1 While George Gershwin (ask your parents who he was) likely didn t have fraternities or sororities in mind when he penned those lyrics for Porgy and Bess in 1935, we all like to think that our summer months will be carefree and untroubled. OmegaFi s experience, however, has shown us that summertime can often be anything but easy for Greek houses. What sort of damage is most common for our organizations? Here s a list of the insurance claims filed by number of occurrences and by dollar amount of damage for the FPMA Number of Occurrences (1050 total) Water Damage 38% Hail/Wind 27% Vandalism 8% Fire 7% Theft 4% Total Claim Dollars Paid ($45,016,231) Fire - $30,296,048 Water Damage - $5,567,48 Hail/Wind - $4,927,412 Equipment Failure - $1,437,909 Sprinkler Loss - $749,183 Preventing Losses Most organizations generally recommend that the chapter home be closed over the summer simply because the costs of keeping it open most often exceed the income received. This is particularly true when renovations or improvements are taking place and not all rooms can be rented. While there may be little to be done to avoid hail and wind damage, it is entirely possible to prevent serious damage and improve security and safety when the chapter home is closed for the summer. With little-to-no traffic through the house, the home can be particularly vulnerable to theft, vandalism or unintentional damage. Items that would have quickly been caught can remain untreated and grow into much larger issues. FPMA NEWS Spring 2013 Volume 33 Summertime, and the livin is easy by David Carico, OmegaFi For example, we note above that water damage is the most common claim occurrence. A leaky water hose to a washing machine is a nuisance at most other times of the year, but is not likely to cause major damage when quickly addressed. However, when unattended for days, weeks or more, it can easily cause major damage to walls and ceilings and lead to problems with mold. If your house is closed during the summer and a caretaker doesn t occupy the property, make arrangements for a member, parent or property management vendor to make consistent visits to catch little issues before they cause significant damage. Breaks are also good times to conduct maintenance and improvement projects. Consider the following check list as it applies to your situation. program at Holmes Murphy over the last 10 years: Administrative and General Items Room Check Out - each tenant should be held responsible for the condition of his/her room. As each person moves out, a check list should be used for a thorough inspection of the room. All damages and abnormal maintenance needs should be documented so the tenant s security deposit can be handled properly and any repairs can be addressed before members return for the next term. Collect Keys - Keys are often handed out throughout the year for various reasons (e.g., storage closets, rooms, kitchen, cabinets, files, main door, etc.). Buying new locks, making duplicate keys and using a locksmith can be costly. It s best to keep track of those members who receive keys during the year, and those who don t return their key should be charged appropriately. (continued on page 4)
2 Accidental Sprinkler Activation: Preventing Damage with Sprinkler Head Guards By Matt Hunsberger, President SprinkGUARD, LLC According to a Canadian study, a fire sprinkler head is twenty times more likely to be activated by accident than by fire Sprinkler systems in fraternity and sorority housing can save lives, property, and can save you money on your property insurance rates. Problems can be severe, however, when a sprinkler activates accidently. A single sprinkler head can discharge gallons of water per minute. A Canadian online source said that a fire sprinkler head is twenty times more likely to be activated by accident than by fire. The most common occurrences where inadvertent activation take place include athletic facilities, recreational facilities such as YMCAs, schools, restaurants, retail stores, warehouses, school dormitories, hotels, hospitals, office space, frozen food storage facilities and distribution centers. We have seen inadvertent activations on campuses all over the United States and they are more common than most people think Examples A fraternity member shot at the sprinkler head with an air soft gun. He hit the glass trigger element, causing the sprinkler to discharge. Substantial damage to three floors of the fraternity house resulted in a claim payout of nearly $62,000. A fraternity member threw a football down the hall to a friend, but struck the sprinkler head. The resulting water damage totaled over $82,000. Residents of a fraternity had to evacuate their house after a hallway soccer match gone afoul smashed a sprinkler head, flooding several rooms. Water pouring from the broken sprinkler head caused extensive flooding in two hallways, a stairwell, two bedrooms, the kitchen, a bathroom and two basement rooms. A plumber shut off the water and replaced the sprinkler head, but housing officials surveyed the damage and told residents they could not stay in the house. A student accidentally broke the sprinkler head near the closet in her bedroom while attempting to hang clothes on it. Water flowed from the pipe for 15 minutes before it could be shut off. The water ultimately flowed down the stairs and into some rooms on both the third and fourth