Insurance consultant warns 1% wind‑and‑hail deductibles could expose Charles City schools to large losses; board reviews $50,000 deductible option

An insurance consultant warned the Charles City Community School District board that a market shift to percentage wind‑and‑hail deductibles could expose the district to very large out‑of‑pocket costs and previewed recommendations to offset premium increases.

John Grace introduced the presenter; the consultant (S4) told the board that the district currently has a $5,000 all‑perils deductible and a property premium estimate of $286,165 if the district keeps that deductible. “If we make no changes, you're going to have a property premium of $286,165 by keeping that $5,000 all perils deductible,” the presenter said.

He said carriers are moving to a 1% wind/hail deductible on building value, which can translate into very large dollar deductibles for several district buildings. The consultant illustrated the scale by citing a high‑school/middle‑school building value of about $65,000,000, where a 1% deductible would equal $650,000 for that structure. To manage both premium increases and catastrophic cash‑flow risk, he recommended the district consider taking a higher all‑perils deductible (for example $50,000) to reduce premium costs and purchasing wind/hail deductible buy‑down (secondary) policies that would cap per‑building wind/hail exposure at the chosen level.

The presenter gave a sample comparison: moving to a $50,000 all‑perils deductible could reduce the district’s property premium to approximately $221,009.86 (a reduction of just over $60,000). He said exact quotes for wind/hail buy‑back policies were pending and that the sample buy‑back premium used in the spreadsheet was a conservative estimate.

Board members also discussed cyber limits: the district currently has a $2,000,000 cyber limit and the consultant noted a $3,000,000 limit would cost roughly $2,000 more annually. The presenter recommended three decisions for the board to consider once final quotes are available: whether to (1) buy wind/hail deductible buy‑down policies, (2) increase cyber coverage to $3,000,000, and (3) set excess liability purchase levels.

During the meeting the board later voted to approve the fiscal‑year 2025 insurance plans as listed and directed staff to finalize quotes and bring a recommended final package to administration for July 1 implementation decisions.

Next steps: consultant to return final buy‑back and premium quotes; administration to update the spreadsheet and recommend final selections to the board in advance of the July 1 renewal date.