There are things every agent should understand about commercial property coverage. How well-versed are you on the finer points of this key coverage? Are you familiar with how the law affects the valuation of property? Or the effect that ordinances or laws can have on a building owner who suffers a loss?
What is the value?
It’s important to start with the value of the property. In recent years, the cost of construction materials has been on the rise. That’s why it’s important to have frank conversations with your insureds about the differences between replacement cost and actual cash value, and the factors that should be considered when setting a limit.
How does the coverage really work?
When your insured has a commercial property loss—for example, a storm tears some of the siding off the building—how does the insured’s expectation of coverage match up with what the insurer may be required to pay? While your client may expect that all the siding of the building will be replaced, that may not be the case.
Additional considerations
The value of a property and the issues above are only the tip of the iceberg when dealing with commercial property coverage. Your clients also will need to consider the following, and they will look to you for advice:
- Why is debris removal coverage so important?
- What does it mean to be vacant and why is it a problem?
Lastly, if your insured is a tenant, there are additional things to consider. How will a policy respond if a tenant makes improvements or betterments to a space? Is a tenant responsible for insuring a part of the building? Is a tenant responsible for damage he or she causes to the space? These are just a few of the questions that need to be answered.
Learn more about commercial property coverage
The key to your clients understanding their insurance coverages for their commercial properties is communication. Do you know how to answer your clients’ questions and advise them? To understand the ins and outs of commercial property coverages, register for Things Every Agent Should Understand About Commercial Property Coverage, taught by Cathy Trischan, CPCU, CIC, CRM, AU, AAI, CRIS, ARM, MLIS, TRIP. For more information, to keep updated on the CE-approval process, or to register for this class, see the PIA Northeast education schedule.
Cathy Trischan
Cathy Trischan, CPCU, CIC, CRM, AU, AAI, CRIS, ARM, MLIS, TRIP, is the director of commercial underwriting at the E&K Insurance Group in Eatontown, N.J. She is a regular speaker for PIA Northeast and in The National Alliance’s CIC, CISR and Ruble programs.