floors. The floors of the affected rooms were covered in a thin layer of water, which also dripped out windows and trickled to the lower levels down the outsides of heating pipes. Students living near the affected rooms noted that the damage was widespread but unequal, with some rooms only having small puddles near the doors while others had water throughout that soaked students rugs. In December 2008, Holy Cross College opened a new student life facility. Just three months after the grand opening of the facility, a soccer ball was kicked, shearing off a sprinkler head and the small wirecage intended to protect it. The result was that the new hardwood floor was under water and they lost the use of the new gymnasium for almost five months. It was during this disaster that the SprinkGUARD was created. The goal was to provide industrial strength protection for sprinkler headswithin fire suppression systems. The University of Notre Dame, Purdue University, Holy Cross College and the University of Missouri have purchased guards for applications within their indoor football facilities, student recreational centers and dorms. SprinkGUARD has also been contacted by and have had talks with the Universities of Arkansas, Iowa, Indiana, Illinois, Richmond, Kansas, Kansas State and SMU regarding the protection of their campus facilities, sorority and fraternity houses. We strongly recommend installing guards on all the sprinkler heads in your fraternity/sorority house. Since 2009, SprinkGUARD L.L.C. has continued to develop patent-pending sprinkler guards designed to meet most applications. These applications range from sprinklers found within drop ceilings, to wall mounted sprinklers, to sprinklers found in open line applications.
3 Business INcome/Extra Expense Are you Fully Protected? by mick mcgill, vice President - Client advocacy for Holmes Murphy Business Income (BI) and Extra Expense (EE) is an additional coverage available through most insurance programs. While it is not required, it is a recommended coverage and all chapters owning or leasing a property should purchase it. Business Income (BI) and Extra Expense (EE) coverage protects a chapter against a financial loss in the event a chapter house becomes uninhabitable and the income generated by its tenants is lost. It also protects against increased expenses to keep your chapter operating without interruption. A covered loss must be the cause for the loss of income or increased expense in order to be covered. Business Income (BI) or as it is often referred to, Business Interruption, protects against the loss of your critical cash flow. If the chapter house cannot be occupied due to a loss, you will need to either find alternative housing for your undergraduates or you will need to refund the unearned rent that has been paid. Business Income coverage steps in and replaces the cash flow produced by rent paying tenants needed by your Housing Corporation to meet your financial obligations until the repairs to the chapter house are completed. It is typically paid monthly and is based upon historical net rental income. Net rental income is gross rental income less variable expenses that cease to exist or are reduced due to the absence of tenants living in the chapter house. Holmes Murphy understands the nature of student housing is unique. Their Fraternal Property Management Association (FPMA) policy provides lost rental income protection for up to 180 days after the repairs should have been reasonably completed. Under most policies, rental income coverage ceases 30 days after repairs should have been reasonably completed. Extra Expense (EE) coverage is intended to protect a business from extra expenses incurred to keep a business operating during the restoration period of a loss. If the damage is minor and there is only a need to relocate a few students and/or re-locate them for a short period of time, it is often more cost effective to place them in temporary housing while repairs are being done. Extra Expense (EE) coverage protects against this unexpected increased expense. In the long run, the expenses incurred ultimately reduce the over all cost of the interruption by allowing a Housing Corporation to retain the tenants. Rent continues to be paid and the obligations promised within the terms of the lease agreement are fulfilled. An advantage of the FPMA program is that the stated limit for this coverage can be applied to either a Business Income (BI) or Extra Expense (EE) loss or a combination of both. Most policies require an insured to declare stated limits for each line of coverage. It is important this line of coverage be rerevenue be stated for this cover- viewed annually. At a minimum, HM recommends 18 months age. As rent is adjusted to remain competitive with the local student housing market, the amount declared as stated limits should be adjusted. Over the past several years as the capacity of college and university housing has not been sufficient to meet the growing demand, rent charged by both for-profit and not-for-profit student housing corporations has increased. Despite this increase, many have not re-evaluated their insurance need in this area and do not adjust the stated limits. As a result, they are not sufficiently insured when a loss occurs. A common denominator present in a vast majority of large fraternity property losses has been inadequate coverage for this exposure. This left the housing corporations without a steady income stream creating a significant financial strain on the corporation during the extended period of restoration. Please contact your Client Manager at Holmes Murphy to discuss your BI/BEE coverage and make sure you are adequately protected. Worksheets can be found here on our website to help you determine what is best for your property. Need Property or Liability Insurance? Our FPMA Insurance Program is just what you need! For more information/quotation contact: Tiffanie Havelka ext
