CREJ - Journal

Page 8

— Property Management Quarterly — May 2015

ll property managers and

building owners should

know if their buildings are

properly insured, who they

relied on to obtain the exist-

ing coverage, and understand the

policy terms and conditions. Proper-

ty managers should review the pol-

icy, often 80-plus pages, to ensure

the coverage provides indemnifica-

tion if the buildings are damaged

by a covered peril. It is important

to be fully aware of your property

and casualty insurance coverage

because it may have a direct impact

on leasing and tenant revenue,

maintenance costs and the overall

profitability of your properties.

Owners and property managers

turn to experienced and reputable

professionals to provide insurance

coverage on properties and busi-

nesses. An insurance broker is a

professional who provides a valued

service in offering a comprehensive

policy specific to your needs and to

protect the properties in the event

of a loss. In return for a premium,

the insurance company assumes

the risk of covering costs to repair,

rebuild or replace the damaged

buildings caused by covered perils,

per the terms and conditions of

your policy.

To obtain the necessary replace-

ment cost coverage, you want

assurance your policy covers

rebuilding at today’s pricing (not

the market or appraised value).

Many mistakenly believe the prop-

erties are protected if the policy

limit is near the purchase price less

the value of the

land, which is not

insured. Having

adjusted numerous

property claims

on behalf of prop-

erty owners, all too

often we find the

owner is underin-

sured – don’t make

this mistake.

In addition to

limits pertaining to

the building cov-

erage, the policy

also will specify limits for business

personal property, business inter-

ruption or a loss of income, cover-

age and coverage for extra expenses

to assist in mitigating your income

loss. If you own multiple properties,

learn about the benefits of blanket

coverage – a single policy with lim-

its that covers buildings and busi-

ness personal property rather than

obtaining individual policies for

each property.

Services provided by a broker and

an agent are similar, yet it is impor-

tant to understand differences

in responsibilities and perceived

allegiances. A captive agent pro-

vides policies on behalf of only one

insurance company, whereas an

independent agent can provide cov-

erage and premium options from a

number of different insurance com-

panies. Agents’ responsibilities are

administrative in nature because

they must accurately complete the

necessary forms and paperwork.

Neither a captive nor an indepen-

dent agent is obligated to inspect

your property to provide binding

coverage. You may be best served

by having a representative of the

insurance company inspect the

properties before you agree to cov-

erage. Even if coverage is already in

place, an inspection of your prop-

erties may identify risks you were

not aware existed. The report will

provide valuable input for consider-

ation and can establish the insurer

is knowledgeable of many factors

used to bind coverage, such as the

age, use, quality and condition of

the properties, materials used in

the construction of the buildings, as

well as an assessment of risks.

A broker is required to be licensed

and, based on information you

share, has a duty to thoroughly

inspect your properties and share

with you coverage options specific

to your properties and businesses.

A reputable broker continually stays

abreast of changes in coverage

and pricing; is aware of reputable

insurers (those who are inclined

to provide quality claims service);

knows of products offered by mul-

tiple carriers, whether via Insurance

Services Office, manuscript or other

policy forms; attends continuing

education seminars; and schedules

frequent reviews to address your

questions and concerns.

Consequences of having inad-

equate insurance coverage can be

devastating. Your loss could be com-

pound if you lose your business or

property. Ask questions, seek input

and clarification, be knowledgeable

and have a complete understanding

of coverages before, not after, a loss.

Consider seeking input in writing;

while your policy will dictate cover-

age, intentions of the parties can be

supported if they are in writing, and

if there are ambiguities or differ-

ences in how or whether coverages

are extended. Do not assume your

properties are adequately covered.

Request confirmation indicating

you are adequately insured from

your broker or agent. Keep copies of

all records and written communica-

tions with your broker, agent and

insurance company.

If you have not reviewed your pol-

icy in the past six months, it would

be wise to schedule a time to meet

with your broker or agent to review

your coverage in the near future. Be

sure to ask about available “addi-

tional coverages” to further protect

your properties. Options available

for purchase for an additional pre-

mium include endorsements to

include or increase code upgrade

or law and ordinance coverage,

sewer backup coverage, or extended

business income coverage because

these types of coverage may be lim-

ited or may not exist in a standard

policy. If you have a vacant property,

ask your broker if you need a spe-

cial coverage to protect the property

from a loss while vacant. Finally,

ask your broker or agent what he

can do, and what he would do, to

assist you if your properties were

damaged. It’s a matter of trust.

Important questions for your insurance broker

Chris Rockers

Partner, Claim

Solutions Group,

Northglenn

Insurance