Insurance Considerations for Historic or Older Commercial Buildings
In the insurance industry older buildings are generally seen as liabilities. However, for some business owners older buildings are an asset or, at least, a part of everyday life. Many trusts and estates inherit older buildings, some businesses choose to be located in older buildings for decreased costs of rent or for the added ambiance for their clientele. If you own an older commercial building some coverages or endorsements become more important.
Ordinance and law coverage– when you have an older building your building may not be up to date regards to current zoning or building ordinance requirements. Should you experience a loss that requires a rebuild of the structure, your property coverage may not cover the additional cost to comply with the new zoning and ordinance requirements. This is where Ordinance and Law Coverage C kicks in. In addition, in the case of a partial loss, the ordinance may require the demolition of the affected structure. This is where Ordinance and Law Coverage A & B come into play. Coverage A will provide coverage for the loss in value due to the loss of the affected property. Coverage B will provide coverage for removal of debris.
Appropriate Valuation– insurance carriers and producers assign values to buildings based upon Marshall & Swift rating platforms. This platform assesses current value of materials and labor in your geographic to determine the cost to build a building of like kind and quality. However, a Marshall & Swift rating is only as good as the data input in order to derive it. You should ask your broker for a copy of the valuation they have done on the property showing the assumptions so that you can ensure that materials are properly identified and that special property features such as hand crafted molding, period glass, or other specialized features are taken into account.
Estate owners and trustees of older buildings will fare much better in the case of a loss if these considerations are taken into account