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State of the Habitational Insurance Market for 2019

Comprehensive property and liability options for all lines of commercial real estate. Options may include:

by ShawnWoedl

A fter an extremely active 2017 that left the commercial prop- erty insurance industry reeling from paying close to $130 billion dollars out in catastrophe losses (from hurricanes, floods and wildfires), 2018 only brought additional un- certainty surrounding the stability of the market moving forward. As it turns out, 2018 nearly kept pace with 2017 (paying out close to $100 billion in catastrophe losses). These totals should seem high to all of us, but especially considering the na- tional average from 2000-2017 was approximately $56 billion per year. The unforeseen level of ca- tastrophe-related loss activity over the last two years, paired with a considerable amount of these losses being attributed to non-peak perils like wildfires (roughly $32 billion paid in 2018), is resulting in anticipated rate increases of up to 30% for locations in catastro- phe-exposed regions of the country. Regardless of your personal loss experience over the last two years, be prepared to see some level of increase assigned to your prop- erty insurance costs if you have commercial properties in areas of the country where these losses have occurred. Expect the larg- est increases from carriers and programs that have a reasonable amount of wildfire exposure. Now more than ever, it is vital that in- vestors shop their property insur- ance at least 60-90 days ahead of their annual renewal to guarantee the most comprehensive cover-

age and most aggressive rates. Partnering with an independent insurance agent that can access multiple markets will simplify this

crease. Aside from working with an independent agent, you can take additional steps to control your insurance costs. Consider increas- ing your deductible to offset some of these increas- es – many insurance companies rate, in part, off of the deductible you carry.

Blanket or per location limits

process for you and help find the best rates and coverages. If there is some positive coming out of all of

Ordinance or law

Equipment breakdown

this, it is that there contin- ues to be an abundance of competition

Simply put, the higher the property deductible you carry, the lower the property rate they assign

Loss of rents including extra expense

Crime coverage

for clean, “non-ca- tastrophe” commercial business. Inves-

Replacement cost

(be careful not

tors with properties in non-catastrophe exposed areas that have

to overextend yourself and your business here). Consid-

No coinsurance

performed favorably over the last few years for their insurance companies should expect to see flat or near-flat renewals. This, however, is still largely dependent on your individual compa- ny’s loss experience over the last 12- 24 months (encompassing their entire spread of risk). Know that if you are seeing an increase from your current insurance company (and you have not had any insurance losses over the last couple of years) you should be able to shop your coverage and obtain similar or exact terms, at or near your expiring cost. Even more so than in years past, it is crucial you take action ahead of your annual renewal if you’re concerned about a potential in-

er the included perils you have on your current policy form, and if you would be comfortable with “self-in- suring” some of those perils. If this an option for you, transitioning from a Special form to Basic form property policy can save you 20% or more per year. There are additional exclusions on a Basic form policy, so make sure you are fully aware of these before making this change. Jeopardizing important coverages to save money is never a good idea, and you should only consider this if you are prepared to take on these added risks. Consulting with your insurance agent on available cov- erage options is a great idea before making any decision. •



Umbrellas up to $200 million

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National Real Estate Insurance Group is the nation’s leading agency offering coverage options for real estate investors across the country. Our lineup of products includes: REIGuard™, LandlordGuard, PMGuard, TurnkeyGuard, LenderGuard, and CommercialGuard.


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