Insurance Coverage Challenges

Isuspect many of you—like myself— have found it increasingly difficult to obtain commercial liability insurance for your properties. As some of you may know, I have a cattle ranch in North Idaho. Nearly two years ago, my carrier at the time informed my broker that we would not be renewed unless we had a 100-foot clearance from all trees and scrub brush. Seeing as this would have proved to be prohibitively expensive—not to mention extremely burdensome—we decided to insure with an alternative and less than preferred carrier.

It turns out that was only foreshadowing of a new layer of underwriting and expansion of the tools that underwriters use to evaluate our properties.

During the past year, the difficulty of placing insurance has only gotten worse, especially on older buildings. I have personally encountered issues regarding electrical panels, picket spacing on upper floor travel ways, and barbecues. In one of my buildings in La Habra, Stab-Lok type electrical breakers caused the annual premium to be quoted at $10,000 higher than the prior year. In the past, we’ve been able to replace half of the breakers in the entire complex for that increase alone.

Even more onerous is the requirement that barbecues must be placed at least ten feet from the insured structure. Most of my complexes are garden style units with absolutely no room to comply with those requirements. How is it fair that our tenants can possibly be denied a normal and time-honored tradition as home grilling on natural gas/propane grills?

I have also noticed that onsite inspections conducted on behalf of the carriers are more in depth and rigorous. Most recently, this past week a major insurance company investigation determined that my triplex was a property of historical significance. It was constructed in 2001, how can this be?

To prove their assertion was unfounded, I provided a link to the city website showing that the address was not listed as a historical structure. Just this morning I provided copies of the stamped architectural drawings and notes further supplementing my evidence (this property does not receive nor ever received a Mills Act designation.)

My fellow managers and owners, AAOC is here to assist you in obtaining insurance—now and in the future. If you need to find an insurance broker to assist you in procuring insurance and to provide you with an informed overview of your portfolio and policies, please refer to our list of service providers.

Many of these well-qualified providers have a long history of dedicated and exceptional service to our members, and I encourage you to check them out.

Sincerely,