Samsung just announced their plans for a multi-billion dollar plant in Taylor, Texas. In early October, Elon Musk announced he was moving the Tesla world headquarters from Palo Alto California, to Austin Texas. Joe Rogan moved his podcast to Austin as well. Other major companies have also picked up on the good vibes in Texas, including Hewlett Packard (moved to Spring, Tx), Charles Schwab (moved to a suburb of DFW), Toyota (Plano), and The PGA (coming to Frisco).
More Texas Growth Signals
The National Association of Realtors identified in September of this year the top 10 commercial office markets as of the third quarter of 2021, and are as follows:
Daytona Beach, Florida
Myrtle Beach, South Carolina
Palm Beach, Florida
San Antonio, Texas
In the NAR commercial insights publication from September they expound on the current health of the Texas commercial real estate market saying, “NAR analyzed 390 commercial real estate markets and found a robust recovery with a positive net absorption and strengthening rents across the multifamily, industrial, and retail property markets, as economic production rebounds to pre-pandemic levels. The apartment and industrial sectors, specifically, are reporting historically low vacancy rates, while retail has undergone a more gradual recovery as consumers continue their return to brick- and mortar shopping.”
This surge in the demand for commercial real estate seems to be occurring all over the state of Texas as NBCDFW reports that “the demand is driving up costs from rents to construction.” They go on to say in the report that, “Prices are at all time highs,” said Chris Dharod, president of Dallas-based SSCP Management. “There’s a lot of money from other cities coming here because they want to own DFW real estate. For a long time, people wanted to buy California real estate. It’s now Texas real estate that they want to own.”
Growth vs. Risk
With all of this rapid growth comes risk. The risk of owning a commercial building in the ever- changing weather conditions of Texas. In the last few years we have seen the impact of these increasing weather events all over the south, and especially in Texas. From Tornadoes, wind & hail events, hurricanes, fires & floods, to The Winter Freeze of 2021… we have seen it all! The reason I bring this up, is that much of the growth in Texas (as of the last couple of years), has been from those migrating from both the east, and west coasts, to the Lone Star State. With our unique Texas weather patterns, it is important to fully understand what type of insurance coverage is needed for one’s assets. The Texas Department of Insurance (TDI) has put together a comprehensive commercial property insurance guide, and I have listed some of the highlights below:
Commercial Coverage Options:
There are three different levels of commercial property coverage. Each level protects against different causes of damage or loss.
Basic form policies provide the least coverage. They cover damage caused by fire, windstorms, hail, lightning, explosions, smoke, vandalism, sprinkler leakage, aircraft and vehicle collisions, riot and civil commotion, sinkholes, and volcanoes.
Broad form policies cover the cause of loss covered in basic form, as well as damage from leaking appliances, structural, structural collapses, falling objects, and weight of ice, sleet, or snow.
Special form policies provide the most coverage. These policies cover damage from all causes of loss, except those specifically listed in the policy. These are called policy exclusions. Most policies exclude damages from floods, earth movement, war, nuclear disaster, wear and tear, and insects or vermin.
TDI goes on to explain the differences between Replacement Cost Vs. Actual Cash Value coverage:
Commercial property policies provide either replacement cost coverage, actual cash value coverage, or a combination of both. To be fully protected, make sure your policy provides replacement cost coverage (per TDI).
Replacement cost coverage pays to repair or replace your property at current costs. This means the policy will pay enough to rebuild your building and replace your property with new items, even if the cost is more than what you originally paid.
Actual cash value coverage pays replacement cost minus depreciation. Depreciation is a decrease in value because of wear and tear or age. If you have actual cash value coverage, the policy might not pay enough to fully rebuild your business.
Other Insurance Coverages You Might Need
Flood insurance- most commercial property policies don’t cover damage from flooding. To be protected from flooding, you will need a separate flood policy.
Crime coverage- You can buy coverage to protect your business from several types of crime. Common crime coverages include: robbery and safe burglary, forgery and alteration, employee theft, money and securities (insures money, securities, and other property against losses that happen on or off your business site).
Inland marine coverage- Inland marine coverage covers property kept on land, not on water, despite its name. Inland marine coverage covers: accounts receivable, computers, contractor equipment, fine art, property in transport, valuable papers, property held for others Business Interruption coverage- pays for the income you lose if your business can’t operate normally because it was damaged or destroyed. Extra expense coverage-pays additional costs to return your business to normal after it is damaged.
Newly acquired or constructed buildings coverage-insures a new building if you have added it to your policy. Note: You usually must add the new building within 30 days after starting construction or acquiring it.
Valuable papers coverage-provides limited coverage for your business records and other valuable papers.
Ordinance or law coverage- pays extra construction or repair costs to meet current building codes.
Boiler and machinery coverage- covers boilers, AC units, compressors, steam cookers, electric water heaters, and similar machinery.
Of course when navigating which coverage to choose for your commercial assets, it is always best to consult with a qualified insurance agent. It is also a good idea to have a good policyholder attorney on your team, as things do not always go according to what seems right, when it comes to the claims process.
A good policyholder attorney is the final part of the equation. A good policyholder attorney will hold the carrier’s feet to the fire when claims arise. It is well documented that insurance carriers can sometimes implement various tactics when trying to lessen their financial exposure to claims, including: underpayment, denial, and the delay of claims. This is no surprise, given the record number of increasing weather events in the last several years (as documented in earlier VLF blogs).
Our Experienced Texas Policyholder Attorneys Are Here To Help
This is why it is important to consult with a reputable policyholder attorney when filing a claim, and especially if your claim has been denied, delayed, or underpaid.
The Voss Law Firm, P.C. has been protecting policyholder’s rights for the past sixteen years, recovering billions of dollars in settlements for our clients.
Feel free to call, or email today for a free consultation on your file.
We are 100% contingency fee based. No recovery, no fee.