Archive for Property
Brownfields Development Sites
Brownfields are abandoned, idle, or underutilized industrial and commercial properties whose expansion or redevelopment is complicated by contamination (real or perceived). Some of these sites were contaminated when the materials discharged into the ground deemed safe and legal at the time are now considered pollutants. As more substances are determined to be harmful (such as leaded gasoline and radon), many older sites are officially designated as contaminated. Lenders and industrial corporate owners frequently allow brownfields’ taxes to become delinquent and let the city take over. Some states have enacted laws that allow a certain amount of contamination to remain after a site has been cleaned up. These laws address the need for the involved parties to restore the property to active use, while still protecting the owner’s, operators, and seller’s liability. Brownfields package policies cover remediation stop loss, residual contamination cleanup, third-party liability, and environmental impairment liability for cleanup operations and continued operations as an ongoing business. Various limits are available.
Coinsurance Deficiency Coverage
This coverage indemnifies the insured that sustains a coinsurance penalty on a first-party loss because the limit of insurance did not accurately reflect the values at risk on the date of loss. Large industrial risks, banks, and other financial institutions are prospects for this coverage.
Difference in Conditions Insurance
Difference in Conditions (DIC) insurance covers the difference in perils or causes of loss between the DIC coverage and the underlying first-party commercial property coverage. It can cover both property damage and loss of business income. DICs are written to cover all direct physical loss or damage subject to exclusions and limitations. The coverage provided depends on how many fewer exclusions the DIC has than the primary underlying coverage form. . These policies provide coverage for earthquake, flood, landslide, and other unusual and unforeseen occurrences. While traditionally used with large industrial and commercial properties, they can also be used with smaller properties.
Durable Medical Equipment Rental
Durable Medical Equipment (DME) is equipment to aid a medical condition that patients can use multiple times. Examples are wheelchairs, commodes, oxygen equipment, and patient lifts. Many of these items are needed for only short-term rehabilitation so renting the item is more cost effective than purchasing it. Businesses that rent these items start with new equipment and then service and repair the items after each use and before they are rented to others. Guidance and instruction in how the patient (and/or caregiver) must use the equipment are vital to the usersâ€™ safety.
Earthquake and Earth Movement Insurance
The market for earthquake and earth movement coverage is active. Availability, pricing, and deductible requirements vary by region. Determining the insured property’s susceptibility to earthquake damage and earthquake preparedness are important parts of the underwriting process. Coverage is available under specific earthquake or earth movement policies or Difference in Conditions coverage forms.
Equipment Breakdown Coverage aka Boiler and Machinery Coverage
Breakdown of a wide range of energy-related equipment, such as computers, machinery that uses computer technology, and other equipment are covered, in addition to the traditional boiler and machinery objects such as boilers, air conditioning systems, ovens, stoves, furnaces, elevators, hoists, and cranes. Medical diagnostic equipment, such as MRIs, advanced heart monitors, and other scientific equipment in hospitals, medical laboratories, and universities can also be covered. Breakdown is the only peril or cause of loss covered. Coverage is available for both direct and indirect loss such as loss of income or extra expense.
Excess or layered property insurance may be written on any large commercial property account. This layering approach works well when the same entity owns multiple locations. Layering often starts with a primary coverage equal to the probable maximum loss (PML) followed by additional layers at a fraction of the primary layer’s cost. The farther away the layer is from the working layer, the lower the rate. Limits and coverage availability can vary significantly based on geographic location.
Flood Insurance – Private
Traditional flood insurance is obtained via the National Flood Insurance Program made available by the Federal Government. While this option can satisfy the needs for basic flood insurance, it may not satisfy the needs of all buyers. The private flood marketplace provides alternatives to traditional flood insurance, sometimes with greater coverage limits for the same or less cost.
