Some commercial properties are more difficult to insure than others, creating challenges for property owners. To learn more about Hard-to-Place Commercial Property Insurance, we spoke with Tim Wright, Senior Underwriter, Commercial Insurance, Burns & Wilcox, Boston, Massachusetts.
What makes a commercial property hard to place?
T.W.: Much of what makes a property hard to place for insurance is about location. You can have a hard-to-place property in Cleveland, Ohio, or in Miami, Florida, for completely different reasons. Miami, as we know, has the risk of hurricanes, while a property in Cleveland could have a greater water exposure due to heavy snowfall and minus-zero temperatures. The location is a huge factor. Aging buildings and certain construction materials are other factors and facilities for unique uses, such as entertainment or specialized manufacturing.
What are some of the greatest risks faced by commercial property owners today?
T.W.: Water is really the worst peril. Water damage is often catastrophic, whether it is through wind-driven rain, a leaky roof, or frozen pipes. Water can find its way into different spots of a building, and oftentimes it can be a leak that is not discovered until significant damage has occurred.
Which insurance policies can help them respond to these threats?
T.W.: Commercial Property Insurance is the primary policy, and there are three coverage forms: a Special Form, Broad Form, and a Basic Form. Those forms will spell out exactly what is covered, from perils like fire to auxiliary coverages such as Equipment Breakdown. Flood is not included in any of those. If you are in a flood-prone area, you would need a separate Flood Insurance policy. For properties under construction, Builder’s Risk Insurance is also important.
What steps should property owners take to complement their insurance coverage from a prevention standpoint?
T.W.: Maintenance, maintenance, maintenance. Owners need to maintain their properties. Property owners can limit their exposure to claims and possibly reduce their premiums by keeping up with proper maintenance of the building. This includes the roof, as well as plumbing, electrical, and heating system updates. Depending on the location, wind protection and wildfire protection measures may also help prevent a claim. It is also important to document maintenance plans and use licensed and insured tradespeople for any work done on properties.
What is a solution you have experienced in a hard-to-place scenario?
T.W.: Layering. Many Commercial Property insurance carriers are cutting their capacity. The cost of goods has gone up. The cost of labor is increasing. Supply chain issues are still happening. All of these can increase the value of properties, which then decreases the amount of aggregate that an insurance carrier can write. I recently worked on a $16 million insured-value building. We had to divide coverage among three different insurance carriers to fully cover the property. This is called layering, and it is becoming a common technique to obtain comprehensive coverage, especially for hard-to-place, high-value properties.
What are the greatest opportunities for brokers within Hard-to-Place Commercial Property Insurance?
T.W.: Brokers need to have good relationships with their wholesalers. At Burns & Wilcox, we pride ourselves on being relationship driven. Brokers are going to run into hard-to-place situations daily, so they need to find somebody who can help solve these problems.
What advice would you give brokers to increase their success rates with these products?
T.W.: Communication is key. The best thing brokers can do is send in a complete, full submission. If it is not complete, they need to include the details in an email; something more than “please quote.” That is not going to help win the business with carriers. In addition, relationships are so important when it comes to property brokerage — your relationship with the broker and the carrier. The best way to get those relationships is to submit complete submissions and get on the phone versus sending emails back and forth.
Why should someone consider Burns & Wilcox for their Hard-to-Place Commercial Property Insurance needs?
T.W.: Hard-to-Place Commercial Property Insurance is really a relationship business. Burns & Wilcox has deep carrier relationships; they know us, and we know them. That helps when a broker sends in a piece of business, and we can target who would be the best fit for them. We have offices throughout the United States and Canada and strong relationships in London. Location is key when it comes to Commercial Property Insurance. If you are not dealing with someone who is local in the area, you could run into problems. It is all about communication and relationships. We have the best relationships on the block.
