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Page 1 - Three Tips to Keep Your Property Insurance Effective Page 4 - BOMA Insider
NEWS FALL 2021
By Craig Burkart, MNP LLP
Three Tips to Keep Your Property Insurance Effective
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t’s a well-worn adage that the worst time to review your insurance policy is when you need it. Property damages and interruptions are stressful enough without having to worry about whether you’re covered for a specific loss. This is not the time to be reviewing your coverage and coverage amounts and hoping it will be enough to get you back to normal. Of course, nobody ever wants to face the type of disaster that might trigger an insurance claim. Unfortunately, the laws of probability don’t really care what’s convenient or whether you’re prepared. That’s why it’s imperative you take the proactive measures below and revisit them on a regular basis. These steps can make all the difference in ensuring you and your tenants can get back on your feet as quickly — and with as few costs and administrative headaches — as possible.
REVIEW YOUR EXISTING INSURANCE POLICY
Keeping your insurance policy up to date and in line with your most likely losses is the most important step you can take to reduce your costs and get your properties back to normal after an interruption. Consider working with a third-party advisor who can help analyze your coverage for specific loss scenarios, review insurance limits and co-insurance amounts, and clarify terms and times.
Gross rental business interruption insurance typically covers short-term financial losses (e.g., 12 months) arising from the shortfall of gross rents received versus standard gross rents due to covered events. Coverage may extend to include lack of access to a premises and interruptions that disrupt the normal functioning of your property. However, policy wordings will differ and it’s imperative you understand the specifics of your policy. Like all coverages, your policies will almost certainly be subject to typical exclusions, such as break or lapse of leases, specific natural disasters, contract penalties, etc. Understanding the full scope of your business interruption insurance policy is essential to execute an effective loss strategy and business interruption analysis. As well, check to see if your policy covers professional fees for claims preparation.
MAKE SURE YOUR INSURANCE VALUES ARE STILL RELEVANT
A common thought is the COVID pandemic will increase insurance premiums. Depending on the nature of your property, they might. But tenant closures, a rise in vacancies, and reduced profits also might also cause your insurance values to decline — which in turn could see your premiums decrease. It’s also possible your
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