CLASS is pleased to have guest blogger Michael Shadeed of Franklin Street Insurance Services provide us with an insurance marketplace update.
“As apartment owners, you are part of one of the most volatile insurance marketplaces in the country, with coverage options and pricing continuously in flux. I understand that most owners view the insurance premium as just another line item, but due to recent industry-wide changes to coverage, make sure you read exactly what it is you are paying for. Outside of the premium page, the following are some coverage options you need to review on your next proposal.
The most widespread change to the coverage options for most carriers are the way they are handling the wind and hail coverage options, and the valuation of your roofs within the policy. Recent tornado and hail claims over the last seven years have hit carriers hard, so in areas deemed high exposure coverage restrictions and deductible variances have recently hit the marketplace. These changes are separate from your traditional fire coverage, and the deductible will be designated as the separate “wind/hail deductible” outside of the “AOP” (all other perils) deductible.
Owners need to pay attention to the roof valuations on all assets age ten years and higher. Carriers are no longer rewarding full replacement cost claims to roofs they deem outdated. Now most carriers will begin to devalue a roof five years after installation, changing the valuation to actual cash value, which is replacement cost of the roof minus depreciation. Once the roof is eighteen years from the last replacement, it is deemed to have no actual cash value. Some carriers will actually try to remove roof coverage all together regardless of the age, so review your quote.
The older your asset, the more building upgrades are needed to satisfy current code in the event of a rebuild. The payment for these expenses is under the “Law and Ordinance” coverage section of your policy. Make sure the limits are adequate to pay for increased rebuild expenses that involve consulting an architect and engineer to meet all current code specifications.
Obviously all of the mentioned coverage options come at a price, so how do you find the carrier willing to put forth the most competitive rates? Consult an insurance broker who specializes in apartments and works with multiple apartment product types, as the age, construction type, and geographic location are all major contributors to the number of carriers willing to be aggressive on their pricing options.” – Click here to contact Michael Shadeed