When a House Is a Home… and a Museum

How One Insurance Agency Is Helping to Preserve Historic Homes and Businesses

While other insurance agents are visiting manufacturing plants, shopping malls and office parks, Brian Phoebus hangs out in historic homes, renovated museums, art galleries and performing arts theaters. His haunts include Montpelier in Virginia, the lifelong home of James Madison; the African Meeting House in Boston; the Walnut Theater in Philadelphia, the oldest theater in the country; and famous venues on Manhattan’s Broadway.

If that’s not enough history, Phoebus’ own office is in a 100-year-old building in Baltimore’s financial district. “We live and breathe this,” he said. “We love what we do and it is an interesting aspect of insurance.”

The “this” is working with individuals, groups, businesses and insurers committed to preservation and restoration of historic homes and sites.

Phoebus is director of National Trust Insurance Services (NTIS), a joint venture between Maury Donnelly & Parr Insurance Agency in Baltimore and the National Trust for Historic Preservation (NTHP), a national, privately funded nonprofit with more than 250,000 members that works to preserve historic places and supports community revitalization projects. As the NTHP’s insurance partner, NTIS works with members and affiliated organizations of the NTHP. NTIS also provides services to other historic property membership groups including the League of Historic American Theaters and Historic Hotels of America on an informal basis. NTIS has more than 2,000 clients in 48 states.

“We act as a resource for stewards of historic properties and nonprofits and try to help them become a little bit more savvy and educated about their needs, exposures and the gaps and deficiencies that sometimes exist in standard insurance policies,” Phoebus said.

Program History

NTIS was created in October of 2003. Prior to that, the National Trust had relationships with individual insurers, rather than with an insurance agency, and each insurer met a specific insurance need. But members began asking for a more comprehensive approach.

Phoebus used to work for Chubb, which had a personal lines program for historic homes. After Chubb ended the program and he moved on, Phoebus successfully pitched the National Trust on the idea of a broad program that would include companies like Chubb and Fireman’s Fund and additional standard and surplus lines carriers. His program would address all of the property and liability concerns of the owners of historic homes, hotels, theaters, museums and cultural institutions along with those working to renovate and revitalize these properties and their neighborhoods.

Among the NTHP’s key affiliates are private non-profits known as Main Street groups that have formed in towns across the country. These local groups strive to bring more economic activity to their business districts. “From a non-insurance point of view, they’re trying to get the businesses out of the malls and strip malls and get them back onto Main Street,” he said.

There are more than 40 Main Street coordinating programs sponsored by states from California to North Carolina, and cities including Boston, Orlando and Portland. Each has a governing board of business and property owners, residents, city officials, financial institutions, and other groups. An average-sized Main Street program has 40 to 60 volunteers; smaller downtown districts may have fewer, according to NTHP. Many of the activists own and live in the historic properties in their Main Street districts.

“[W]hat we realized early on in this program is that there’s an incredible pride of ownership that goes along with these groups. They usually work there, live there, or volunteer there because they love these buildings,” Phoebus said. Owners tend to pay close attention to the upkeep and renovations needed on their properties, an attitude Phoebus believes makes them more attractive insurance risks. “Because of that, we’ve built in some above-average coverage components we feel are critical to the ability to restore these buildings to their original splendor if something ever occurs,” he said.

NTIS clients include historical societies and preservation organizations, or “house museums” as Phoebus calls them, small historic sites and museums. NTIS also advises theaters, hotels, churches and synagogues, many featuring magnificent architectural detail and some of which have been converted to apartments or condominiums.

Market Challenges

These special properties, some of which showcase irreplaceable items of art and history, should themselves be considered pieces of fine art, in Phoebus’ view. That’s a view that scares many underwriters, Phoebus said, since underwriters typically fear structures built before a certain year using difficult-to-replace materials

“They’re scared of having to get involved with these at the time of damage,” Phoebus said. “Most carriers still are most comfortable settling claims using materials that are available at bigger box retailers.

The main difficulty in insuring these homes and buildings is arriving at a valuation that everybody can live with, according to Brian Klepchick, commercial lines program director for the Northeast region for Fireman’s Fund, a key partner for NTIS.

“A whole different type of appraisal needs to be done to make sure everybody understands what it would cost to reconstruct with the orginal architectural features, workmanship and materials that were there in order to get it back to its historical splendor and maintain that significance,” he said.

Older buildings are more complicated, and not all underwriters would go through the effort to differentiate a 100-year-old building that’s had its air conditioning, roof and wiring upgraded versus one that has not been so carefully restored. “There’s much more complicated analysis,” Klepchick said.

Phoebus agreed that obtaining a true valuation is a challenge, but so is getting a client to accept a valuation where the replacement cost often far exceeds market value: Costs can range from $250 to $3,000 a square foot.

Filling Insurance Gaps

Phoebus also tries to help owners of hisproperties fill gaps they are unaware of, such as loss of business income— because many policy forms to do contemplate the seasonal nature of small businesses.

Coded changes — where owners are told they must upgrade their structures to meet new building codes, Americans with Disabilities Act accessibility requirements, or green energy certification— are also an issue.

“Historic structures are often trying to blend the preservationist and conservationist movements together so that they can maintain that history and the splendor of their architecture,” Klepchick said.

These modifications can be costly and, according to Klepchick, owners of historic structures often have trouble obtaining the ordinance of law coverage they need, unless they go through a special program like NTIS. Mixed occupancy risks, which are common in Main Street districts, pose another challenge. There may be apartments or condos upstairs and a shoe store or law firm on the ground level. There are only a handful of insurers that will insure mixed-use buildings, according to Phoebus.

Other Markets

Phoebus said he commonly turns to multiple carriers to place the coverages that an owner of an historic property needs.

Fireman’s Fund is his “go-to” market for larger historic sites, house museums, theaters, historic hotels and better-protected habitational business. NTIS also works with Fireman’s Fund on larger, well-managed restoration projects on these properties. Fireman’s Fund will also write non-property lines of coverage for NTIS clients.

But NTIS also has partnerships with Chubb and Great American for nonprofit directors and officers liability and EPL. He said he places a “good amount” of small business with The Hartford and some museums and theaters with Great American.

NTIS also accesses surplus and specialty markets for its most difficult risks, particularly those in catastrophe prone areas, as well as vacant and dilapidated buildings.

“Some of the oldest areas of America are on the coast, the Charlestons and Newports and Savannahs. We certainly get our fair share of coastal business. But there is a lot of incredible historic business all over the country,” Phoebus said.

The relationship between NTIS and Fireman’s Fund was recently enhanced to make NTIS the sole-provider of the specific historic property coverage product that Fireman’s Fund offers. Now any agent can access the coverage through NTIS.

Phoebus said he hopes to further expand the NTIS distribution model so that an agent in any town across America who has a need for historic property coverage can come to NTIS for a quote.

To get the word out, NTIS attends 30 to 35 different conferences across the country, where it exhibits and conducts educational seminars on risk management. Phoebus also writes articles for association newsletters. He said the NTHP actively promotes NTIS to its members as well.

Topics Carriers Property Chubb