Rate Hikes Lead to Less Insurance Coverage for Louisiana Parish Schools

September 24, 2012

The Livingston Parish School Board will cut the district’s property insurance coverage in half to keep from paying an additional $224,000 in annual premiums.

The Advocate reports the board voted unanimously to lower the district’s property insurance policy limit from $50 million to $25 million, for an annual premium rate of $607,458.

The district paid $543,409 for $50 million in coverage on $280 million worth of buildings and contents in 2011-12, according to figures provided by insurance consultant John Norris.

Maintaining the same coverage on $288 million worth of property would have cost the district $767,583 for 2012-13, Norris said.

The premium increase is due to changes in the way the insurance industry calculates risk following storm events such as Hurricane Katrina, he said.

Norris recommended the board drop the policy limit to $35 million, for an annual rate of $701,433.

The district’s highest concentrated property value is along La. 16 in Denham Springs, where buildings and contents have an approximate combined value of $32 million, Norris said.

However, the Federal Emergency Management Agency will “back up” the district’s losses if they are caused by a widespread disaster, Norris said.

Making up the difference between a policy limit and the amount of a loss can take years, board member Keith Martin

The district was largely self-insured when Springfield High School burned in 1970, he said, “and it took us 20-something years to come back from that.”

“Sometimes we’ve got to take a chance, and our budget is making us take that chance,” Martin said.

The district has never sustained a $25 million loss in a single event, board member Milton Hughes said.

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