Insurance Underwriting is described as the process of classification, rating and selection of risks.    Most of you know that when rating Commercial Real Estate Risks, particularly condominiums, Underwriters have several considerations to watch out for.  The acronym they use to ensure they cover all potential loss considerations is, C.O.P.E. (Construction, Occupancy, Protection, Exposure).  In the first section of this four-part series we will cover the ‘Construction’ section of the C.O.P.E. acronym.  When considering Residential Real Estate Risks Underwriters have several considerations to watch out for. The susceptibility of the building or structure to damage is directly impacted by the locations construction characteristics.

Things your Underwriter is looking out for when rating your commercial residential risks…

• Most people know that the construction type impacts the quality of the risk. Is the building construction wood or frame?  This is important because wood is highly susceptible to fire spreading and can cause extensive damage as opposed to using fire-resistant materials that reduce the spread of fire and the resulting damage if a fire does begin. One thing that is often overlooked though is whether or not the building has fire divisions.  This is something you should include in your submissions.
• For risks that are located in areas subject to tornadoes, hurricanes, earthquakes or wind losses, are the buildings constructed to protect against this cause of loss?  Is there a Capital Improvement Budget and Maintenance Plan included?
• What is the age of the building and how often are the heating system, roof, plumbing and electrical systems updated or replaced?  When any of these systems or components are not properly maintained or updated the potential for one of them to cause or contribute to a loss increases.
• Was the building originally built as a condominium? Many condominiums are converted from apartments, hospitals, libraries or other structures. Were the Electrical, plumbing and HVAC systems updated when the conversion took place?

 These are items that might be overlooked or left off of a submission but will eventually have to be answered.  To speed up the underwriting process on your submission, try to include all of the above mentioned information.

Check back for part two of our four-part C.O.P.E. series where we will be talking about ‘Occupancy’ considerations.

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