Maryland Shopping Center Insurance
One tenant could cause the whole shopping center to go up in flames. Do you have the right Shopping Center Insurance coverage?
Do you own a shopping center in Maryland?
A shopping center can be a strip center or an enclosed mall, or a combination of both. You need a carrier that specializes in shopping centers so you are not left with a huge gap in your shopping center insurance coverage.
Case Study
Suppose you have a flooring store as a tenant. They rent from you an unfinished space and build it out. They decide to put down marble floor and cedar wood planking on the walls. The flooring company ended up spending $100,000 in build-outs. It is not up to you to cover these build outs if there is a claim, it is the tenants, so why do you care. Well while the flooring store is renting there it is not your concern, the flooring company should have enough coverage on their policy to cover their betterments and improvements.
Now let’s suppose the flooring store moves out, and a mortgage broker moves in. You were able to charge the mortgage broker more rent because they loved the build outs that were left by the flooring company. However, now there is a fire. The mortgage broker’s insurance policy is not providing the coverage for the build outs because they did not install them. You may find that your existing shopping center insurance coverage on the building maybe below the allowable coinsurance percentage and you are penalized on your claim settlement since you are now $100,000 under insured.
Are Leases Important?
When you rent a shopping center it is important that your leases are coordinated with your shopping center insurance coverage. Did you make the responsibility of the new tenant to cover all the betterments and improvements left by the previous tenants? A great lease will clearly spell out the responsibilities of both you and the tenants. It should make it crystal clear as to what the insurance requirements are of the tenant. A great lease combined with a great shopping center insurance plan can drastically reduce your exposure to financial loss in the event of a disaster.
Going over your lease requirements regarding the way the shopping center insurance company will respond at the time of the loss is very important. As this will also help you spell out the insurance requirements of your tenants. We also recommend that you get a certificate of insurance from your tenants on an annual basis. This certificate should list off the the insurance coverages that you require in your lease and also name you as an additional insured for the liability insurance portion of the policy.
What are the factors that the insurance companies use in determining your cost?
The first one is the tenants of the building, having tenants that do a lot of cooking or spray painting or are an undesirable class for the carrier will affect your price and the availability of coverage. Secondly, the year built and the type of construction. If the building is over 30 years old the company is looking for updates to the plumbing, wiring, roof, and heating systems.
With shopping centers, the companies usually rate on the square footage of the building and the area of the parking lots. In addition, the insurance companies look for pride in ownership, sprinkler systems and location to the fire department, as well as requirements and tracking in place to make sure that tenants maintain their own coverage in determining the amount of credit or debit to apply to a shopping center price.
Being in business as a shopping center owner, there are also other business insurance policies that you may need in order to properly protect yourself. Some of these are as follows: