By Izzy Green,
president & CEO, Evergreen Insurance & Risk Management
As a busy building owner, I’m sure you’re more concerned about filling up your next apartment, closing your next deal, and getting your building refinanced than you are about notifying your insurance broker with changes to your building.
There are a few very important changes to your building that you should notify your insurance broker about immediately.
If the occupancy of your building dropped below 75%, you should notify your broker right away. Most insurance companies that insure occupied buildings require the building to be at least 75% occupied. Once the occupancy rate (according to the square footage of your building) drops below 75% they may consider the building vacant, and in that case you might not be covered for a claim. Other companies allow your occupancy rate to be below 75% for a period of 30 to 60 days, as long that you are trying to fill it with tenants. Some may even require you to provide copies of leases.
If the occupancy of your building falls below 75% make sure to contact your broker right away to ensure you are in compliance with your insurance company’s guidelines, and to see whether you have to get a vacant building insurance policy.
Although renovating an apartment after a tenant has moved out may seem very minor to you, to the insurance company it can make or break whether you’re covered or not. Some insurance companies may allow minor construction such as repainting an apartment. Some companies may allow any type of work as long as it is not structural. Other companies may allow even bigger projects as long as 80% to 90% of the building is occupied and not under construction.
That being said, it is crucial for landlords and building owners to always check with your broker before doing any type of construction to make sure that your insurance company allows it. If they don’t, you will be advised whether you need to get additional builder’s risk, or general contractor’s policy.
Once a landlord didn’t report ongoing renovations in his building that was insured as an occupied building with no ongoing renovations, the building suffered a total loss (not caused by the renovations) and the insurance company wanted to deny the claim. Only after months of suing the carrier did they settle to pay half of the claim.
The types of tenants you have in your buildings make a huge difference to insurance underwriters. Some companies may not cover any type of store with cooking on the facility. Other occupancies insurance companies can be picky about are: day cares, student housing, subsidized housing, SRO (single room occupancy), churches, cleaners, or manufacturers.
If the occupancy types of your building changes during your policy period, make sure to notify your broker about it.
If your building suffered a loss, it is very important that you notify your insurance broker right away, regardless whether you are actually planning on filing the claim with the insurance company.
According to the policy requirements the insurance company has to be notified immediately when a loss occurs.
One of our clients suffered a boiler loss, he only reported the claim 2 months after the incident. We had to work very hard to convince the insurance company to cover the claim.
One of the reasons for this is, that immediately after a loss occurs, the insurance company sends down an adjuster to evaluate and estimate the damages. Two months later after you already began repairing the damage it is very hard for the insurance company to determine what exactly caused the loss and whether such a peril is covered or not. And even if it clear that the cause of loss is covered, it is almost impossible to estimate exactly how much the damages actually were.
So keep your brokers number handy, and call them first! Keeping an open dialog with your broker will greatly benefit you. An independent broker works for YOUR best interests.