4 Summertime, and the livin is easy (continued from page 1) Announce Summer Projects - Summer is the best time to conduct housing projects. If a project is going to require the assistance of the chapter members, it is best to announce it before they leave for vacation. Announcements should be both verbal and written, so no one can claim that he or she didn t know about the project(s). Summer House Manager - The chapter or house corporation should appoint a summer manager who will make sure the house is checked, inside and out, on a weekly basis. The House Manager could also be in charge of overseeing all of the summer maintenance needs. If a caretaker is employed who is not a member, the summer house manager could be responsible for keeping the caretaker accountable. Meet With The House Corporation - A year-end meeting between the chapter officers, the house manager, the kitchen steward and the house corporation would be helpful for evaluating the financial situation and any necessary projects for the break. Safety Report - A safety report should be made periodically, and the end of a school term is one of the best times to do so. A written report should be made and given to the house owner or the house corporation with a copy given to the chapter advisor. Mail Delivery - If mail is received at the house, the post office must be notified of a summer forwarding address. If mail is received at a post office box, someone should be assigned to check the box regularly. Forward the name and address of the chapter s summer correspondent to your Inter/National Headquarters. Officers who work in OmegaFi s Chapter Desktop should also update their contact information so that their OmegaFi Account Manager can help them address summer billing issues quickly. Fire Department, Police and Alarm Company Notification - Be sure to notify the fire department, the police and your alarm company whether your house will be open or closed, and make sure they know the person to contact in the event of an emergency. If the police and alarm company know your property will be closed, they will watch it more closely. Notify Neighbors - Let the neighbors know whether or not your house will be vacant. If a small number of tenants will occupy the house, it would be good for them to introduce themselves to the neighbors. Garbage Pick-Up - Garbage is usually picked up on a weekly basis. If the chapter pays for this service and the need for it is decreased, some money may be saved by lowering the number of pick-ups, or halting them altogether. Telephone Service - If there s a public phone in the chapter house, check into the cost saving possibilities if the phone will not be needed during the summer. Exterminating - When the house is vacant, it s the best time for an extermination company to do a major insect and rodent extermination project. Secure Windows - All windows should be locked. A security bar could be placed in the runner of each ground floor window. For theft prevention and energy conservation, the drapes and blinds should be closed. Security Lights - Exterior security lights with motion sensors help deter trespassers. Automatic timers on a few interior lights also give the appearance that the home is lived-in. Fire Extinguishers, Safety and Alarm Systems - The fire extinguishers and other smoke and fire safety systems should be checked and serviced routinely. It is an especially good time to test all of the safety systems when the building is empty. If the house has a centralized alarm system, alert the alarm company of the vacancy dates. Water Heater & Air Conditioner - Considerable amounts of energy and money can be saved by turning down the hot water heater thermostat(s) and by raising the thermostat on a central air conditioner. Note that just as you should never turn the heat completely off during the winter break, to avoid frozen pipes - it is not advisable to turn the air conditioner off completely; just set it no higher than 80 degrees to prevent the growth of mold and mildew. Check and Service Mechanical Systems - Have a qualified individual check and service the air conditioner, furnace, boiler and water heater. Change Combination Locks - The code to combination locks should be changed periodically. The end of a school term is one of the best times to do so. Even chapter members shouldn t be unexpectedly and irregularly entering the building during vacation time. Secure Expensive Items - If a specific storage closet is unavailable, one room should be designated for locking up all target items for burglars, such as stereos, TVs, VCRs, speakers, paintings, etc. Protection Against Vandalism - Sometimes people break into a building simply for the sake of destruction. Composites, trophies, and chapter knick-knacks are often the target of such vandalism, and some of these items cannot be replaced.
