Multifamily Florida - Spring 2012 - (Page 15)

FEATURE How to Avoid Over-Insuring Your Apartment Property by Ryan Cassidy and Evan Seacat, Franklin Street In our day-to-day work, we consistently see multifamily properties that are overinsured. Many apartment managers and owners are paying for insurance they don’t need or aren’t taking advantage of various opportunities to lower their premiums. Because the insurance business is complex and requires a lot of education to stay on top of the latest issues, it can be tough for apartment managers and owners to know how to determine whether the property is over-insured. So here are a few tips that can help ensure you’re paying the lowest rates possible for your apartment property while still having effective coverage. 1. Once a year, have an insurance agent who specializes in commercial real estate provide a free assessment to review your insurance policies. Because the agent works in the insurance field day in and day out, he or she will be able to recognize whether you’re paying too much for coverage and suggest ways you may be able to lower premiums. The type of construction of the buildings on the property may entitle you to insurance credits, so make sure the agent personally visits the property to see the buildings and note potential savings. 2. Make sure your insurance company has an accurate record of the property’s “replacement cost.” Because of the tough economy, the cost of labor and materials provided by contractors in recent years has declined. This means the costs to replace recently constructed buildings may be lower than what the insurance company is estimating. Make sure the insurance company is covering your property for the accurate replacement cost, and not a penny more. 3. Tip Two leads nicely into Tip Three: Be aware of “inflation guard.” Some insurance companies automatically raise the property’s building value by between 4 and 8 percent annually to account for inflation. Many times, the building value is not actually going up at a rate of 8 percent. Providing the insurance company with an updated appraisal will ensure you’re not paying more than necessary. 4. Estimates on building value fluctuate with the market, so get an updated property appraisal every 12-24 months, especially if you haven’t done so in a few years. If your insurance company is still insuring the property based on the building value at the height of the market a few years ago, you could be paying too much in premiums. Get an estimate from more than one appraiser to get an accurate figure, and send the updated building value to your insurance company to be sure you’re paying a fair premium. 5. Take a close look at your wind mitigation coverage, as your property may be eligible for credits that lower insurance premiums if the buildings’ roofs meet certain requirements. This type of credit became available more than 10 years ago, but we still frequently see accounts where apartment communities are not taking advantage of this money-saving opportunity. 6. Consider making improvements to your community’s buildings. Insurance companies look favorably on construction components such as hurricane shutters, high-impact glass, new roofs, fire sprinkler systems, and burglar and fire alarms. Ryan Cassidy and Evan Seacat are Directors of Insurance at Franklin Street in Ft. Lauderdale. For more information, please contact them at and ● Your CLEAR choice in waterway management since 1992. AQUATIC WEED CONTROL, INC. - Algae and aquatic weed control - Mechanical vegetation removal - Planting native plants and trees - Carp stocking and barriers - Exotic vegetation removal and wetland restoration 800-543-6694 529270_Aquatic.indd 1 MultifamilyFLORIDA l SPRING 2012 3:12:44 PM l 15 5/6/11

Table of Contents for the Digital Edition of Multifamily Florida - Spring 2012

President’s Message
Legislative Update
Florida Apartment Industry Makes an Impact in Tallahassee and Washington, D.C.
Caution: Spring Might Bring Killer Bees to Your Community
How to Avoid Over-Insuring Your Apartment Property
Superior Property Management: Do You Know What It Looks Like?
Apartment Industry Aims to Provide Housing for Homeless Families
Product/Service Council Directory
Index to Advertisers/

Multifamily Florida - Spring 2012