Commercial Real Estate Insurance

Madison Avenue Insurance Group has been writing commercial property risks since 2006. We are very experienced in commercial real estate market and can work with you to find right coverage for your specific needs.

We have access to the top insurance carriers and programs for all years built, types and sizes of buildings to include apartment buildings, condo conversions, condominiums, condo associations, commercial real estate, hotels and motels, warehouse space and strip malls.

We may offer “Master” insurance policies with one policy and one account manager to simply your life.

Contact us today to discuss your portfolio and needs.

Building Coverage Types

Actual Cash Value (ACV) Pays out for property damage at the cost to repair or replace less depreciation.

Replacement Cost (RC) Pays out for property damage at the cost to repair or replace the building and/or contents.

Functional Replacement Cost (FBV) Pays out for property damage at the cost to repair or replace the building and/or contents with like but lesser quality materials.

Guaranteed Replacement Cost (GRC) Pays out for property damage at the cost to repair or replace the building and/or contents event if it exceeds the coverage listed on the policy.

Insurance Policy Forms

When you purchase property insurance for your home or investment property, you typically have a choice of three different levels of coverage: Basic, Broad and Special.

The type of policy you have will be listed on the declarations page of your insurance policy and should also be listed clearly on the insurance proposal or application you sign prior to binding your policy.

The difference between these coverage forms is often misunderstood by property owners and confusion on this topic can lead to large or unexpected gaps in coverage.

Basic Form

The Basic Form policy is the least comprehensive of the three coverage options. Basic Form policies only cover the specifically named perils. This means that if a coverage is not specifically named in the policy, there is no coverage. A Basic Form policy tends to be quite limited in scope and should be used with care. It is usually offered by carriers when the property is not in good condition, is under remodel, vacant or is old and without wiring, plumbing, or heating updates.

Coverages included in a typical Basic Form policy are: Fire, Lightning, Windstorm or Hail, Explosion, Smoke, Vandalism, Aircraft or Vehicle Collision, Riot or Civil Commotion, Sinkhole Collapse, Volcanic Activity

Broad Form

Broad Form policies offer more coverage than Basic Form. They include coverage for all of the same hazards in a Basic Form policy plus several additional hazards which are expressly named. Like the Basic Form policy, a Broad Form policy covers only named perils. If the coverage is not specifically listed, it is excluded.

Coverages included in a typical Broad Form policy are the same as in the Basic Form policy plus the following; Burglary/Break-in damage, Falling Objects (Tree’s), Weight of Ice and Snow, Freezing of Plumbing, Accidental Water Damage, Artificially Generated Electricity

Special Form

Special Form coverage is the most comprehensive of the three options. Note that Special Form policies read differently than a Basic or Broad Form policy. In a Special Form policy, instead of the document listing what is covered, all perils are covered except for what is specifically excluded in the policy.

Co-Insurance

Coinsurance is a clause used in insurance contracts by insurance companies on property insurance policies such as buildings. The clause works by requiring you to insure the property at 70%, 80%, 90% or 100% of its value so that the insurer receives a fair premium for the risk. Simply put if the building is under-insured at the time of loss, the insurance payment is reduced by the amount the building is under insured.

Example: You carry $750,000 of coverage on your apartment building with an 80% Co-Insurance Clause. At the time of loss, the replacement cost of your building is $1,000,000.

You are 25% under-insured. This triggers the Co-Insurance clause.

Your $750,000 coverage payment is reduced by 25% paying you $562,500 (less your deductible).

You are out of pocket $437,500 to rebuild your building.

Building Ordinances

Building Ordinances generally come into play when there has been a 50% or greater loss such as a fire. The city where the building is located will then require the entire building to become updated to current building codes. These codes are ever changing and determined by each city annually.

Examples of updates include adding low-income housing; installing sidewalks, installing sprinkler systems, burying power lines, wheelchair access, energy efficient heating and appliances, moving building to current set-backs; lower building to current height restrictions, adding adequate parking spaces; replacing decks with 4″ railings.

Building Ordinance B Coverage pays to tear down and dispose of undamaged portions of your building as required to repair or rebuild your building.

Building Ordinance C coverage pays to update your building to current building codes as required by your city after a covered loss. The older the building the more updates will be required by your city.

Liability Insurance

General liability protection provides coverage for tenants, guests or other 3^rd parties that have experienced or who have claimed to have bodily injury or property damage on premises. Large liability exposures we commonly see are due to a fire or fall.

Many people place their commercial real estate in Trusts or LLCs to prevent large financial loss in lawsuits, however this still leaves the assets of the Trust or LLC at risk. Increasing your liability limits is an easy way to protect your assets.

Liability coverages include owners legal and defense costs.

Tenant Discrimination Coverage

First party Employers Practices Liability coverage protects you from discrimination, harassment or wrongful eviction type claims brought on by your employees.

Property managers are not considered employees. They are a 3^rd party vendor and need to carry their own tenant discrimination coverage. You cannot insure their work, much like you cannot carry coverage for your landscaper or dentist.

Third party Employers Practices Liability coverage protects you from claims brought by your tenants, vendors, or suppliers if they feel you have discriminated against them.

Coverage includes can include legal costs which can add up quickly.

Loss of Income Coverage

While property insurance covers physical damage to your building, business income coverage pays for lost revenue during the restoration period.

For example: Your tenants move out after a covered loss and are not paying rent. You still owe your bank, overhead and taxes for the property. The insurance will pay you your net lost rental income until repairs are completed.