Lyon OKs insurance, but plans to shop around

An agreement with the Nevada Public Insurance Agency Pool, a cooperative insurance agency, was grudgingly approved by the Lyon County Commissioners, but the business relationship may not last.

Angered over the Nevada Pool's failure to come to an agreement to replace the Silver City Schoolhouse, which burned in 2004, Commissioner Bob Milz advised the company representatives that the county would be looking elsewhere for coverage.

"What's the point of having you guys insure the county, then when we have an event, you want to give us half the value of what we need?" he asked. "What if we have another event, say this building burns down, and it cost $5 million or $10 million or $15 million, are you going to give us half of that?"

Milz was hesitant to approve the contract initially, but acknowledged the county needed insurance, and since the current contract expires on July 1, 2008, the premium of $546,334.22 has to be paid by that date and the commissioners won't have another meeting until July 3, they risked cancellation if they didn't vote to approve.

The commissioners voted 3-0 to approve, with Commissioners LeRoy Goodman and Larry McPherson absent.

Wayne Carlson, representing Nevada Pool, said the schoolhouse fire, other losses and an increase in the appraised value of county buildings contributed to a 10 percent increase in the county's insurance premium.

He also said the company now hired appraisers from Maximus Appraisers to assess the value of county buildings.

Carlson pointed out that Lyon County didn't have a co-insurance clause in the policy, so there was no penalty for undervaluation.

County officials allege that the Silver City Schoolhouse was undervalued and the insurance company only offered about $400,000 to replace it, less than half the actual costs. After three years of battling, the commission last year voted to pay to rebuild the building out of the county Surplus Building Maintenance Fund, and try to recoup costs from Nevada Pool later.

Carlson alleged that the plans approved by the county included modifications the company was not willing to pay for.

"The value is listed at the time of the loss," he said. "What it cost to replace the building at the time of loss, not something different."

Milz said the POOL agency had insured the schoolhouse for 15 years, knew it was in the historic district, yet only was willing to pay actually costs instead of doing what the district requires.

The pool insurance agency and those close to the Silver City Schoolhouse have debated the insurance issue since the building burned. Part of the problem stems from the schoolhouse's definition of whether it is an historic building.

Milz accused the agency of "a blatant attempt to stall any settlement" and preventing any resolution to the dispute over the cost of the schoolhouse.

The issue is not in arbitration, Carlson said, and each side has an appraiser that is going over drawings and specifications. The appraisers are then supposed to assign a value to the building.

"This has been stalled and stymied," County Manager Dennis Stark said. "We provided records a number of times and we're still sitting here making no progress. If I had my druthers, we'd be in court right now."

In a letter, Silver City Town Board president Erich Obermayr said Nevada Pool was unwilling to honor its obligation to replace that building in like kind and quality. "They used many different stalling tactics to avoid meeting their obligation."

"The schoolhouse was a vital part of our community and a treasured historic structure," he wrote. "It was a fully insured public building, but if not for the county, we would today, four years after the fire, be no closer to rebuilding it than we were the day after the fire."

Contact reporter Karen Woodmansee at kwoodmansee@nevadaappeal.com or call 881-7351.