District Energy, 2007, 4th Quarter - Sample Partial Issue

system would submit a claim to one carrier, and it is adjusted without a conflict between two companies. If a system has separate insurance companies for property and equipment breakdown, it is very important to have a joint-loss-agreement endorsement. This endorsement defines the role of each insurance company in the event of a loss and should be on each company’s policy. This will help to eliminate the problem of both carriers expecting the other to settle the claim while the policy holder is stuck in the middle, with no money to get repairs going.

One of the side benefits of insuring with a good equipment breakdown carrier is use of their inspection services. State and city ordinances require inspection and certification of boilers. The inspections done by the insurance company would meet the need of the local ordinances, saving the equipment owner the expense of paying a third party to do it.

Insurance companies can assist district energy systems in other areas as well. Equipment breakdown carriers

With all the value equipment

breakdown coverage provides,

district energy systems should

consider leveraging their

coverage in their marketing

to potential new customers.

often offer consultation on disaster planning, expansions and new projects. Some carriers now even provide infrared thermography to detect heat variances and potential weakness or failure spots. Systems should check with their insurance companies to see the full range of services they have to offer.

With all the value that equipment breakdown coverage provides, district energy systems should consider leveraging their coverage in their marketing to potential new customers. It could be an attractive selling point that system customers can save on insurance premiums by not having to purchase their own equipment breakdown policies. They also do not have to worry about pollution

8 District Energy

issues from burning their own fuels or keeping up on other constantly changing environmental regulations.

While most companies in the energy business, including district energy systems, do have equipment breakdown coverage,

District energy systems with equipment breakdown coverage should review their policies to see if office equipment is also included. Most policies have been expanded to include computers and other electronic equipment under the definition of covered equipment. Power surge is a common cause of loss that is excluded from property policies. It is common to find coverage for equipment that is more electrical than mechanical, such as transformers, switchgears, voltage regulators, computers, fax machines, copiers and phone systems.

they should be sure they know what their policies cover and what they do not. Systems must make their maintenance people aware of this coverage so no potential claims will be overlooked, and when equipment breaks down, they must also be sure to submit a claim to their insurance carriers before proceeding with any repairs. By paying close attention to these fundamentals, policy holders can maximize the benefits of their coverage and limit any financial losses incurred through breakdown of their equipment.

Kenneth Cooksey, CPCU, is a senior vice president at Acordia Inc., a Wells Fargo Banking company that provides insurance brokerage, financial and consulting services. It is the fifth-largest insurance company in the U.S., with offices throughout the country and overseas. In the insurance industry since 1978, Cooksey specializes in insurance for companies in the energy field and works in Acordia’s National Energy Practices Group. He can be reached via email at ken_cooksey@acordia.com.

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Acordia has grown to become one of the energy industry's largest and most knowledgeable partners, with the ability to analyze exposures and offer competitively priced risk transfer alternatives. Today more than ever, energy companies look to Acordia for bonds, property and casualty insurance, workers' compensation, employee benefits, and much more.

Acordia is the fifth largest insurance brokerage firm in the world, and the largest bank-affiliated insurance brokerage firm in the U.S. with offices in every state.