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How An Ounce Of Prevention Can Keep You From Financial Ruin

Early childhood educators frequently run their school on a shoe string.  Their priorities always revolve around the program they provide to their enrolled families, their staff and hopefully providing a living for their own family.  As a result, few programs set aside funds for maintenance and repair work which inevitably leads to reacting to a bad situation.
 
A couple of examples will help illustrate the point.  In one school where they owned the building, the wiring and electrical panel was 40 years old.  Once the school brought a new commercial refrigerator into the kitchen they started to experience problems with the kitchen circuit being tripped sporadically.  The cook and owner didn't really think much about the situation, they would just reset the circuit breaker and go on about their day.  They certainly did not ask an electrician to come out and look at the situation because that cost money that wasn't in the budget.
 
About 8 months after the new refrigerator was brought into the school, the owner received a phone call from her alarm monitoring company at 3:30 in the morning.  Her school was on fire.  The alarm company had dispatched the fire department.  The owner arrived in time to watch her school finish burning to the ground.
 
A week later the school owner received the fire chief's report.  It said the fire started due to wiring that had been chewed on by rodents and an overloaded electric panel.  Both of these concerns could have been addressed before a fire had the proper maintenance been conducted.  Although insurance did indeed cover this claim, by the time the school was rebuilt, the owner had to start from scratch again because all her families had long since made other arrangements and all her teachers had found other jobs.
 
Another preschool owner leased her space in a strip mall.  The owner of the building did not do a very good job of maintaining the building but she thought it wasn't her problem.  Unfortunately, she discovered one morning just how much it was her problem. 
 
This particular property desperately needed a new roof and the building owner did nothing about it.  Although the school owner had spoken to the landlord, she had never put the concern in writing.  So the morning she came into school and found 3 inches of water throughout the school she was on her own.  She had no recourse against the landlord because she had no proof.
 
Her furnishings, curriculum materials and computers were all damaged by the water that had poured in overnight.  Without her equipment she could not operate her school.  With water inside the building, she could not operate her school.  With the need to dry out and avoid mold problems, she could not operate her school.  When she filed her claim with the insurance company she found that insurance will only pay for this type of claim if something happened to the roof that is covered by the policy caused the damage inside the building.  For instance, the roof was damaged by wind, hail or fire.  A roof that needs maintenance is specifically not covered in any insurance policy, so the damage caused by the water coming into the school would not be covered.
 
In this situation the school owner wasn't made whole by an insurance company AND they could not turn to the landlord because they could not document their repeated requests for the repair.  This left the school owner out of business because they did not have the financial ability to make the repairs and replace all their equipment and materials.
If you are the building owner, I strongly suggest you include maintenance and repairs in your annual budget.  In months and years you do not have to spend those funds, be sure to save them for the months and years that you will have the expense. 
 
If you are a tenant, I strongly suggest you put all your requests in writing to your landlord.  If you reach the point of making a second request it should be delivered to your landlord with proof of delivery.  You can utilize email with delivery and read receipts, US Postal Service Priority Mail with delivery tracking or one of the other delivery services that require a signature.  The point is if something happens because of the landlord's failure to maintain the property you need to be able to prove you asked more than once for the repair.
I value your feedback.  Please email comments or suggestions to: beth@blockinsurance.net Or, email steven@blockinsurance.net              
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