Tips for Building Insurance
“Ask Kari” is a monthly, Question & Answer feature from Kari Negri. Kari has two decades of property management experience, is a featured speaker at many industry trade shows, such as AAGLA’s annual trade show, and is the CEO of SKY Properties, Inc. in Los Angeles.
This month’s question comes from Walter in Los Angeles: “What are some of your tips for building insurance?”
Tips for Building Insurance
Hi Walter, what a great question! So many factors go into deciding insurance needs. I’ve invited Tony Napoli, a 28-year veteran insurance broker at Napoli Insurance whom I’ve worked with for years, to answer this question as a guest article. Tony can be reached at (818) 830-3401 if you have further questions.
- Proper Replacement Value – The best way to assure that your building is properly insured to value is to insist that your agent prepare a current, Marshall & Swift Replacement Cost Worksheet. An under-insured property is not only problematic in the event of a total loss, but in a partial loss as well, as most policies have co-insurance penalty clauses that are utilized for under-insured buildings.
- Building Ordinance Law Coverage – Provides additional coverage to rebuild a property to current ordinance law guidelines. Over time, changes in ordinance laws can have a significant impact on the cost of re-building a damaged property. The older a property is, the higher the ordinance law coverage should be. A 10% limit of the building amount is a good starting point, but coverage up to 25% can be appropriate for much older properties.
- Special Form Coverage – Provides for the added peril of “Water Damage”, in addition to the standard perils of Fire, Windstorm, Hale, Aircraft, Riot, Explosion, Vandalism, Vehicles and Smoke. Water damage is by far the most prolific peril and many policies do not automatically include Special Form coverage.
- Earthquake & Flood (DIC Coverage) – These are two major exclusions on standard apartment policies that are worth considering if your property is located in areas prone to these perils. With earthquake, it is important to specify coverage for Underground Utilities, Walls & Walkways and Loss Of Rents, as these coverage are not automatically included on policy forms.
- Loss of Rental Income – Make sure your policy covers you for “Actual Loss” of rental income for no less than 12 months, with 18 months being optimal. In the event of a devastating loss, it can take an extended period of time to re-build, depending on building laws in your municipality.
- Comprehensive Liability and Umbrella Coverage – If a huge liability loss occurs on your property, it can have a devastating impact on your financial future, yet adding a substantial layer of protection with a liability umbrella, is less expensive than most people realize.
Thank you for your question, Walter! I hope Tony’s tips have helped. Tony can be reached at firstname.lastname@example.org I want to extend a big thank you to him for sharing his expertise here. Thanks Tony!
As always, please remember, I am not an attorney. Seek clarification through your attorney. All articles are simply an opinion. Stay in touch at www.GetSky.net
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