As a commercial property owner, you want to make sure that your most valuable real estate assets in your portfolio are properly protected. But you also want to make sure that you’re complying with all of your insurance companies guidelines and maintaining your buildings so you can prevent future losses.
The California insurance marketplace has been experiencing unprecedent turmoil over the past few years. California insurance companies have suffered major losses over the last 5 years resulting in billions of dollars in damage due to the catastrophic wildfires and major water losses.
It’s caused many insurance companies to change their underwriting guidelines, increase their rates, no longer accept business in certain locations in the state, and go out of business. We call this a hard market in the insurance industry, and it could last for several years.
One of the best ways to prevent future losses and stay in compliance with your insurance company is to follow specific guidelines when maintaining your property which also mitigates future losses.
We’ve gathered research with our top insurance companies to find out what the mandatory requirements are for commercial buildings in California and we’re going to share these tips with you so you can stay out of harm’s way and help prevent any future losses.
As a commercial real estate investor, the last thing you want is an insurance company to decide they no longer want to insure your building due to failing to meet the mandatory requirements, not providing proof of updates to your building, or being out of compliance with certain maintenance issues. If you receive documentation or a renewal questionnaire from your insurance company, return the information to them immediately. You can also give us a call or schedule an appointment with us, and we can review the possible exposures to your building.
Here are some of the new mandatory requirements for commercial buildings in California.
- Older buildings, built before 1990, may require data and documentation of upgrades to the electrical, plumbing, roofs, and heating.
- If your building has Zinsco or Federal Pacific electrical panels and breakers, they need to be replaced. They are old and outdated and have been found to have a defective design that is prone to over-current and arcing, and do not meet underwriting standards anymore. Zinsco panels and breakers are no longer in production and replacement parts have been proven to be unreliable. The panels present an unacceptable life safety and fire hazard. Unfortunately, replacement of these panels is required with most insurance companies.
- Installation of GFCI (ground gault circuit interrupter) receptacles must be installed in kitchens, bathrooms, basements, laundry rooms, garages, and on outdoor receptacles. As an alternative GFCI breakers can be installed in the electrical panels to provide protection for these circuits. Remember to consult an electrician to inspection the system and perform repairs that meet the local electrical codes.
- Swimming pools need to be fenced and gated with self-locking gates. Gates should automatically close, latch and lock when released. Also, the handle and hardware must be ADA compliant. It must be of a proper height and have a handle on both sides of the gate. No round knobs should be installed.
- Fire extinguishers in the building must be fully charged and in good condition. A fire extinguisher maintenance company must service and inspect all fire extinguishers on the property on an annual basis and the service tag should be attached to each unit. Also, there should be no cracked, broken, or missing glass in the fire extinguisher cases.
- Railings need to be no less than 42” which is the minimum standard or the current building codes in CA. In the past five inch spacing was allowed, but no longer. Call us if you have questions about this. Make sure that all vertical railings on balconies and stairways are a minimum of 42”.
- It’s recommended but not required to prevent water damage the pressure relief valves on the hot water heaters need to be plumbed so they water can exit the building. You can also install drain pains and pressure relief valves plumbed into the pans.
These are some of the new mandatory requirements insurance companies have implemented in California for placing new insurance business and at renewal of a commercial property insurance policy. Many insurers of commercial property in California are sending out renewal questionnaires and reinspecting buildings to make sure commercial property owners are complying with these new requirements. If they identify the building needs repairs, updates, or maintenance they will require the property owner to make the necessary changes to the building to continue coverage or place new business.
As a commercial property specialist, we want to make you are educated on these changes and you have the proper protection for your commercial real estate portfolio. If you have questions or need additional information, click the link below to schedule an appointment with one of our commercial agents.