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2012 ISO Commercial Property Changes
The 2012 ISO Commercial Property filing changes both policy forms and endorsements. The forms have an edition date of October 2012. Since the changes include both broadening and reduction of coverage, agents need to be aware of any reductions to reduce the E&O exposure. This article will deal with all of the major changes.
2013 ISO Commercial General Liability Changes
ISO revised various General Liability coverage forms and endorsements effective April 2013 to reflect the changing needs of insureds and insurers. As with all program changes, the revisions include broadening of coverage, narrowing of coverage, and editorial changes that have no impact on coverage. Of course, it is the narrowing of coverage that always presents an E&O exposure. This article will discuss the many changes in the program and indicate the impact the change has on coverage.
A Word About Murals
If your client has a mural on the inside or outside of the building, how do you cover it? Is it covered by the property policy? Is there any special wording in the proprietary form that provides coverage? Many agents don’t consider insuring a mural, but it could be a very expensive exposure for your insured. This video session explores the coverage needs of a mural.
Are You Overlooking a $25,000 to $500,000+ Property Exposure?
A mural is a very real insurance exposure. One underwriter reported writing $500,000 coverage on an exterior mural. Just for the mural, NOT the building. Just an “average” mural (painted by a local, unknown artist) can cost the building owner between $10 and $20 per square foot. Meaning that even a relatively small mural (20x20) could cost up to $8,000 to have redone.
DOPE Excludes Stupidity
Departments of Insurance across the country are bracing for the introduction of new commercial property policy language promised by the newly-formed property insurance bureau the Dominion of Organized Property Exchanges (DOPE). How might the “Injudicious Act” exclusion affect property pricing?
How Many Different ‘Values’ Can Property Have?
Property can be assigned many “values” depending on the purpose of the valuation and who is valuing it. But insurance is concerned with only four options: actual cash value, replacement cost, functional replacement cost and market value.
How Much Insurance Do I Need on My Building?
An insured buys gets a steal on a new building, paying $2.5M for a building with a replacement cost of $12M. The insured is concerned with protecting his investment rather than the cost to rebuild. What should the agent do?
I Bet the Named Insured Doesn’t Own the Building! Have You Asked?
Never assume the named insured owns the building. You need to ask what seems like a ridiculous question because ownership of the building may be held by another “person” related to the operation. The president of the corporation may own the building personally, but in his mind there is no difference. Not protecting the actual owner can create a huge gap in coverage.
Improper COPE Information Costs Billions – for More Than Just the Insurance Carrier!
Commercial property underwriters have utilized essentially the same information for nearly 400 years: Construction, Occupancy, Protection and Exposure. Known to us mortals as “COPE.” When the correct COPE information is provided, the insurance mechanism performs as intended. However, ISO estimates that approximately 50 percent of commercial properties are incorrectly “rated” from a COPE perspective. The result, $4.5 Billion in commercial property premium leakage over four years.
Insuring Leased Real Property…An E&O Time Bomb
Your insured leases (all or a part of) a building and the lease makes him responsible for damage to the HVAC equipment. The lease might also make him responsible for other real property beyond just the space he occupies. He has a BOP policy for his business personal property…does the FDLL coverage take care of the real property exposure? Is there a need to include some building coverage on his BOP policy?
ISO’s 2017 Commercial Property Form Changes
September 1, 2017, ISO introduced six new changes to the commercial property program. As part of this filing, ISO altered the CP 10 30 Cause of Loss – Special Form, introduced two new building coverage options for tenants, revised two protective safeguard endorsements, created new waiting period options for the CP 15 45, created a new optional coverage for ordinance or law, and introduced a new ordinance or law option for tenants.
If your client has a mural on the inside or outside of the building, how do you cover it? Is it covered by the property policy? Is there any special wording in the proprietary form that provides coverage? Many agents don’t consider insuring a mural, but it could be a very expensive exposure for your insured. This video session explores the coverage needs of a mural. This article is a follow up to the video presentation on murals.
RCP: What Does That Little Code Mean?
Insurance carriers often provide what is referred to as a RCP Code. The code comes from ISO data and provides a lot of information. With this code, agents have a lot of information and can use it to advise their clients. This article details each part of the RCP and provides some insight on how the information can be used.
