Commercial Property Insurance Shows Signs of New Life
Commercial Property Insurance Shows Signs of New Life
by Pardeep Vedi
You may have heard (or experienced) that in recent years, affordable commercial property insurance has been difficult to obtain. The good news is that the commercial property insurance market in Central Florida is starting to show signs of new life.
The challenges began after Hurricane Andrew in 1992. The 2004 Hurricanes Charlie, Francis, Jean and Ivan virtually eliminated any market. After that, the only insurance available to Florida business and agents was by non-resident insurance carriers (surplus and excess markets). The rates were usually 200 to 300% higher. They also had a substantial increase in deductibles, especially for windstorm.
Because of the skyrocketing rates, a large number of Florida businesses had the difficult option of having to self insure, also known as “going bare.” In response, banks and lenders had to become creative. They tried to create temporary self insurance pools on a case-by-case basis. However, according to Alex Sanchez, CEO of the Florida Bankers Association, “The regulators frown upon this; they would like every property insured for obvious reasons – because you don’t want to see a catastrophic storm and then bank failures. This said, bankers want to keep their good customers, and some are allowing it as long as they can document their reasoning in the loan file.”
After the 2004 hurricane season, there were numerous calls on Florida Legislators to provide some relief. Florida Insurance Commissioner Kevin McCarthy held public hearings and Governor Jeb Bush and the Cabinet approved an emergency order. That established a commercial property and casualty joint underwriting association for small businesses unable to obtain insurance. However, insurance companies were still not rushing in to provide additional coverage. This will really only happen if and when there is a National Disaster Fund established that provides relief and a separate market for the peril of wind.
Fortunately, other than Hurricane Wilma, Florida has not experienced any major hurricanes for the last three years. Insurance, especially for inland counties, is becoming easier to afford. There are resident (admitted), insurance carriers that are willing to assume some commercial property risks. Properties that are up to $1.5 million or so depending upon the age of the property, location and use are most likely to be considered by these agents. Owner occupiers may have slightly better rates than Investor Owned properties.
Because commercial property insurance in our area is becoming more available, talk to your Florida insurance agent. Give that person a call well before your renewal. Your agent will help you understand your options and help you get the most affordable coverage. This will keep you and your business protected.
Pardeep Vedi
American Insurance
3586 Aloma Ave., Ste # 3,
Winter Park, FL 32792
407-678-7747
agent@insurancesavers.com
www.insurancesavers.com
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