Risk Management for Building Owners with Vacant Buildings

The most common property form in use for commercial buildings is the ISO form, CP 00 10 04 02. The language of the form states explicitly:  ”Buildings under construction or renovation are not considered vacant.” Some brokers will advise their building owners that because they have “construction going on” in their buildings, right? [wink-wink], they needn’t worry about the vacancy clause.  Such flippant advice is fraught with peril for both the broker and the building owner client. Having had private...

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Lease Gap Can Be An “Abyss”

My client was rather proud of his new BMW 750i–the business is doing well, and frankly, it’s a great ride! While driving to work recently,  a truck in front of him swerved to avoid road debris, and wound up fishtailing in the meridian, kicking up some sizable debris.  My client was hit  by a rock and felt the jolt, but nothing more as the car seemed to behave normally as he continued on his way to work. A few more miles down the road, a warning light came on, and then as he tried to exit the freeway the engine began to seriously...

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Vacancy–an Insurance Pitfall

With the current economic downturn, many property owners have experienced vacancies in their commercial building portfolios.  Beware of the Vacancy Clause! The standard clause in general use is worded such that if your building is more than 70% vacant for more than 60 consecutive days, you lose valuable coverage as follows, (a)   Vandalism; (b)   Sprinkler leakage, unless you have protected the system against freezing (c)   Building glass breakage (d)   Water damage (e)   Theft; or (f)     Attempted theft. Additionally, with...

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Building Ordinance or Law, Gaps in Full Insurance Recovery

I could hear frustration in the property manager’s voice.  He is responsible to a client that owns 5 commercial properties in the Greater Bay Area, in 5 different cities, and 3 different counties. How can you keep track of the building code requirements of all the cities and counties, and know how to factor those into the potential replacement value of the properties to be insured, making sure that you aren’t caught short in the loss adjustment? Says the property manager, “I’m willing to recommend that the owners pay...

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Liability after the music stops! Where’s your chair?

A manufacturing company decides to sell its business.   A typical manner of sale is for the acquiring company to purchase assets only, and not the stock of the company to be acquired, thereby theoretically avoiding future and presumably unknown liabilities of the acquired company. What form of liability insurance should the selling company keep in force in order to avoid an uninsured future product liability claim?  From the date of the transaction forward, the selling company will have no further responsibility for products owned and sold...

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Not Owning an Auto Doesn’t Mean You Don’t Have Any Auto Liability

Most business people have learned from their insurance advisers that auto liability exposure extends beyond simply owning a vehicle.  The two common instances of additional liability are “Non-owned” autos and “Hired” autos. Underwriters address these liabilities specifically by adding a Business Auto policy and providing coverage for these exposures as symbols 8 and 9. Non-owned Auto Liability will protect your company for vehicles that it doesn’t own but for which it could be found liable. A typical example would be an employee...

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