A new advisory examining core risk management concerns for commercial real estate property owners and managers was released by ACE Group last week.
The advisory, “Managing Real Estate Liability Risks in a Changed Market,” authored by Joseph Fobert, senior vice president at ACE Excess Casualty, provides a guide to some of the volatile exposures occurring in the market, emphasizing the importance in evaluating risks, reinforcing risk management strategies and assessing insurance programs to ensure the appropriate primary and excess coverages are in place to mitigate potential exposures.
Fobert notes that liability claims have been increasing in both frequency and severity which could lead to higher deductibles and self-insured retentions along with more restrictive policy terms and conditions.
“As the U.S. commercial real estate market improves, risk management considerations that once had been put aside are now coming to the forefront and should be reexamined,” said Carol Laufer, executive vice president, ACE Excess Casualty.
The advisory highlights a number of key exposure areas and discusses how the risks in some cases have become greater, while others continue to evolve.
For example, New York’s Scaffold Law which dates back to 1885, continues to provide significant challenges, said Fobert, as injury awards climb. Despite the law being the only one if its kind in the country, its scope has widened over time, the ACE advisory states. As a result, ACE recommends property owners review contractual language with third party contractors to ensure hold harmless clauses and additional insured coverage is adequate and in force.
The advisory also notes that properties acquired during the real estate boom may face heightened completed operations and construction defect exposures on projects built during that time because of a failure to acquire adequate completed operations coverage with contractors due to their high demand at the time. The insurer recommends companies looking into property acquisitions scrutinize the construction completed at the time to ensure adequate completed operations insurance was in place.
In light of the changing real estate market, the advisory warns that deferred maintenance is also a concern which could lead to an increase in bodily injury claims.
Terrorism, the Americans with Disabilities Act, energy efficiency and carbon monoxide monitors were also addressed in the advisory.
To access the advisory visit: http://www.acegroup.com/us-en/assets/ace_real_estate_advisory.pdf
Source: ACE Group
Was this article valuable?
Here are more articles you may enjoy.