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 a claim to be paid without any deductions for building depreciation. On the other hand, Actual Cash Value only compensates for the depreciated reconstruction value of a building.
• Building Foundations. Coverage for building foundations is often time excluded unless the insurance agent or broker requests otherwise from the underwriter. Generally, underwriters can include this provision for free.
• Building Ordinance. This coverage pays for the increased cost of construction to adhere to current building codes when rebuilding (e.g., installing a fire sprinkler system).
• Earthquake Sprinkler Leakage. If an earthquake sets the fire sprinklers off, insurance companies oftentimes exclude the resulting water damage caused by the sprinklers discharging. Some insurers give policyholders the option of adding
this onto a Commercial Package policy, which is often the most cost-effective way to purchase this type of coverage.
Earthquake deductibles are typically based upon percentages of the limits (typically 5%-25% of the limits offered) with a minimum flat dollar amount (e.g., 5%, minimum $25,000). There are two main ways underwriters offer deductibles today:
• Per Unit of Insurance. Each type of coverage (building, business interruption, etc.) has its own percentage deductible. This can be advantageous as the deductible incurred before insurance kicks in is typically lower.
• Per Policy. The percentage deductible is based on the Total Insurable Value (sum of Building, Business Personal Property, and Business Interruption), which means policyholders will pay a much higher deductible before the insurance policy begins to cover losses.
There are many nuances that exist in the insurance marketplace that can either work for you or against you. Newfront is an insurance brokerage with commercial and private client expertise that provides comprehensive risk management powered by advanced technology and a client-obsessed culture. Their mission is to transform risk into opportunity, enabling everyone to pursue their goals. The team at Newfront Insurance is always ready and available to assist you to ensure you get the most comprehensive policy at the most competitive price. For a free, no obligation consultation, please contact Newfront Insurance at or call (855) 830-8954 and be sure to mention you are a member of the Apartment Association of Greater Los Angeles - Members are offered a 5% discount on Workers’ Compensation Insurance and new Apartment Insurance Package.
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