When one policy just isn't enough

Organizing the amount of information we need to perform our jobs effectively can be a daunting task. The amount of information coming at us can be overwhelming. But we must balance our desire for simplicity with the need to consider our most useful options.

For example, isn't the most practical method of buying insurance for your municipality to purchase one comprehensive policy that provides coverage for all of your loss exposures?

Well, maybe not. Although your package policy (insuring your property, general liability, auto and crime) is the core of your municipal risk management program, there are some very good reasons why your insurance agent might recommend insuring some of your loss exposures with separate, monoline policies.

Examples of loss exposures that may be — often times should be — insured outside of your package policy are fireworks, builders risk and liquor liability.

Including "specialty" coverages like these in your package policy does have certain advantages: you only need to remember one expiration date, maintain one policy and process one invoice for payment. And often, the cost of the specialty coverage may seem less expensive as part of a package. But there are equally good reasons why it might be to your advantage to place these coverages separately.

• It is easier to budget and to allocate the actual cost of insurance to a particular event or project. For example, purchasing a builders risk policy for a renovation project allows you to include the actual insurance costs in the project's budget.
• A large claim arising from a unique activity could jeopardize the stability of your primary insurance program for as long as five years through increased premiums, higher deductibles or fewer insurers willing to quote. Separately insuring a unique exposure avoids this possibility.
• Your package insurance policy may have annual aggregate limits of insurance, especially for general and public officials liability. You can protect this limit and make sure it's available for your expected losses by separately insuring your special events.
• You and your insurance representative gain access to the experience and professional services of underwriters, loss control representatives and claims adjusters who specialize in unique loss exposures. For example, buildings under construction present an entirely different set of loss exposures than does a completed structure. A builders risk loss control specialist can provide a service that easily justifies the more expensive premium a separate policy might cost.

Your package insurance policy is your "every day insurance for your everyday activities." Depending on the size and scope of your community, it is good risk management to consider separate insurance for your unique exposures.