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Page 8 — Property Management Quarterly — January 2017
COMMERCIAL
REAL ESTATE TAXES
TOO HIGH?
TRULY LOCAL EXPERT
TAX CONSULTING
SINCE 1989
CALL 303-834-1110
W hether you have recov-
ered from time spent with
distant relatives over the
holidays or you continue
to reflect on a wonder-
ful time had with said family, it is
likely that laughter was common and
smiles plentiful if word games were
played.While playing these games,
like Scrabble, Hangman and Pictionary,
you might have followed the rules and
directions, but there was little harm
to anyone if you didn’t.Words can
provide entertainment in the context
of games – but words are very impor-
tant in many aspects of our lives. And
while rules may seem inconsequential
within these games, rules regarding
the wording in your insurance policy
are no laughing matter.
In the context of an insurance policy,
certain words and phrases, as chosen
by the insurance company, have spe-
cial meanings. Trying to resolve an
insurance claim is not a game – rules
and directions are limited, but there
may be significant monetary or cover-
age penalties if those available are not
followed.
There are only a limited number
of words and phrases defined within
your policy – these words or phrases
may appear in bolded text or quota-
tion marks throughout the policy.
Many policies contain a property
definitions section.Whether a home-
owner, building owner or property
manager, knowing how your policy
defines the limited words or phrases
before you need the benefits of the
policy is important. Insurance compa-
nies use standardized forms in their
policies, but there are many standard-
ized forms – they
chose which words
are defined, yet the
definitions may still
vary.
You may believe
you know the
common-sense
meaning or defini-
tion of most words,
including those in
an insurance policy,
but you may come
to learn common
sense or generally
accepted definitions do not apply to
insurance claims. A word may have
multiple meanings. If the word is spe-
cifically defined within your policy,
that is the definition that applies. Even
if defined, ambiguity may exist – and,
if ambiguous, the language is to be
construed in favor of the policyholder.
Policy language and provisions change.
It is important to review the records
you receive each year as the policy is
renewed to learn of changes to include
definitions. Contact your broker, agent
or other insurance consultant with
questions whenever you have a one
regarding coverage, benefits or claims.
For example, look for the definition
section in your policy – you may be
familiar with words or terms such as
“replacement cost value,” and “actual
cash value” and the definition for both
may include the word depreciation –
but “depreciation” is not among those
defined in the policy. Records used by
insurance company representatives in
the handling of a claimmay refer to
or define “depreciation,” but it is not
defined in your policy. Ambiguity in a
proper assessment and proper appli-
cation of depreciation allows insur-
ance companies to withhold funds
that are payable on the claim – and
the amount withheld may be improp-
erly excessive.
In looking to protect the building
owner and tenants, other defined
words or terms of significance include
“business income,” “extra expense,”
“ordinary payroll expense,” “period
of restoration,” and “tenant improve-
ments and betterments.”These defi-
nitions impact payments issued on
claims, expenses that are covered,
repairs that are covered and the length
of time payments are available.
You also will want to carefully
review leases with tenants to know
the obligations of the tenants’ insur-
ance companies and your insurance
company. Know if and how your policy
on behalf of the owner is different and
how betterments are addressed. One
definition within a lessee’s policy is as
follows:
Tenant improvements and better-
ments means fixtures, alterations,
installations or additions made part
of the building you occupy but do
not own and that you cannot legally
remove; and that are made at your
expense; or that you acquired from
the prior tenant at your expense.
Understanding the components of
a building or structure and any spe-
cific improvements to the property by
a tenant is best captured in writing.
Should a claim involve multiple car-
riers and tenants, a coordination of
efforts will be required. If damages are
sustained to a building, considerations
should be given to how the claim is
to be adjusted and how the loss will
impact your tenants and your busi-
ness relationship with each based
upon terms of the leases.
Two more words to contemplate,
neither of which are found or defined
in your policy: reputable – meaning
in good repute, having a good reputa-
tion, well thought of, and respectable;
and ethical – pertaining to or dealing
with morals or principles of morality,
pertaining to right or wrong in con-
duct. Insurance claims are important.
Insurance companies and their rep-
resentatives should be reputable and
ethical. Games should not be played
– not with words or efforts to properly
resolve a claim.s
Insurance
Chris Rockers
Partner, The
Claims Group,
Northglenn
A word may have
multiple meanings.
If the word is
specifically defined
within your policy,
that is the definition
that applies.