Convention Hall Insurance Will Cost $81K Annually

CAPE MAY- Insurance coverage for the city’s new Convention Hall will cost $81,600 per year.
City Council approved a resolution to purchase three types of insurance coverage at a Nov. 20 meeting.
City Manager Bruce MacLeod said primary flood coverage would be purchased from FEMA at a level of $500,000 for the building, $100,000 on contents with a $50,000 deductible. He said the annual premium for the coverage would be $51,155.
“The actual insurance coverage will be procured through Harleysville Insurance Company…” said MacLeod.
He said Convention Hall has existing coverage of $2.5 million through the Atlantic County Municipal Joint Insurance Fund: Municipal Excess Liability. That coverage has a $500,000 deductible in recognition of the primary insurance through FEMA, said MacLeod.
Council also authorized pursuing excess coverage in the amount of $5 million at a cost of $31,600 annually.
During public comment, Jerry Gaffney, a former mayor, councilman and insurance agent, said the level of coverage meant the city would self-insure for $400,000 for building contents.
MacLeod said he was not certain the building contained $400,000 of contents. He said the city was covering $100,000 of contents because items such as chairs and tables could be removed from Convention Hall before a major storm.
Gaffney noted the $50,000 deductible on the FEMA coverage meant the city was self-insuring that amount. He questioned how much money the city was saving by having a $50,000 deductible.
MacLeod said deductibles were available from $1,000 which carried a $100,000 annual premium and seven or eight other options with varying degrees of deductibles. He said $50,000 was the highest deductible for this type of building.
Gaffney said the $50,000 deductible was per loss meaning it would be doubled if there were two incidents in one year.
“Not a wise decision,” he remarked.
Gaffney said the Joint Insurance Fund Municipal Excess Liability fund had a total of $50 million to draw from “which is nothing considering (Hurricane) Sandy’s claims.” He said insurance rates would be based on the construction materials of Convention Hall, its location and its elevation.
MacLeod said the total level of coverage for Convention Hall would be $8 million.
While there has been some question on the elevation of the building, in particular a sump pump room with an elevation of only 8.5 feet, City Solicitor Tony Monzo said that did not result in a denial of flood insurance but the elevations impacted the insurance premiums.
Resident Patricia Hendricks questioned why Convention Hall had only a temporary certificate of occupancy six months after the facility opened.
MacLeod said one item remained to obtain a certificate of occupancy, receipt of an “as built survey.” He said the city had received the survey earlier in the week from the contractor.
Resident Charles Hendricks questioned why the insurance premiums for Convention Hall were so expensive.
MacLeod said he did not know the answer but noted Convention Hall was located in a FEMA V-Zone which carries a large premium.
According to FEMA’s website, V –Zones are: “Areas along coasts subject to inundation by the 1-percent-annual-chance flood event with additional hazards associated with storm-induced waves.”
A FEMA chart of dominant flood hazards in the V- Zone include elevated water level, currents, waves, debris and scour and erosion.