Green Building: Commercial
The first celebration of earth day was held in 1970. Since then the public has become increasingly concerned about the environment. Government subsidies and the need to reduce operating costs have encouraged many businesses to follow their environmental consciences as a way to both reduce their operational costs and provide healthier workplaces. Green architects design buildings that use geothermal energy and other alternatives, along with garden roofs, treated glass, and other energy and water saving devices. Standard property policies may not cover these improvements. As a result, these companies have introduced policies geared to this market:
Green Building: Personal
Home owners who explore alternative energy sources (such as solar, geothermal, or wind) will need to explore special endorsements to cover these additions in their insurance programs.
High-Valued Commercial Property
Companies interested in writing high-valued commercial property risks usually establish minimum property values they will consider. The coverage tends to be more generous with a number of additional coverages and coverage extensions. These accounts are subject to significant deductibles and are often written with multiple layers. Unique loss prevention services are often available. Geographic, weather and climatic factors affect the coverages available and premiums charged.
High-Valued Personal Property
Customized insurance coverages are available for high-valued luxury homes, high-rise condominiums, or town homes. Many of these residences are located in coastal or mountain areas with problematic property exposures. In addition to standard homeowners forms, some unique coverage enhancement endorsements are also available. Examples of such enhancements are excess wind, excess flood, earthquake, vacant property, rental property, builders risk, and inland marine.D613
Historic Home Insurance
Insurance coverage on historic homes is a specialty coverage that few insurers offer. It covers the insurance needs of homeowners who occupy homes of significant architectural and historical value to the area where they are located. In order to qualify for coverage, the home must be nominated for or be listed in a register of historic places or be in a federal, state, or local government designated historical district. In many cases, a home’s replacement cost far exceeds its true market value because of its historical value. Available insurance options range from 40% to 100% of replacement cost value. Other important coverage features include valued coverage for elaborate and ornate woodwork and open house liability coverage for historic home tours.
Many homeowners are supplementing income by renting out all or portions of their homes on a temporary basis through online networks. Many homeowners insurance carriers are unwilling to accept this added exposure.
Homeowners Policies: Low-Value and Nonstandard
Specialty carriers have developed homeowners and tenants package policies for low-value and nonstandard dwelling risks in distressed areas to counter competition from urban area or statewide Fair Access to Insurance Requirements (FAIR) Plans. FAIR Plans do not offer “package” coverage on residential property. Property coverage is usually written on a named peril basis and is combined with personal liability in a single policy. Deductibles are mandatory. Premiums charged are higher than in the standard market and some policies are written under various state consent-to-rate requirements.
Inland Marine Insurance
Inland marine insurance indemnifies loss to movable or specialized types of property. Inland marine provides coverage for a wide range of risks and property. Some examples are: crane and rigging equipment, logging equipment, scaffolding, rental equipment and party good dealers, any equipment-driven risk, well drilling and servicing, scientific equipment, medical equipment, jewelry and coin dealers, broadcasting equipment and property, warehousing legal liability, and railroad rolling stock. But a wide variety of other types of property and risks can also be covered.
Insurance for public libraries may be written on a stand-alone basis or as part of a municipal package that covers city and county libraries. The stand-alone package is a combination of property, commercial general liability, business auto, and other specialized insurance coverages. Inland marine coverages insure fine arts, valuable papers, books, visual aids, and other library property. Coverage for limited first-party pollution cleanup may also be included. Coverage also applies to book spoilage due to changes in temperature. Property coverage extends off premises to apply to exhibitions, outdoor sculptures and monuments, and computer equipment. Commercial general liability coverage that includes medical payments coverage for staff and volunteers is available. Directors and Officers liability, employment practices liability, and Errors and Omissions liability for librarians are optional coverages that can be purchased.
Moving & Storage Companies
Moving and storage companies are responsible for their clients’ personal and commercial goods from the time the load is removed from the client’s home or place of business, during transit, while in temporary storage, until it is delivered to (and unloaded at) its final destination. Coverage is available for auto liability and physical damage, general liability, the client’s goods while in transit and in storage, the client’s business personal property, and workers compensation.