5 Make sure these types of memorabilia are safely locked up and out of sight. All Appliances Unplugged and Individual Rooms Emptied - It s best to have individual rooms entirely emptied, which includes the unplugging and removal of all appliances in the chapter house. This makes the building less tempting for burglars, and it clears the rooms for summer maintenance projects such as painting, resurfacing floors, etc. It also makes spotting damages and making the appropriate deductions from security deposits easier, and allows more flexibility in adjusting room assignments. Bathrooms Check and Service Plumbing Fixtures - The end of the school year is a good time to inspect the plumbing fixtures for leaks and mechanical deficiencies. Water may be turned off to areas of the house that will not need it. Moisture-Tight Surfaces - After a thorough cleaning, it s good to check the tile and other wall and floor coverings to make sure that water isn t seeping through to the under structure. If re-grouting the tile is necessary, summer break is a good time to do it. Exterior and Yard Yard Maintenance - Be sure that arrangements are made so that grass, shrubs and trees are watered and maintained. An unkempt and disorderly yard suggests to predators that the home is unoccupied and may be an easy target. It also presents a negative impression to alumni, parents and potential rushees who may drive by during the summer months. Limit Any Attractive Nuisance - An attractive nuisance is a dangerous condition which has the propensity to lure children. A swimming pool is a good example, and should be drained. Even a No Trespassing sign or locked gates are not sufficient protection for the chapter if a child is injured on chapter property. Secure Outdoor Valuables - Lock up those items that could be easily stolen, such as yard tools, patio furniture, etc. Check Water Drainage - Make sure the gutters and downspouts are clear of debris and in working order so that water will run from the roof properly and drain away from the building. Also check to make sure that there are no low spots on the ground where water could collect next to the building. Kitchen and Dining Facilities Remove Perishable Food - Remove all perishable food from the refrigerator(s) and shelves. Tightly seal any open containers of food that can be stored. The odor of open and spoiling food will attract rodents and insects. Kitchen Cleaning - It is very important that all appliances, equipment, floors, insides of cupboards and refrigerator(s), etc. be thoroughly cleaned. Grease, dried spills, and crumbs will also attract vermin. Service Equipment - All kitchen equipment should be routinely serviced, and a break is an optimum time to do so. Call a qualified service person to inspect the refrigerator(s), cooler, dishwasher, etc. Lock Up Supplies - All kitchen and table service hardware, utensils, cleaning supplies and storable food should be locked away. Limit Kitchen Usage a high percentage of fires in Greek housing are started in the kitchen. If possible, consider locking the kitchen up for the summer months to reduce the danger of fire. Shut Off Equipment If the kitchen is not used during the summer months, turn off the gas and water where possible and unplug all unneeded equipment and appliances. Drain the water from any equipment that has a reservoir or waterlines within it. It can certainly be difficult to give attention to these items with the pressure of final exams and the many duties and responsibilities attendant with the end of the school year, but taking some time to secure the chapter home and prepare it for the summer months, even if it doesn t quite make the livin easy, can make for a cleaner and more organized home for your return in the Fall. For more information, go to: Resources/ David Carico, CFRE, is Vice President of OmegaFi (www.omegafi.com). OmegaFi helps chapters with the billing and on-time collection of member dues, rents and fees, and provides capital campaign fundraising and alumni relations services to House Corporations and National organizations.
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