Commercial Property Executive: Gearing Up for the 2018 Hurricane Season
By Kluger Kaplan July 30, 2018
Real estate professionals in high-risk areas have learned the lessons hurricanes Harvey, Irma and Maria laid out last year, and used them in the preparation process for the 2018 Atlantic hurricane season, now underway. Taking preventive measures is paramount in minimizing damage. However, having a strong insurance policy is equally important…
A comprehensive insurance policy could ultimately smooth out difficult situations left behind by calamities. This task falls to property owners and tenants—landlords must review their assets at least yearly, as the property’s value is determined at the time of loss, according to Philippe Lieberman, a founding member of Kluger, Kaplan, Silverman, Katzen & Levine.
Moreover, parties must have a clear understanding of their lease agreements, making sure that they know who is responsible for obtaining the property insurance and that it covers all types of property loss. For example, in the case of a triple net lease, the tenant is required to pay all real estate taxes, as well as insurance and maintenance.
“Many commercial insurance policies contain coinsurance clauses, which are designed to force or encourage policyholders to insure their properties to a certain percentage—usually 80 to 90 percent—of the properties’ true value. If the amount of insurance is found to be under the coinsurance percentage, then a penalty is applied, which reduces the payout at the time of a loss,” Lieberman concluded. In such cases, there is a risk of litigation over the insurance payment amount.
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