15 May Commercial Property Insurance Q&A Session.
As a Commercial Real Estate (CRE) practitioner, broker, and investor myself, I fully appreciate the value of having qualified professionals to help me and my clients get the most out of their investments. CRE is a multi-layer industry and in order to be successful, a professional team effort is required. Therefore; I decided to share a great Q&A session I had with my good friend Karl Bartels, account executive at JAG Insurance Group; a leading commercial property insurance provider in South Florida.
During the session, we touched on key aspects that affect commercial property insurance and answered some of the most Frequently Asked Questions made by property owners and/or investors.
I summarized the Q&A into the main topics and questions I felt were the most relevant. I hope you enjoy it!
Q&A Session: JAG Insurance Group.
Karl, thank you for taking the time to help me put together this informative Q&A for all our readers here at JIO.realtor
JIO.realtor: Karl, tell us a little about yourself? How long have you been an independent insurance agent?
Karl: Going on 12 years now. I am with JAG Insurance Group. We are a full-service P&C agency, with dedicated Commercial lines and Personal departments, my focus is largely Commercial – specifically Commercial Property and Business risks. We are based in Coral Gables and write several risks throughout South Florida but are also licensed and insure risks in just about every state and even internationally. I have definitely seen and heard it all by this point.
JIO.realtor: What separates yourself and JAG from rest of the pack?
Karl: We have many more markets than your typical agency. We also have incredible relationships and leverage with these markets, especially on the commercial property side. We can get things done that others simply cannot at the most competitive rates available. We also pride ourselves on our customer service. You will be getting a call or email back that same day, no exceptions. It often baffles me how many horror stories I hear about poor customer service or lack of communication from other people’s agents.
JIO.realtor: What is the current state of the Property insurance market? Have you seen major increases after storms like Irma this past year?
Karl: No, the property rates have largely held firm even with an active season this past year. We initially expected to see some significant increases but they have been very minimal if at all. If you know of anyone experiencing increases definitely send them my way because that should not be the case.
JIO.realtor: What properties need to maintain Property Coverage?
Karl: Any property with a mortgage is required to carry property and liability coverage. Lenders require this to protect their collateral. Even if you own the property outright, it is a wise decision to obtain insurance to protect your equity. Most people will find they don’t have the financial wherewithal to rebuild should their building be destroyed or heavily damaged. Insurance provides security should a catastrophe hit.
JIO.realtor: Will the policy pay for the entire damage, even if it is higher than the limits on the policy?
Karl: Not typically. Most carriers will only pay up to the loss limit of the policy after the deductible. This is why it is imperative to have the correct limits and be insured for the full replacement cost of the property.
JIO.realtor: How do I know if I am insured to the full replacement cost?
Karl: We as Insurance brokers and carriers are not appraisers. The only way to make absolutely sure you are insured for the correct amount is to obtain an appraisal from an independent property appraiser. Recently I had a client with a triple net lease responsible for ensuring the entire building they lease. The landlord keeps insisting they raise the building limit on the policy and both parties kept coming to me asking me to increase coverage. I confirmed that I cannot establish a value for this property and they need to hire an appraiser in order to do this. We cannot establish the value.
JIO.realtor: Let’s say I paid $1,000,000 for my building, but according to the insurance policy, the limit of insurance is only $525,000. Why is there such a difference with those figures?
Karl: Market value is not the same as replacement cost. When re-building a building, there is no consideration taken for land value, therefore, the replacement cost of the building is typically a lesser figure than the market value.
JIO.realtor: How do I keep my premiums as low as possible?
Karl: First, find the right agent… other than that updates, updates, updates! As buildings age, they potentially become more of a risk to carriers. The most important thing is to be sure your buildings show “pride of ownership.” Prevent claims and be proactive. Inspect the premises for trip-and-fall hazards and eliminate them. Replace worn components to prevent a future claim. Keep the building well-maintained and up to date with the most recent building codes. Update electrical and plumbing on older buildings. You can also explore higher deductible amounts if you are willing to take on the extra risk.
JIO.realtor: Can you explain the difference between admitted and non-admitted carriers? Is admitted automatically better than non-admitted?
Karl: Absolutely not. Non-admitted carriers are just as reputable as admitted carriers, having to pass similar rigorous rules and regulations within the state. Admitted carriers file rates with the state and in exchange are afforded protection by the Florida Guarantee fund. This means should the carrier go under there would still be some coverage available through the guarantee fund, likely well below the limits of your policy. Non-admitted carriers aren’t protected by the Florida Guarantee fund but are able to create rate and policy flexibility. Also, non-admitted carriers like Lloyds of London have incredibly strong financials. Simply put, if they go under we have a lot bigger problems to worry about with the World Economic state.
JIO.realtor: Any other hot tips for commercial property owners?
Karl: Flood. Flood is a very hot topic lately and rates have certainly been on the rise. A lot of people don’t know that there are Private Flood markets available as well and the rates are often much more favorable.
if you feel there’s more you would like to know more about commercial property insurance and/or any other topic not mentioned on this Q&A, please feel free to comment at the section below this post, or reach out to Karl (contact info below) or email me directly and we’ll be more than happy to answer any question or comment you might have.