Kristin Recore - Commercial Insurance Advisor with TIAG

06/18/2024

WE ARE HIRING ANOTHER COMMERCIAL LINES ACCOUNT MANAGER
Hybrid Schedule (2-20 license necessary for hybrid)
**Email - [email protected] for all the details!**
Immediate opening and ready to hire!
Must live near the office location for in office work days and training.
Location: Clearwater, FL 33765

08/11/2022

Improper Valuation Creates Risks for Insureds
Common misperceptions with valuation
Misperception #1: Purchase price or market value reflects an accurate value for a building’s replacement cost.
The price of the building or current market value may not be an accurate reflection of its replacement cost.
Misperception #2: Tax and mortgage costs show a building’s value.
Assessed value for tax purposes can be vastly different from the cost of materials and labor to repair or replace building when it’s damaged.
Similarly, appraisals performed to establish loans are typically performed at the beginning of the loan term and not updated until the financing program is renegotiated.
Misperception #3: Keeping a valuation as is, despite inflation, will be fine.
Property market dynamics vary, but if insured value does not increase over the course of a few years, there is a strong possibility it is undervalued. This dynamic is even more relevant in the current inflationary environment.
Misperception #4: Buildings should be valued at the minimum amount required in the coinsurance clause.
Coinsurance clauses in property policies allow for a buffer in the valuation, to help protect the policyholder in a situation where the value fluctuates over the policy period. Insuring a building at the minimum amount required by the coinsurance clause can increase the risk to the insured because using the minimum does not allow for common material and labor cost fluctuations.
Below is a simple example of how a valuation change can negatively affect a property owner:
A commercial office building insured for $600,000 when the owner purchased it appreciates in value a few years later and suffers a total loss from a fire, costing $1M to replace. The property policy has scheduled limits of $600,000, meaning the insurer will pay a maximum amount of $600,000 for the claim (additional co-insurance penalties may apply). The building owner therefore faces at least $400,000 in out-of-pocket costs to rebuild.
Proper Valuation Tips:
Scrutinize valuations. If your building was a total loss today, what would it cost in labor and materials per square foot to replace it?
Benchmark local valuations. If most other buildings are valued at $200 per square foot and yours is valued at $75 per square foot, it may be appropriate to closely review building characteristics and order a replacement cost appraisal to determine if the building is undervalued.
Compare to historical valuations. Building-cost inflation and market appreciation change over time. If your building was properly valued five years ago, it likely is undervalued currently unless the value has increased at the rate of inflation over time.
Insure building to their full replacement cost value to avoid undervalued limits and coinsurance clause penalties that could expose you to potentially costly out of pocket expenses in the event of a claim.

https://email.rtspecialty.com/products/binding/improper-valuation-creates-risks-for-building-owners-and-insurers?ecid=ACsprvseQd4_t2UtKd4POJ1A3labxpDZwRU8h87QGzC--aV4kbibC0DClaEs2D_IxoZu0XJjSmNw&utm_campaign=RT%20Binding&utm_medium=email&_hsmi=222184748&_hsenc=p2ANqtz--OqhtMqLwFHmBsm3bPfPF1yXm3XhwEAqLLkoz8iHdvI5V2QHE_3Z3DN53qNyYI1mjM_u9AkxcOHPI1hs7YchOvAxVLZld4qJDBbCiVMVnF1NAyeFc&utm_content=222184748&utm_source=hs_email

08/09/2022

What you need to know about the Florida Legislation Senate Bill 4-D for Condominium Inspection and Repairs

On May 26, 2022, Governor DeSantis signed into law Senate Bill 4-D during a special legislative session as a response to the Surfside Condo Collapse. The Bill established a statewide structural inspection program, requiring Condominium and Cooperative Associations to conduct Milestone Structural Inspections of their buildings and to perform Structural Integrity Reserve Studies to ensure that Condominium and Cooperative buildings are safe for continued use. The bill will require that condominiums be re-certified after 30 years if they are three stories or higher or are 25 years old and within three (3) miles of the coastline. If an Association is older than thirty (30) years old (e.g., the building’s certificate of occupancy was issued on or before July 1, 1992), the Association must conduct a Milestone Structural Inspection of the buildings within its community before December 31, 2024 and every 10 years after that be required to re-certify. Condominium Association Boards will be required to set aside money in reserves to cover future repairs starting in 2025. The Association is responsible for all costs associated with performing a Milestone Structural Inspection. The Milestone Structural Inspection Report is an official record of the Association. The Report must be maintained by the Association for fifteen (15) years. A Tenant of a Unit has a right to inspect an Association’s Milestone Structural Inspection Report, and a prospective purchaser of a Unit has a right to inspect an Association’s Summary of the Report. The condo boards will also be required to conduct reserve studies every decade to make sure they have the resources to finance needed structural repairs. The proposal will also open condo board members (many volunteers) to lawsuits if they ignore inspection requirements. It is a breach of an Officer or Director’s fiduciary duty if the Association fails to complete a Structural Integrity Reserve Study, as necessary. Each Association must provide certain information about its buildings to the Division of Florida Condominiums, Timeshares, and Mobile Homes on or before January 1, 2023. The condo reforms are in response to the partial collapse of a 136-unit building in Surfside last June that left 98 dead.

https://www.flsenate.gov/Session/Bill/2022D/4D/BillText/er/PDF

https://www.natlawreview.com/article/governor-desantis-signs-senate-bill-establishing-building-safety-act-condominium

https://www.tampabay.com/news/florida-politics/2022/05/25/florida-legislature-passes-condo-law-on-inspection-repairs/

Starting in 2025, condo boards will need to set aside reserve money to cover future repairs.