Hello. I’m Ron Philleo with Philleo Agency Insurance. Insuring a commercial building can be difficult. Today I’ll go through a few items that’ll make it a little bit easier for you. The first thing we need to know is what kind of building did you buy? Is it an apartment building? Is it an office complex? Is it a restaurant? Some buildings combine a little bit of everything; those are known as mixed-use buildings. So we’ll need to know what kind of building you bought and what the occupancies are going to be.
The next thing we need to determine is what should we insure that building for? Typically, we insure for replacement coverage. Replacement coverage is coverage that, if the building is destroyed, whether it be a fire or a tornado or something like that, they will be able to replace the building. That’s usually the best coverage.
The next coverage you could also go with, an alternative coverage, is known as actual cash value. That’s a depreciated coverage. We usually don’t recommended that, but in some circumstances it may be necessary. So, replacement coverage is usually the way to go, though.
The next thing we need to determine is, is this an owner-occupied building, or are you going to be leasing it out? Or maybe there’s a mix of both. Maybe you’ll be there and there will be tenants as well.
If you have tenants in the building, we want to make sure we have loss-of-rent coverage or loss-of-income coverage. This will help you if, let’s say the building is damaged due to a claim. We’ll pay for the loss of income that you endure during the period that the places can’t be occupied, until it’s rebuild. So that’s very important. Make sure you have loss-of-rent or loss-of-income coverage.
The next coverage is liability. Liability is so important. In a commercial building, there’s a lot of activity, typically. Someone can slip and fall. Make sure you carry — we recommend — at least a million dollars of liability coverage, in case something happens or somebody gets injured at your commercial building.
You also want to make sure that any built-in items on the building–there might be coolers that are built-in, or there might be features of the building that are built-in–you want to take those into account with your replacement coverage as well. A good independent agent will be able to come out, survey the building with you, talk about the features, talk about what’s going on, all the occupancies, and determine the correct policy for you. Again, we recommend using an independent agent because they’re going to have more resources and be able to shop around for you and make sure you’re getting the best deal.
I’m Ron Philleo with Philleo Agency Insurance. Make sure to check out our other videos.