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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, and a very popular addition to many both public and private commercial buildings and residences. 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 $50 per square foot. This means that even a relatively small mural (20x20) could cost up to $20,000 to redo. Is your insured's coverage adequate?

Builders Risk Insurance: Matching the Policy to the Project

Builders risk insurance helps owners and contractors involved in both commercial and residential new construction insure against the risk of property losses arising in their projects. Additionally, builders risk policies may cover renovations to residential structures such as custom homes, modulars or commercial structures. With the construction industry heating up in the past few years, builders risk policies have become very popular solutions to more complex remodels and construction projects.

Commercial Property Quiz

Test your knowledge of Commercial Property with this 10-question quiz.

Cracking the Condominium Conundrum

How can a policy generating about $75 in revenue cost you $5,000, $10,000, or more? Believing that writing an HO-6 is quick and easy is the beginning of an E&O storm that can cost you thousands (your E&O deductible).

Do the Acts of “Terrorists” Trigger the Terrorism Exclusion?

Protests, civil disobedience, riots, and looting followed the death of George Floyd under the knee of a Minneapolis police officer. Might the terrorism exclusion apply to any damage caused during these protests and ultimate riots? Answering this question is initially more difficult than it appears.

Does Invoking the ‘Insurrection Act of 1807’ Affect Property Coverage?

Rocks being thrown by President Trump are causing major ripples in the insurance pond. His declaration that ANTIFA would be labeled a terrorist organization raised questions regarding whether coverage would be excluded, limited or provided by the various terrorism endorsements. Now his threat to invoke the Insurrection Act of 1807 has raised question of coverage because the word “insurrection” is found within various property exclusions.

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.

If the Nashville Bombing is Considered a “Terrorist” Act, Does that Trigger the Terrorism Exclusion?

Christmas Day 2020 saw Nashville, TN rocked by an explosion. Were these the acts of a terrorist? Might these acts trigger the terrorism exclusions?

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?

IRV Methodologies, Replacement Cost and Reconstruction Cost: A COVID Issue?

Replacement cost isn’t what the insured thinks it is, and it’s the industry’s fault. When we say “replacement cost,” insureds hear, “I’m getting new stuff for old.” Depending on the situation, that is not true. We have to build the property policy to get to what the insured thinks replacement cost is; we have to build to reconstruction cost. Throw in COVID, and this whole issue becomes even more important.

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.

ISO's 2017 Commercial Property Changes

Insurance Services Office (ISO) filed several important commercial property changes effective September 1, 2017.

Murals Revisited

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.

Understanding Commercial Property Underwriting - COPE in All its Glory

Gain a better understanding of the four key Property Underwriting factors - Construction, Occupancy, Protection, and Exposure (COPE).

Understanding the Basics of Property Protection in COPE Underwriting

Property underwriters analyze essentially the same information today as was reviewed 400 years ago. Although technology has changed, the basics of property underwriting has not changed. The four primary factors in property underwriting are Construction, Occupancy, Protection and Exposures (COPE). This article provides a brief overview of one piece of this puzzle – Protection.

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.

What’s Happening in Multi-Family Housing Insurance Market?

The Foundation for Community Association Research Factbook reported that 52.9% of U.S. housing was built prior to 1979, leading to aging roofs, failing plumbing, and more. 'The habitational market has long been claim-ridden,' O'Connor Corrigan says. “High frequency, high severity—you know, the insurance covers accidents that are typically confined to one home, but now imagine it's spreading to your neighbors.' Visit this link to listen to this podcast, a highly enlightening 30-minute trip through the challenges of the multi-family housing insurance market.

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 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.

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!