The Insurance Policy: A Tool to Create Value


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Learn how to incorporate insurance claims into your client service package, providing you with a new tool to acquire clients. These expert panelists share what it means to have control over an insurance claim in order to remove and add value to a property. In addition, they discuss how to upgrade rents by using insurance policies to market properties.

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  • {"1":"Welcome and introductions.\nFollowing a number of monumental natural disasters, including wild fires, tornadoes, hurricanes, and floods, we wanted to offer some insight into how to create value to your clients through exposure to industry experts, where to find invaluable information and resources in the event of a major disaster, how to best prepare for a disaster before it occurs, and how to generate cash through insurance proceeds.\nImagine you own a Class-C, 71,000 square foot, 3-story, multi-tenant office building, constructed in 1980 in suburban Colorado Springs. The property has always struggled, but you’ve been making slow progress stabilizing occupancy and now have the benefit of a large government tenant that will bring traffic to the building and generate demand for smaller ancillary trades.\n","29":"Eventually, we are able to document that our insurance agent had incorrectly underwritten the policy with the co-insurance provision, yet had delivered written confirmation to us confirming full replacement cost coverage with the co-insurance provision eliminated.\nShortly after the fire, we retained the services of a highly qualified, licensed and insured Public Adjuster, and spent the next 18 months diligently working to resolve the claim.\nAnd here’s the rest of the story…\nWe trust that this session has stirred your curiosity regarding your own policy or policies, and answered some of the questions I raised earlier. \n","18":"Ron is currently the managing partner with American Valuation Partners, AVP™ where he was the co-principle real estate expert for the BP oil spill in the Gulf of Mexico and the historic 7.8 billion dollar settlement for the Plaintiff Litigation Group. His current practice includes the valuation of distress property, eminent domain acquisitions and contaminated property litigation. Ron is also an Associate Professor of Real Estate at the Burns School Real Estate & Const. Mgmt. At the Daniels College of Business, University of Denver. He has recently produced research on Hydro Fracking effects on real estate and eminent domain processes. Dr. Throupe has also provided expert valuation & consultation services on a full time basis as Director of Operation of Mundy Associates in Seattle and later Greenfield Advisors.  A National real estate economics consulting and valuation firm. The firm is most known as the lead plaintiff experts for the Exxon Valdez case. Ron was also part of the Katrina Hurricane after litigation and Celebrity Cruise line analysis and valuation for settlement of Legionnaires Disease outbreak. Ron is on the editorial board of the Journal of Real Estate Sustainability, of the American Real Estate Society (ARES).  Ron Serves the ARES Board as the Director of Critical Issues. He is the MC host for the ARES Critical Issues Seminar day at the ARES national conference each year, the largest meeting of Industry leaders and university representatives is the US.  Ron is frequently asked by media and real estate organizations to comment on current real estate market conditions. He was recently quoted on CNBC, CBS evening news, NBC, The Wall Street Journal, the Huffington Post and Fox News.  He has made presentations to the American Real Estate Society annual meetings, the Appraisal Institute special programs on distressed property, the National Hazard Mitigation Conference, the National Council of Real Estate Investment Fiduciaries, Law Seminars International, and the American Bar Association.\n","24":"Your practice includes some of the largest settlements in real estate, do natural disasters differ from man made disasters, such as the BP Oil spill, in settlement methods? \nWhat error in basic concepts of valuation do you see made on claims of damage estimates?\n","2":"At about 1:00 AM on Sunday morning, May 4, 1997, my partner received a telephone call while in Kansas City on business to advise that a property our firm managed was on fire.\nLate the prior evening, a man wielding a sledgehammer shattered a ground-floor plate-glass door at the Bell Tower building at 2020 N. Academy Blvd., then broke into the IRS office on the third floor. Dousing the office with 5 gallons of gasoline. The man set off a fire shortly before midnight that caused part of the roof to collapse.\n","25":"How did your career transition from a commercial real estate practitioner to this niche business?\nYou’ve just given us a truckload of information. What’s the most efficient way for a CCIM to convey this to a client?\n","3":"Early the following day, my partner arrived from Kansas City and met our Dallas-based insurance adjuster on-site. At that point, the adjuster explained that our policy contained a co-insurance provision, essentially obligating the insurer to only 50% of the liability and offered to settle the claim for approximately $1,500,000, which we rejected until we could grasp the complexity of the situation.\nLater that morning, IRS employees were inquiring about the coverage of their personal property and local tenants were asking when they would be able to return. The situation was also modestly complicated by the presence of the CSFD, CSPD, the ATF and FBI, since this was now a federal crime scene.\nSo, here are several questions for you to consider as you evaluate your own commercial policies:\nAre you intimately familiar with the terms of your policy?\nDo you know exactly what to do if you experience a substantial loss?\nHave you waived all coinsurance requirements?\nDo you have full replacement coverage?\nDo you have extension coverage for Ordinance & Law?\nWhat obligations do you owe your lender to avoid default?\nDoes your lease offer adequate protection against claims from tenants?\nDo you have adequate coverage to get paid and help your owner settle the claim?\n","26":"What are some of the insurance issues this scenario raises for the owner of the building?\nWhat resources would United Policyholders offer that could help that owner navigate them?\n"}
  • The Insurance Policy: A Tool to Create Value

