Commercial Building Help!!

[InsFNG]

Hi everyone. I'm new to the business, I just started 2 months ago, and I have a commercial deal to quote and I'm not sure exactly how to cover it.

I'm in Texas. My client just purchased a new construction, 3 unit retail strip building, approximately 4,000 sq ft, for $3mm. He has all of the spaces leased to tenants on a triple net basis. The tenants are a Subway, Dunkin Donuts, a frozen yogurt place.

I need help determining exactly how to insure the building to protect my clients interests. Should this be written as a CPP? Lessors risk? Is it somehow possible to do as a BOP? My clients only interest is as the owner of the building.

I appreciate any help anyone can offer. Thanks!

 

[rndz7]

Hi everyone. I'm new to the business, I just started 2 months ago, and I have a commercial deal to quote and I'm not sure exactly how to cover it.

I'm in Texas. My client just purchased a new construction, 3 unit retail strip building, approximately 4,000 sq ft, for $3mm. He has all of the spaces leased to tenants on a triple net basis. The tenants are a Subway, Dunkin Donuts, a frozen yogurt place.

I need help determining exactly how to insure the building to protect my clients interests. Should this be written as a CPP? Lessors risk? Is it somehow possible to do as a BOP? My clients only interest is as the owner of the building.

I appreciate any help anyone can offer. Thanks!

Call your General Agency, Captive, and ask for Underwriting, New Business, department...........Gather the information off of the Acord forms.

 

[jlanier]

Some carrier's will write it in a BOP and yes it is lessors risk. Usually the tenants must be BOP eligible in order to write the building on a BOP otherwise it goes as CPP.

 

[pmtaf]

When you say triple net, I assume you're meaning triple net lease when each tenant carries the insurance. That is the first thing that stands out to me. Why wouldn't the owner carry insurance on the building/property, then carry ratio of space:insurance premium over to the tenants in the form of rent? Most companies will put this on a CPP as Property, GL (with appropriate codes), business income/extra expense and some offer an endorsement to protect against key tenants moving out business income. If landlord is also tenant most will put on a BOP. (That's true instances of a triple net scenerio)

Tenants could then purchase their own insurance. Not say they have to get this, but they could purchase policies for their Personal Property and then GL that would include a 1M/2M limit with a $3M rented premise limit. (Most will only go $1M), and a $5M Umbrella naming landlord as additional insured on all policies.

If tenants buy insurance on building per triple net, they may only buy enough to cover their portion of the building and there could be issues in the instance of a claim. Even if in the contract, tenants are required to carry coverage on entire building and there is loss, proportion would be at play and would be total headaches for landlord and maybe even upset tenants if there is a partial loss. Example: On the north end there is a small claim but since a business on the south end has coverage on the building, the south ends tenant policy may pay out in proportion when there part wasn't damaged at all. My opinion, as a tenant I would not be happy.

Underwriters and carriers eventually will tell you what you are going to do and how they want to write it but I'm just giving advice for your client/landlord. Call carriers ask them and ask for supplemental apps. Also ask if they'll take another carriers supp app so you're not filling out a seperate one for each carrier.

Also, if my understanding of the triple net is wrong.... My apologies.

 

[AZDave]

Lessors risk. Many carriers offer a BOP Lessors risk. Make sure you insure for 100% cost to rebuild, and all tenants name owner as additional insured. Many markets for this, but I'm in AZ.

Good Selling.

Dave