2A — October 26 - November 8, 2018 — M id A tlantic
Real Estate Journal
www.marejournal.com
M id A tlantic R eal E state J ournal Publisher, Conference Producer . .............Linda Christman AVP, Conference Producer ...........................Lea Christman Account Executive ........................................... Steve Kelley Account Executive ............................................. Kim Brunet Account Executive ........................................ Marisol Chase Senior Editor/Graphic Artist ..........................Karen Vachon Office Manager ...............................................Kerrin Devine Contributing Columnists: ........ Daniel J. Caldwell, Stout & Caldwell, LLC; Lisa R Cassidy, ecoImagine; Matthew Mauer, American Insurance Administrators Mid Atlantic R eal E state J ournal ~ Published Semi-Monthly Periodicals postage paid at Hingham, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal 350 Lincoln St, Suite 1105, Hingham, MA 02043 USPS #22-358 | Vol. 30, Issue 21 Subscription rates: $99 - one year, $148 - 3 years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
M id A tlantic Real Estate Journal
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Matthew Mauer
I Can BuildMy Building but I Can’t Make the Bank Payments P rotecting an asset from physical damage is usu- ally at the forefront of what type of insurance to purchase, but have you ever asked yourself what you might be missing? Is the successful repair or rebuilding of an as- set really the biggest and only concern? The answer to this question is no. Most sellers of insurance don’t look at the whole asset appropriately. Historically, agents are not very good at fully explaining the options that are available to protect a bank’s repossession or a failed investment venture. Agents sell the minimum level of cov- erage that banks are looking for. Typically, a buyer doesn’t want to consider more cover- age than the bank requires. When it comes to determining an appropriate level of cover- age, the authority on what the insurance needs are should lie with the agent as opposed to the lender.
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Consider this scenario: A large investment property is damaged by an extensive fire that requires significant repair to the building. Reconstruction requires township/city/munici- pality approval before putting the reconstruction out to bid, all while the insurance com- pany has 60 days to analyze your sworn proof of loss. Re- alistically, construction starts 4-5 months after the damage occurs. With delays between insurance carriers and local government, it is expected to be completed in 12 more months, pending any further delays. The leases you have in force with tenants all have an
option to abate if significant damage to the building has occurred, and most tenants have exercised this right in their lease. While you are dealing with this issue, what happens if the rental checks of tenants in your building stop? This scenario is one of many seen in commercial insurance programs across industries, but is particularly important for real estate. A properly structured and well-thought- out insurance considers the timeline to rebuild a structure after a devastating loss, and what your needs would be to continued on page 7A
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