Insurance question (commercial)

[Uwe S.]

Hello,

I don´t got any answer on my asking in another topic from me, so I try here now separatly.

For my commercial propertie in OH I need which insurances? I know title (I have), propertie (I overtaken from the seller) and umbrella insurance. P NW gave me the tip brick and mortar insurance, I don´t know these insurance.

Secondly, which insurance company you prefer for your commercial properties?

Thank you.

-Uwe

[Timothy W.]

Flood insurance you can only get from the government. No private market carrier has it.

Your umbrella policy, as Jawsette alluded to, is an extension of your liability policy.

As to the concept of market value - one important thing to understand is that market value is actually not considered when it comes to insurance. The only two values that matter are replacement cost value and actual cash value. Neither is affected by the market. Your property that costs 1 million dollars to build has a replacement cost value of 1 million dollars whether the market says it's worth 2 million or .5 million. Actual Cash Value is simply the value of the property after the physical materials have lost value due to their age (they have depreciated in value). 50 year old wood is worth less than 5 year old wood because it has 45 years less of useful life. I always recommend a Replacement Cost Value (RCV) policy for the reason that most buildings that cashflow are not brand new. If the building is new, you could be alright with an Actual Cash Value (ACV) policy for the first couple years and the only components that will be significantly hit by that are typically finishes such as paint, carpet and wallpaper and they are generally not the most expensive portion of a major claim. It's a decision you have to make as to how much risk you're willing to carry yourself.

As to the issue of getting your insurance coverage while you wait for insurance companies to fight it out, this is generally an issue of subrogation or waiting for a third party claim settlement. Let me break that down. If you file the claim on your insurance and your insurance company determines in the process of settling the claim that someone else shares part or all of the liability of that claim, they will file their own claim on that other insurance carrier. This is your insurance filing a subrogation claim. If you decide to file a claim directly against that other insurance company without using your own insurance company you are filing a third party claim - you are the claimant. Be aware, on every third party claim I have seen the initial settlement offer has been an ACV offer no matter whether the insurance you carry is ACV or RCV. The reason is you are not a client/customer of the company you are filing the claim against so they are not responsible for providing you RCV.

Finally, the last issue of lost rents while your damage is getting repaired - this is called either loss of rents or business interruption. You will likely have this coverage on your policy, and you can also claim this on a third party claim. Be prepared to document just how much money you are actually losing.

Does this make sense?

Tim