If you own an apartment building, you know it’s a valuable asset that you want to make sure to protect to ensure it continues to bring monthly income into your pocket in the form of rental income. Take care of your baby!
Philadelphia Insurance Companies has identified three leading causes of residential fires: electrical issues, smoking, and cooking. Additional hazards include laundry dryers, barbeques, and flammable liquids. To address these causes, Philadelphia recommends the following tips and resources to help you reduce the chances of a fire at your apartment building:
Electrical Fire Safety
- Do not overload your system by using “daisy chains” of power strips or extension cords
- Have the entire electrical system inspected by a qualified electrician prior to building purchase or occupancy
- Have your electrical system inspected at least every 10 years by a qualified electrician
- Have an infrared scan of your electrical system with a thermographic camera every three to seven years to identify hot spots
- Tighten or replace components where hot spots exist to help prevent electrical fires and for possible savings in electrical consumption
- Visually inspect key electrical components, like breakers and switches, on an ongoing basis, making sure they are clean, dry, and tight
- If your apartment building has aluminum wiring or Federal Pacific Stab-Lok breakers, these are known fire hazards; contact your insurance broker or carrier for Risk Management Services to help
Smoking Fire Safety
- Make your apartment building smoke-free
- If you cannot have a non-smoking apartment building, create a safe smoking area at least 20 feet away from the building with a non-combustible, non-tipping receptacle for ash and butts
Cooking Fire Safety
- Implement cooking fire preventative devices, such as stovetops that sense unattended cooking or limiting the temperature of the cooking surface
- Implement Auto-Out fire reactive devices that expel an extinguishing agent in the event of a fire
Laundry Dryer Fire Safety
- Verify that dryer lint traps are in good condition and being cleaned often to prevent buildup
- Ducting from the dryers should be smooth aluminum, and should also be on a cleaning schedule
Flammable Liquid Fire Safety
- Do not store more flammable liquids or aerosols than necessary on a property. Discard all not being used and store the remainder in a UL listed flammable liquids cabinet
Barbecue Fire Safety
- Consider a policy of “no personal” barbecues on site. Provide a community barbecue located away from any building
- Do not allow any charcoal barbecues to be used onsite
- If personal barbecues are allowed, they should be used a minimum of 10 feet from any structure and not allowed on any combustible deck
Finally, make sure smoke detectors are present and operational. In residential fires resulting in deaths, 57% of the time a smoke alarm was not present or was not operational, according to the NFPA. Ultimately, the goal is to prevent fires, which requires a joint effort by apartment building owners, apartment building managers, and residents. A reasonable investment of time and resources by all three parties can help keep people safe and protect real estate investments. For more information, watch the four-minute video above from Philadelphia Insurance Company. And contact me anytime you have questions about protecting your apartment building. This is an ever-valuable asset you want to keep in good standing.
Credit: Philadelphia Insurance Companies
If you own a vacant commercial property like a retail shopping center, office building, industrial building, etc., be really careful when it comes to your property insurance. There are limitations with coverage.
By definition, a building is considered vacant unless at least 31% of its total square footage is rented to a lessee or sub-lessee and used by the lessee or sub-lessee to conduct its customary operations.
Typically, insurance carriers will not pay for any loss or damage caused by any of the following, even if they are Covered Causes of Loss if the building where loss or damage occurs has been “vacant” for more than 60 consecutive days before that loss or damage occurs:
- Sprinkler Leakage, unless you have protected the system against freezing;
- Building glass breakage;
- Discharge or leakage of water;
- Theft; or
- Attempted theft
With respect to Covered Causes of Loss other than those listed in Paragraphs (1) through (6) above, an insurance carrier will reduce the amount they would otherwise pay for the loss or damage by 15%.
If you own a commercial building which is currently vacant, or if you know you will be losing a tenant soon, the first thing you should do is contact your insurance broker to see what options are available before you secure a new tenant.
Construction material costs increased by 7.4% in September compared to the same month in 2017, according to an Associated General Contractors of America (AGC) analysis of U.S. Labor Department data. In the past year, tariffs have caused producer price index increases of 29.3% for diesel fuel, 22.1% for steel pipe and tubing and 11.7% for fabricated structural metal, among other cost increases. Over the past year, contractors increased their construction fees for nonresidential properties by 3.5%, which indicates firms are absorbing increased costs, according to the report. Additionally, 80% of respondents to an AGC August survey reported difficulty filling hourly worker positions, resulting in 62% of firms paying higher salaries to attract and retain workers.
What does this mean for my Commercial Building Insurance policy?
If you own a commercial building, whether it be an apartment, industrial, office, or retail building, you should pay close attention to the Building insurance limit you have on the policy.
Perhaps you secured a policy years ago and haven’t looked at it in a long time. Or, have no idea how much you should be insuring your building for in the event of a fire, or earthquake.
Our economy is cranking right now. Contractors have more jobs than they know what to do with. Their employees are in high demand and they need to pay high salaries to keep their talent. More demand equals higher costs.
This isn’t 2009 when contractors were begging for work and you could basically name a price when hiring them for a job. They are busy and selective on which jobs they choose in today’s economy.
From what we’re hearing from Southern California based general contractors right now, their costs for material and labor are at least $300-$400 per square foot to build. So if you have a 20,000 square foot commercial building, you should probably be insuring that for at least $6M Replacement Cost value (20,000 x $300 per sq/ ft).
My suggestion is that you dig up your commercial building insurance policy and check what limits of insurance you have for the building coverage. If you’re severely underinsured, call your commercial insurance agent/broker and ask them what it would cost to endorse your policy with the limits suggested above. You’ll be happy you did if you suffer a loss in the coming day/week/month/year.
Growth in online grocery sales could increase demand for industrial cold storage space, causing 35 million square feet of cold storage to shift from retail locations, according to a report by CBRE. Online purchases will make up 13% of all grocery sales by 2024, the report states. California would likely have the most industrial cold storage at nearly 400 million cubic feet.
Industrial building owners and investors take note!
Do you have fire sprinklers in your commercial building, either as a tenant or building owner? How confident are you that you have the proper coverage on your property insurance policy to protect from an accidental fire sprinkler discharge like this one?
Think about physical loss or damage to your business’ equipment, stock, furniture, fixtures, and/or improvements caused by the water damage. If you are unsure, make sure to talk to your agent/broker for verification. Don’t just assume.
A client of mine, a commercial building owner, suffered a fire on Saturday afternoon at their commercial industrial property in Gardena, CA.
Here are some pictures of the scene:
We reported and initiated the claim right away over the weekend with the carrier. Thanks to technology, we were able to get it done remotely while I was out of town.
In addition to protecting your commercial real estate property, there is even more more good news when it comes to your commercial property insurance policy……it is tax deductible. Yes, you read that correctly. By protecting yourself and your property, you can write this expense off to save on taxes.
No matter where you live or where your property is located, you can take advantage of many federal tax deductions available to commercial property owners across the U.S. For example, you can deduct the premiums you pay for nearly every insurance option for your commercial rental activity, including:
- Fire, theft and flood insurance
- Landlord liability insurance.
- The cost of health and workers’ compensation plans for any employees who work on premises.
A major benefit of commercial property insurance is that it allows you to combine the many types of insurance covered into a single, cost-effective package policy that can help you get far better deals than if you purchased your insurance coverage’s a la carte (Property, General Liability, Business Income, Umbrella, etc.).
Furthermore, in the event that your commercial real estate property is adversely affected by a rare weather event like a flood, you can obtain a tax deduction for all or part of your loss.
Source: The Hartford