Insuring Library Items Sent for Treatment

Q. How do I know that the material I send off premises for preservation treatment is properly and adequately insured against fire, flood and other such risks?

A. Prudence is not a virtue that much of anybody in our society is fond of, myself included. Thelma and Louise are my current ranking heroes and the occasional whimper from the back seat tells me that my driving style is somewhat less than cautious. Nevertheless, notwithstanding and regardless, prudence does have its places and certainly one of those places must be in the need to know the answer to the above question.

First let us be clear about the kinds of risk that we are talking about. Insurable risks do not include mishandling. All preservation treatment requires extensive handling of the original and frequently its modification. The degree of risk involved in such treatment make it beyond the scope of standard insurance. The carelessly trimmed volume, the book that fell in the glue pot, the watercolor that was inadvertently washed, all are uninsurable through a standard policy. Either the treatment provider must be responsible for compensation or the library must assume the risk. In the case of library binding, where the average unit value is low, library binders generally assume responsibility for replacing or paying for items damaged in handling. Conservation treatment facilities cannot possibly do this. The items they treat are each often worth tens or hundreds of thousands of dollars. Treatment agreements for this sort of work usually includes an disclaimer which exonerates the treater from claims against mishandling. How this risk will be covered should be explicitly agreed upon before treatment is started.

Our interest here is in insurable risks. These include loss or damage from fire, flood, accidents during transportation--virtually anything that is not loss from mishandling or mistreatment.

Library binders and microfilming facilities usually carry a fixed amount of insurance based upon an estimated value of the materials in their care. In addition to this general amount expanded coverage is usually available for individual items of extraordinary value. Additional insurance riders of this sort account for almost almost all coverage in conservation facilities. There is, of course, an additional per month charge for this protection based on the amount of coverage.

The first thing that must be examined when evaluating insurance is the likelihood of loss. Each situation must be evaluated separately but experience would indicate that, in general, the frequency of loss is very low. In over 16 years of managing a large library binding program I have experienced only one incident that effected only a few volumes. (This, of course, does not include loss or damage from mishandling.) Regardless of the chance of loss it is important to know whether the insurance is adequate for the material that is covered.

Discovering and understanding this information is not a simple or self evident process. Certainly it was not so to me when I first began to investigate this topic. In fact, it was so confusing I sought the aid of NYPL's insurance brokers who were extremely helpful The first thing you have to know is that insurance comes in several flavors. The kind you want the certified information about is property insurance. In particular you want to know how much coverage there is on "the property of others in the care, custody and control of the insured." You also want to know the coverage for transportation if your vendor is responsible (as are most library binders) for their own shipping. In addition to property insurance it would be good to know their coverage for general liability in case you should make a claim against them for something other than damage or loss of material such as non-compliance.

The information you need to evaluate the adequacy of insurance coverage can be given to you in a letter or over the phone but it is advisable to require a Certificate of Insurance or Evidence of Property Insurance. These are standard forms which will indicate: the producer of the form (usually the insurance agent or broker); the insured; the companies affording coverage; the coverages; and the certificate hoder, i.e. who it was issued to, or other interested party, i.e. the potential payee, in other words, you.

If you should decide you will require certificates of insurance from you preservation treatment providers you should do so by letter. Since your vendor may be no more aware than you of the finer points of insurance they will need instructions on what it is you need to know. Rather than letting you reinvent the codex let me give you a sample of what you might include in such a letter.

We require verification of the insurance held by you for our materials while they are in your care. Please issue a Certificate or other Evidence of Insurance which identifies this library as certificate holder and/or "Loss Payee as their interests may appear" and indicates your current coverage in the following areas: property of others; transportation; general liability.

It should also indicate what risks are covered (i.e. "all-risk" or "named perils"). This certificate must be reissued (14) fourteen days after coverage renewal, modifiction or expiration.

Once you have received this information the difficult task of evaluating whether this general coverage (exclusive of item-specific policies or riders) is adequate. This is difficult because the coverage described is not just for your material. It is for all the material in the care of the treatment facility. You must therefore find out how much material is being covered. Your vendor should be able to give you an estimate of the average number of items in their facility at any given time. This will give you an value for the average coverage per volume. You must then determine whether that value is adequate. I think a concrete example would be helpful here.

Let 's assume that Joe Shmoe's Library Bindery of East Cupcake, New Hampshire has $1,000,000 worth of coverage. You determine that he averages 20,000 pieces in his plant at a time. This gives a coverage of $50.00 per volume. How much are your volumes worth? Excellent question. Are they monographs or serials? Let's say that they are some of each. Most of what you send for binding, about 80%, is monographs. How much does an average monograph cost? After much investigation you determine that an average monograph costs $30.00. How much is a serial volume worth? An even better question. Your collection development people can tell you that the average subscription is about $80.00. You assume that most if not all of these are yearly subscriptions rates which leaves you with the question of how much of a serial is in a serial volume? This is a question you can answer from your own completely accurate, exhaustive and terribly well-thought-out statistics. Your library averages approximately 1.25 volumes per year, call it $100/volume.

A simple calculation of 80% of $30 plus 20% of $100 gives an average value of $44/volume. This is less than the average coverage so does this mean that your material is adequately covered? No. This no where near adequate for several reasons. First, these are averages. Deviation from these averages may be significant. Suppose that at one point half of your material at the bindery is serials. Their average value is then $65, well above the average coverage. Or you might suppose that the serials include a volume of Chemical Abstracts which cost would raise the average value significantly. In addition to this your mix of monographs to serials may not be typical. Perhaps 80% of the volumes in the plant are serials in which case the average volume value is $86 for a total value for the $1,720,000. In this case Mr. Shmoe would be under insured by about three quarters of a million dollars. As a rough rule between one and one half times the expected value should be the minimum coverage you require. It is definitely time to give Joe a call to explain to him how most library binders are adequately insured and that perhaps one of those more prudent firms would appreciate you business.

I have assumed in the above that an insurance claim would be based on price. The cost of replacing material is, of course, greater than their purchase price. When I tried to determine whether a claim could be made to recover processing costs the best answer I got was, "You could try." I would like to know if anyone has tried to collect these costs as part of an insurance claim. If any of you have some experience in this matter please contact me care of CAN and I will be glad to share the information with the rest our readers.

All the above has ignored (intentionally) the library's own insurance which may provide some coverage during treatment. Such considerations are irrelevant in evaluating the insurance of others. It is their responsibility to provide for your material when it is in their care to the extent you believe is sensible and prudent.