TUITION FEES AND BUSINESS INTERRUPTION INSURANCE:
Your best coverage is our only policy.
Loss Exposure:
Just like any other organization, Independent schools have an exposure for potential Business
Interruption Losses, which are triggered by direct loss or damage to the School s physical property caused by an insured peril. The resulting Business Interruption loss is the impact the direct loss or damage has on the school s revenue and/or expenses.
Schools however have certain unique factors that can differ from other organizations in the event of an interruption in operations.
The time period for which a school s revenue and expenses would be affected after a loss has occurred is dependent on when the actual physical damage occurs during a school year. For example, if a loss occurs near the beginning of a school term, students are more likely to seek a refund of their tuition fees and make other arrangements. Once repairs to the facility are completed however it is unlikely these students would return for the remainder of the school year. Furthermore these students may never return.
Secondly if the premises are not fully repaired or replaced before the start of the second school year, enrolment and all revenues could be adversely affected in the following school term as well.
In either case the actual impact on revenue and expenses could go on for a substantially longer period than simply the time required to repair the damages.
The Westland School Insurance Program provides a 24-month indemnity period with respect to the business interruption coverage. This reflects a school s unique exposure. (It is important to note however that the limits of coverage must be adequate to enough to reflect the 24-month exposure).
The definition of earnings is also broadened to ensure that it covers, in addition to tuition fees, all other sources of revenue including government and private funding, revenues generated from special events, grants, sales of textbooks and school supplies and donations. It is likely that these revenue streams would also undoubtedly be affected by any decline in the number of students resulting from an insured peril. As such, these revenue sources must be considered to properly determine a school s Business Income .
Limits of Coverage:
When establishing limits of coverage, consideration should be given to potential loss of net income plus all expenses that will exist.
Schools typically need to carry adequate limits of insurance to cover the potential reduction in income plus fixed costs that would continue in spite of the interruption in operations. As well, limits should provide for any potential additional extra expenses that may be incurred to maintain operations and/or minimize interruption of operations (i.e. renting temporary facilities).
The principle behind Business Interruption insurance is to put the insured into the same position that they would have been in had no loss occurred and not put them in a better or worse position.
If for example enrollment were cut in half, there would likely be some corresponding reduction in expenses, which should be factored in when calculating insured limits.
The timing of the insured loss is also important to consider. If this happened just prior to the beginning of the school year, enrollment would be more adversely effected than if it happened near the end of the school year. In the latter case, it would be more likely that extra expenses would be incurred to maintain operations.
It is important in the end that the insured limits properly reflect a school s worst case scenario.

Your best coverage is our only policy.
:
Name:
Address:
Note: The indemnity period under the Private School Insurance Program is 24 months. Therefore all entries should be based on typical annul figures with allowances made for future projected earnings and costs, as well as the full 24 month exposure period.
Projected Values
Business Income:
5.
6.
7.
1.
2.
3.
4.
Tuition Fees
Government Funding, Grants
Donations, Private Funding
Sales of Text Books, School Supplies or other material
.. $
$
.. $
.. $
Revenue Generated from Special Events
Rental Income ..
. $
$
Other: __________________________________________________________ $
Total School Income: $
Deductions: (Expenses that would not continue during an interruption in School operations)
1.
2.
3.
4.
Rent or Lease costs not subject to contractual payment obligations . $
Non-Continuing Payroll (i.e. Teaching, Custodial or Support Staff not under contract) $
Services purchased from outside organization which do not continue under contact $
Other non-continuing expenses: $
$
9.
10.
11.
12.
13.
14.
5.
6.
7.
8.
1.
2.
3.
4.
Total Deductions: $ [
Extra Expenses:
(costs occurred during the period of restoration in order to continue the normal business activities)
Rental of temporary premises and/or temporary equipment & furnishings
Moving Costs
Preparation & maintenance of temporary premises
Cost of light/heat/power at temporary premises
Utility and Services installation at temporary location
Extra telephone and fax service charges
Extra labour-additional help/overtime/ training
Extra traveling time
Extra transportation expense bonuses for quick service/ expediting expense costs
Announcements/Advertising Costs - radio/TV/mail/Newspapers
Additional cost of insurance
Miscellaneous:
Miscellaneous:
.. $
. $
.. $
$
. $
... $
..
$
$
$
$
$
.. $
$
$
Sub-Total: (Business Income less Deductions plus Extra Expenses) ..
24 Month Indemnity Factor:
(Multiply by a factor that reflects the policy s 24 month indemnity period)
..
Factor for Future Projections: .
(An interruption to the business could occur towards the end of an annual policy term and it is therefore necessary to anticipate at least two years ahead when calculating the amount of insurance required.)
$
X
X
Amount of Insurance: $
]

Your best coverage is our only policy.