the school district, along with others across the state, to back down from full coverage in order to manage costs, Chief Financial Officer Bret Schnadelbach said.
The district paid $476,333 in premiums for $50 million worth of coverage on School Board property in 2011-12, according to figures Norris provided at Tuesday’s meeting.
Maintaining that level of coverage in 2012-13 would cost the district more than $714,000, Norris said.
Norris recommended cutting the coverage in half to shave $157,500 off the projected premiums, saying the reduced level of coverage would be in line with what other school districts are buying.
Of other surrounding parishes, only Washington Parish continues to maintain full coverage on its $130 million worth of school district property, Norris said.
In addition, the reduced policy limit should cover any reasonably expected losses short of catastrophic storm damage, Norris said. In the event of a major storm, FEMA would “back up” the district’s losses, as it does with other public entities, he said.
The school district will save roughly $59,000 in premiums on all insurance policies combined, including general liability, auto, errors and omissions, excess workers compensation and property coverage, if the board follows the Finance Committee’s recommendations, Norris said.
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