The Unseen ‘Magic’ Behind Commercial Property Underwriting
COPE underwriting is the basis for commercial property underwriting and has been for nearly 400 years. Understanding Construction, Occupancy, Protection and Exposures is imperative to properly present and underwrite property coverage.
Three Ways Your Clients Increase Their Own Property Premiums
Bad decisions cause commercial property clients to pay higher property premiums. Sadly, the insured may not even recognize their poor choices. Worse still, agents can help clients identify their bad decisions with the right information.
Valued Policy Laws: What is a “Valued Policy”
Valued policy laws require the insurance carrier to pay the face amount of the policy if the structure is a 'total loss.' In these situations, it does not matter if the replacement cost is less than the face amount. This article links to a list of states with valued policy laws and the particulars of each state’s law.
2008 ISO Commercial Property Changes
Late last year, ISO made a number of changes to their commercial property forms and introduced several new endorsements. Though the form edition dates are June 2007, these changes were not effective in most states until November and December, 2008. Expect some of your carriers to delay adoption until later this year. In addition to outlining the major changes, we'd also like to point out HOW and WHY some of these changes were made by agents like you.
Complying with Triple Net Lease Insurance Requirements
Lease agreements can take many forms. One of the increasingly more popular ones is a triple net lease. While it has historically been used more often for the long-term lease of larger properties, it is showing up more and more often in 3-5 year leases of smaller properties, many insured under BOP's. Here are some things to be aware of....
Insurance Implications of Terrorist Attacks (Part 1 of 2)
Yesterday was my son's 12th birthday but he didn't spend it unwrapping presents or gorging on ice cream and cake. Most of our evening was spent solemnly observing unspeakable horror and devastation as the events of September 11, 2001 unfolded. In this article, we'll focus on some of the possible insurance implications of these events.
Insurance Implications of Terrorist Attacks (Part 2 of 2)
In Part 1, we focused largely on the exposures presented by the September 11 terrorist attacks and the coverage implications of war and governmental exclusions. In Part 2, we'll examine the coverage implications of terrorist attacks against, or using, biological, chemical, and/or nuclear weapons or facilities.
Insurance Requirements in Commercial Property Loan Agreements
Insurance requirements in small to mid-size commercial property loan agreements have changed remarkably in recent years. An increasing percentage of loan documents impose lengthy requirements as to the terms and amounts of coverage. It is interesting to see insurance requirements on modest property loan documents today similar to requirements imposed in debt instruments involving tens of millions of dollars fifteen years ago.
Insuring Property Under a Triple Net Lease
The position of many of the VU faculty on triple net leases is well known...many of us abhor them. However, they are an unfortunate fact of life. If your tenant must sign a lease making him or her responsible for insuring only portions of a building such as glass or HVAC units, what is the best way to insure such property? Based on the number of 'Ask an Expert' questions we get on this subject, the answer may surprise you.
Leasehold Interest Insurance
A not-for-profit company leases a building from the state for $10 per year. The state self-insures this 50 year old building. If there is a loss to the building, the state would not likely repair it. The tenant would be looking for a new home at a greatly increased cost of rent. This insured is a prime candidate for leasehold interest insurance. Unfortunately, many agents don't understand how the form works and how the coverage amount is determined.
More Wacky Claims
Sometimes you hear about a claim denial and you just can't believe it. In this article, we'll present two recent commercial property claims that were denied. And, no, we didn't make these up...honest.
Should Property Addresses Include Suite Numbers?
An agent wrote us recently that their office was debating whether a suite number should be shown for a commercial property insured tenant. At issue was how this would affect coverage for property within 100 ft. of the 'premises' and impact the business income coverage (or lack thereof) for a loss in the building outside the suite vs. a potential coinsurance penalty based on the suite value and total building value.
Sprinklers...Two Thumbs Up!
Have you ever seen a fire break out in a building in a movie or on TV? Chances are, the scene shows every sprinkler in the building going off. In real life, that almost never happens (unless you're dealing with a special deluge system). Continue reading and you'll find out why...and a lot more. (And there's something special at the end. :-)
Triple Net Leases...Revisited
Triple net leases make the tenant responsible for insuring the building or parts thereof. In another article, we discussed how dangerous these provisions can be to both the owner and tenant. Recently, an agent asked, 'In the event the tenant commits arson and destroys the building, how do you protect the building owner's interest in the property under the tenant's policy?' Uh oh!