Musical Instrument Floaters
Musical instruments can be extremely valuable. Insurance coverage must apply wherever the instrument is, including while in transit and at non-owned locations. Homeowners policies cover personal-use instruments but not instruments used professionally. Insurance companies underwrite musical instrument coverage for professional musicians very carefully because of the high values and significant transit and off-premises exposures.
Auction houses are considered nonstandard fire risks due to factors such as poor water supply, distance from a public or volunteer fire department, poor housekeeping, and often below-average building construction. Establishing appropriate insurance to value on consigned personal property for which an auction house may be legally liable is often difficult and limits the number of markets available to provide appropriate personal property coverage.
Shopping Centers: Malls
Shopping centers may qualify as a specialty insurance risk if the property limits are extremely high. High concentrations of building and contents values, extremely large undivided floor areas, windowless buildings, exposures from hazardous occupancies, and exterior exposures are some property-related considerations that must be weighed and evaluated. Shopping malls may include supermarkets, restaurants, bowling centers, and motion picture theaters that must be underwritten carefully. Public liability exposures related to crowd control inside the building and parking lot incidents outside the building are significant.
Shopping Centers: Strip
A strip shopping center may have only one tenant or may have multiple tenants, but all tenants areas are entered from the parking lot or sidewalk. There is no common interior area that is the shopping center owner’s responsibility. Some strip shopping center owners own multiple centers, which usually makes the overall property schedule more attractive due to the spread of risk. Parking lot exposures and vacancy are the two most difficult issues to address.
Short-term Rental Properties
Many homeowners with vacation homes will supplement their income by renting it to others on a short-term or vacation basis.
Supermarkets are retail grocery stores that have more than 5,000 square feet of floor area. They have large open areas without fire cut-offs and extremely combustible or highly damageable contents with blank wall construction. This makes it difficult to fight fires from outside the building except from the front. There are extensive electrical requirements that place extreme demands on the electrical wiring. Another hazard in most supermarkets is large amounts of trash and waste materials that accumulate. Liability hazards are less serious than fire hazards but issues such as congested aisles, overstacked displays or shelves, poor lighting, and the physical condition of parking areas and sidewalks are present. The products liability hazards of foreign objects in prepared foods and spoilage of food in dairy and refrigerated areas must be considered.
Timeshare/Interval Ownership Operations
Timeshare/interval ownership management companies need coverage similar to that provided to condominium associations. Nonprofit companies that are established to protect the assets of the individuals who collectively own timeshare units need the same coverage. Insurance protection for eligible risks is available for commercial property, liability, automobile, crime, inland marine, equipment breakdown, electronic data processing equipment, guest property, directors and officers liability, and umbrella liability.
Vacant Properties Insurance
Vacant properties are difficult to place, especially if the owners do not maintain them properly. A major problem with a vacant property is that it may not be considered a financial asset. This problem results in a moral hazard because the insured profits more from the loss of the property than from its remaining in good condition. Vacant buildings can become havens for vagrants or drug users and fires can be started intentionally or accidentally. Small fires may go unnoticed until the building is heavily involved. Fire departments often allow such buildings to burn down rather than risk the lives of firefighters. The longer a property remains vacant, the more difficult it becomes to maintain coverage.
Vacation Income Property
Unoccupied vacation property that is a financial drain to the owner can be turned into an income producer. When it is unoccupied the expenses for a caretaker to watch over it rise as does the cost to insure a vacant dwelling. However, a property management firm can be hired to oversee and rent out the property. The rental fee should pay for the property management fees, all ongoing costs required to keep the property maintained and generate a profit for the owner.
Warehouse Operators Legal Liability
This coverage insures the liability imposed by law on the insured for loss of or damage to (or destruction of) property of others that is in its warehouse. It is written on inland marine coverage forms and policies but is essentially a legal liability bailee coverage. Values can be significant.