“The insurance of commercial and residential real estate may seem to be a very straightforward area of cover, but there can be far more to this than is apparent to the untrained eye”.

A further recent complication relates to the insurance requirements of Banks and other Lenders. Whilst in the past these organisations would have accepted the noting of its interest on an insurance policy, loan agreements are now extremely specific as to how the insurance needs to be arranged, with whom and sometimes impose onerous conditions upon the borrower and insurer alike. These requirements are often far wider than the cover provided under insurance policies unless the policy is specifically extended to cater for the contractual obligations.

IMG_3121-300x225We have specialised in the arrangement of cover for property investors for over 25 years, and as a member of the Mason Owen group of companies, we have direct access to a whole range of RICS qualified property surveyors.

We therefore have the knowledge and experience to be able to look after all your commercial Real Estate insurance requirements.

Your insurance requirements are often driven by contract, and it is not simply a case of the client deciding what cover he would like to place.


Core Covers


The main area of cover relates to the actual bricks and mortar. Cover for the Buildings should be placed at a level to be able to fully reinstate a property, including the cost of clearing the site and starting from scratch in the event of substantial damage.

A landlord would also need to arrange cover for any Loss of Rent, which the tenant could withhold under the terms of a lease following Damage to the building making it unusable.


Leases


All leases contain Insurance Covenants, which determine how the cover should be arranged between landlords and tenants. As the market evolves, the bargaining position between the parties can change, and it is essential that the broker understands how the lease obligations need to be interpreted and ultimately covered by insurance.

Lender Requirements


A further recent complication relates to the insurance requirements of Banks and other Lenders. Whilst in the past these organisations would have accepted the noting of its interest on an insurance policy, loan agreements are now extremely specific as to how the insurance needs to be arranged, with whom and sometimes impose onerous conditions upon the borrower and insurer alike. These requirements are often far wider than the cover provided under insurance policies unless the policy is specifically extended to cater for the contractual obligations.


Don’t Get Caught Out By Under-Insurance


One of the major causes for dissatisfaction following a claim, is when insurers do not pay a policyholder’s valid claim in full. The reason for this could be a legal principle called “Average” which allows the insurer to reduce the claim settlement if the policyholder has not arranged cover at the correct levels. As an example, if a client only insures its property at two thirds of the correct replacement value, the insurer has only received two thirds of the correct premium for the risk and is therefore entitled by law to only pay two thirds of the claim.

This under-insurance can obviously have severe financial consequences in the event of a loss, and it is therefore vital that policyholders fully understand how to set their sums insured correctly. Please click here for guidance on some of the more common pitfalls to look out for, so that you can arrange cover correctly in order to ensure you do not fall foul of the Condition of Average.

Click here to read MOFS ‘Don’t Get Caught Out!’ guide.

Alterations to Your Buildings


 If any works are being carried out to a building, it is likely that a formal building contract will be used. This will place contractual obligations detailed in the insurance clauses as to who should insure and for what class of insurance. The insurance arrangement obligations can fall to either the Employer or Contractor. We have extensive knowledge of the main Build Contracts, and how the insurance requirements would operate to ensure that the appropriate cover is placed.

Quite often our specially negotiated property wordings are wide enough to provide sufficient cover free of charge.