My friend is buying a shopping center, and he is putting down 450,000 for 1.8 mill. shopping center.What is a reasonable amount of the coverage he should have for a shopping center?
And,how do I find out a replacement cost for that property. I want to insure it for a replacement cost only.
2006-10-27 07:48:04 · 4 answers · asked by Stone 1 in Business & Finance ➔ Insurance
Well, you really need to look far beyond just covering the replacement cost of the shopping center in the event of a property loss. In fact that should only be the very small part of a bigger overall risk problem with this kind of a property.
You are going to need a great deal of liability insurance.
If a person is hurt (or worse....killed) on the property because of some kind of hazard....your friend will be on the hook for it. You could potentially face millions of dollars in liability costs.
What if there were some sort of mass casualty event....a wall collapse, a natural gas explosion....god forbid a gun toting madman.
Because it is a shopping center the potential for liability claims by a large number of people is enormous.
Because of that....getting a LOT of liability coverage is a LOT more important than trying to save a few nickels on your property damage coverage.
2006-10-27 08:40:44 · answer #1 · answered by markmywordz 5 · 0⤊ 0⤋
What he pays for the shopping center has no bearing on what he has to insure it for. Replacement cost valuation should run him $125 to $150 per square foot, depending on where the mall is located. That's the property coverage. For liability coverage, it's going to depend on the type of tenants, and the percentage occupied, along with the square footage of parking available. He's going to have to call and get a specific quote, there are JUST too many variables, including location, fire protection, construction type, number of stories, security guard information, etc.
2006-10-28 02:52:33 · answer #2 · answered by Anonymous 7 · 0⤊ 0⤋
Look for a commercial real estate insurer in your area. I believe that you can only have replacement costs only if there is no mortgage on the property. He may want to contact the local commercial realtors organization in his area to foresee the possible expenses he can incur; replacement cost only doesnt allow for any improvements and could be a dangerous thing given the climate of the current retail environment
2006-10-27 08:53:36 · answer #3 · answered by msijg 5 · 0⤊ 0⤋
You buy insurance for the risk. The risk is the building cost, not land cost. It's the cost of rebuilding. Most insurance companies have good softwear that calculates building cost and most policy's have provisions that pay replacement cost.
2006-10-28 16:30:41 · answer #4 · answered by roger w 2 · 0⤊ 0⤋