    1. 1. Insurance: a Tool to Create Value Steve Price, CCIM (Moderator) Amy Bach, United Policyholders Scott deLuise, CCIM, Matrix Business Consulting Ron Throupe, PhD, CCIM, University of Denver
    2. 2. CCIM LIVE – Denver, 2013 Amy Bach, Executive Director Email: Website: October 26th, 2013 United Policyholders 2013 © ALL RIGHTS RESERVED
    3. 3. About United Policyholders • A respected voice and a trusted information resource for individual and commercial insureds in all 50 states. • We don’t sell insurance or accept funding from insurance companies. • Not-for-profit funded by donations and grants. • Staff, advisers and volunteers with personal and/or professional expertise in disaster recovery, insurance claims and insurance law.
    4. 4. 20 Years of Experience • Monitoring the insurance marketplace (sales, claims and litigation) • Helping people and businesses “Speak UP” • A voice for policyholders’ interests and rights – In the media – In legislatures – With regulators – With public officials
    5. 5. Three Programs: • Roadmap to Recovery™ – Guiding individuals and businesses on solving insurance problems that can arise after disasters. • Roadmap to Preparedness – Increasing insurance literacy and preparedness by sharing lessons learned. • Advocacy and Action – Going to bat for insureds in courts of law, legislative and other public policy forums, and in the media. 75% of our amicus briefs have been in CGL/commercial cases.
    6. 6. Reminders: An insurance policy is a legal contract, but there are laws on how it gets interpreted An insurance claim is a business negotiation. If you have leverage and proof of what you are entitled to, most things are negotiable. An insured has paid for coverage and good claim service, and should not have to pay for expert reports, claim and legal help. But the reality is may people need help getting a fair and full settlement.
    7. 7. From CA to CO to TX to NJ… • Insurance economics and profit motives affect claim handling, settlement offers and outcomes • The right experts and professional help can be critically important • 24/7 help for insureds:
    8. 8. We have one goal as CCIM’s: •Add as much value for our clients as we possibly can add, •Using all the tools we possess, •Working as smart as we’ve been trained •As efficiently as our experience allows
    9. 9. Use the insurance claim! • • • • • In your “bag of tricks” As the exclusive real estate pro that “gets it” When no one else “understands it” Because your client’s under stress And they need your help now
    10. 10. Make yourself invaluable • To your existing clients: Trusted Advisor • Target clients (the one’s you’ve always courted): Knowledgeable resource • Municipalities, sub-governmental agencies • School districts • Special districts (parks/rec, metro/san)
    11. 11. An insurance claim is a very sophisticated business transaction • • • • • Most have never done this before! It’s all about the capital to repair It’s about cash flowing the loss with insco $$ It’s about continuing operations during crisis It’s about survival
    12. 12. Get the Varsity on the Gridiron • Identify your team; the insurer will as well – Architect/interior designer – Engineer (structural, mechanical, electrical) – Process consultant – Contractor • The insurer should pay for these…as part of your claim…if you act first.
    13. 13. It’s all about documentation! • • • • All communications must be in writing Be on the offensive: Proactive, Professional Do not let carrier present claim: you do it! After everything else: – it’s your loss – It’s your claim – It’s your money!
    14. 14. Commonality: Eminent Domain or Disaster • Valuation for Damages • Why do you need valuation? • What is the Before vs. After methodology • Value before and Event vs. Value after
    15. 15. Insurance Position: Same position as prior to an event • “as – is” value, or before the event value: • Is the “as is” value - current use, the Highest and Best Use (HBU)? • “after” the event value • The difference is the theoretical damages
    16. 16. Does the HBU Affect Settlement Strategy? • Insurance: typically on the current use • If HBU ≠ current use – May be better to settle and move on • HBU requires two valuations – As is – As if vacant, if this is your answer it conflicts with insurance
    17. 17. Examples • Ex. Flooding of homes or businesses (betterment) – Retrofitting of property above flood elevation – Can create a betterment • Carports • Seasonal storage • Special Purpose Property – Churches, manufacturing processes – Cost may be the only way, but making sure you get the “exact replica” in value, not just in use
    18. 18. Why involve a valuation expert? • • • • • Feasibility of potential uses Understanding of Cost vs. Value Cost ≠ Value most times Where does money (cost) create value? What other local owners decide to do with property can affect the value equation for you. Interdependence of land use
    19. 19. Q&A: Ron Throupe, PhD
    20. 20. Q&A: Scott deLuise, CCIM
    21. 21. Q&A: Amy Bach, Esq.
    22. 22. Now for the rest of the story…
    23. 23. Scott deLuise, Public Adjuster
    24. 24. Contacts Amy Bach, Esq. United Policy Holders (415) 393-9990 Ron Throupe, PhD University of Denver – Burns School (425) 681-6602 R. Scott deLuise, CCIM, Matrix Business Consulting (303) 298-1711 or (888) 321-5200 Steve Price, CCIM Price Properties, Inc. (719) 338-8303