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May 2017 — Retail Properties Quarterly — Page 23
Management
I nsurance carriers are liable for
the loss of business income
only during the period of resto-
ration, which often is defined
as the length of time required
to rebuild, repair or replace the dam-
aged or destroyed property and bring
it back to preloss condition.The clock
starts ticking on this timeframe when
the physical loss or damage actually
occurs and it ends when the property
should be repaired or replaced.
Many insurance carriers have preap-
proved vendors because it can speed
up the claims process. Some insur-
ers require several repair estimates
before approving the work to be initi-
ated, but if a policyholder decides to
use a preferred contractor, the work
can start soon after filing a claim.The
prices often are negotiated in advance
between the carrier and the restoration
contractor, the contractor’s insurance
has been verified and the contractors
are graded by the satisfaction of the
end user.
By having an emergency response
agreement, or ERA, in place, the insured
is well on the way to lessening the
length of time it could take to get the
business back up and running.
The ERAmaps out the following
items:
•Company contact information for
the business establishment with phone
numbers (including after-hours) and
emails.
•Property overview of basic build-
ing information, which includes areas
where mitigation has already occurred.
The testing process itself adds time to
the ability to initiate repairs, so map-
ping out what has
already been miti-
gated in a structure
greatly increases the
speed to bring the
business back to pre-
loss condition.
•Building access,
including prede-
termined parking
areas for emergency
vehicles, access
doors and stairways,
as well as who has
keys, etc.
•Contact informa-
tion for the facility’s
major utility providers, such as power
and gas, as well as the physical location
of shut-off areas.
•Safety provider information such as
alarms, fire sprinklers and dangerous
chemical locations.
•Insurance information. It is para-
mount that the policy is understood
prior to an incident happening to save
time, money and frustration.
Understanding Your Policy
Business interruption/extra expense
coverage, also referred to as time ele-
ment, is a critical aspect of your busi-
ness owner’s policy and requires care-
ful analysis before its inception. It is
partially defined as “net income that
would have been earned or incurred
and continuing normal operating
expense incurred, including payroll.”
Deciding howmuch coverage you
should have is when an insured or bro-
ker relationship is most critical. Does
your broker have a strong knowledge
of your business and
what your needs
would be in the
event of a loss? If
not, then it’s time
to have a sit-down
with that person to
properly assess what
the financial picture
of your operation
looks like. If you
have an accoun-
tant or account-
ing department, it
would be wise to
include that person
in discussions with
your broker at the time of renewal for
the selection of proper limits, especially
when filling out the provided work-
sheets to determine the appropriate
level of coverage.
Business interruption/extra expense
coverage typically is subject to co-
insurance in the same manner as your
building/business personal property
coverage.The standard rate is 80 per-
cent. In simple terms this means if your
business nets $100,000 with continuing
expenses on an annual basis, youmust
carry no less than $80,000 in cover-
age.This is the one component where
adjusters most often see the limit as
inaccurate when handling a loss.
Is your business subject to the terms
and conditions of a lease agreement?
Thorough review and understanding of
the lease is a key component to having
the right amount of coverage on your
policy. If you are party to a lease, having
your broker or counsel review this prior
to binding coverage will help ensure
the proper amount is applied. Many
times, people do not fully understand
their insuring obligations as per the
lease terms and operate under broad
based assumptions of property owner-
ship.This can lead to significant gaps in
coverage for which the involved insur-
ance carriers cannot assist. Just as you,
the business owner, are subject to the
terms and conditions of the lease, so is
your insurance company as it adjusts
the loss.
Some additional things to consider
when applying for insurance are:
•Will you expand your business dur-
ing the policy year?
•Are any of your locations vacant?
•If your business cannot be accessed
by the public or is shut down by civil
authority, howwill this affect your bot-
tom line?
•If products sold by your business
cannot be acquired due to a disaster at
a producer location not insured by you,
what level of financial affect will result?
(i.e., dependent property coverage)
•Howmuch downtime can you self-
absorb before it begins to present a
financial hardship? Most policies with
business interruption coverage have a
waiting period (deductible) of 72 hours.
•Will law and ordinance (building
code) be a factor in the period of resto-
ration?
These are only a few of the criti-
cal issues to consider when asking
your broker to bind coverage for you.
Thorough review and understanding
of the coverage and how it will apply
in the event of a loss is paramount to
a smooth transition from disaster to
recovery. s
B eyond the products it sells
and the buildings it operates,
there is a growing expecta-
tion that a company shares
community interests, tackles
the same challenges and reflects the
neighborhoods it serves. In Colorado,
home to the first voter-led Renewable
Energy Standard in the nation, that
means joining the movement for clean-
er, sustainable energy solutions.Target
is committed to enriching the commu-
nities we serve and creating efficient
buildings, using resources responsibly,
eliminating waste and minimizing our
carbon footprint. In Colorado, one of the
best ways to honor that commitment
is through investments in our stores to
enhance the quality of life for the sur-
rounding residents and community.
The Colorado solar industry ranks
11th in the country, boasting a total
925.8 megawatts of solar energy, accord-
ing to the Solar Energy Industries Asso-
are proud to be one of 10
companies adding to that total in SEIA’s
report.
The recent addition of our first roof-
top solar panels at a Denver-area store
is an important milestone and required
us to overcome challenges, such as
identifying the right partners, timing
and store capabilities. For example, we
identified a partner in SunPower, with
help from the Xcel Energy Solar Roof
Top program. Installing a solar system
varies in complexity and lasts a number
of weeks.
When looking at new projects, we
work closely with our vendors to review
our buildings and ensure they can
support a solar system by complet-
ing detailed structural and electrical
reviews, as well as a roof assessment
prior to any con-
struction. Once the
system is construct-
ed, we have to shut
down our store’s
electricity for hours
to allow the electri-
cians to perform the
connection between
the solar system to
our store and the
utility grid. It’s a
collaborative effort
including refrigera-
tion techs to secure
our food and Xcel Energy to cut the
power.
When it came to a project at our
Arvada store, which shares an electric
meter with other stores in the local
development, we worked closely with
our property manager to coordinate
the power loss with all parties. It was
truly a synchronized operational effort
between groups.
• What does thismean for our real
estate? We have a long-term interest in
designing, operating and maintaining
energy-efficient, sustainable buildings,
and the amount of our energy needs
being met with solar power and other
sustainable technologies is growing
exponentially.The energy produced
from the solar installations in Colorado
alone will equate to about one-third
of each store’s energy use. In total, the
systems will produce more than 3,800
megawatt hours of energy annually,
the equivalent of powering about 285
homes for an entire year.
By the end of 2017, more than 10
percent of our stores in Colorado will
have solar power, and we’re optimistic
about growing our solar footprint in
the state. Store locations receiving solar
installations by the end of 2017 include
Aurora South, Arapahoe, Arvada, Edge-
water and Highlands Ranch.The solar
opportunities in Colorado forTarget are
strong – from our building footprint,
ability to partner with vendors as well
as overall community endorsement
of these projects.This investment
also aligns with our long-term goal to
increase the number of buildings with
rooftop solar panels to 500 nationally
by 2020; a goal we’re already 70 percent
of the way to also are
focusing on expanding our investment
in offsite renewable energy to comple-
ment on-site renewables.
• Commitment to renewable energy. We
strive to be a renewable energy industry
leader. In 2016,Target installed more
megawatts of rooftop solar power than
any other U.S. retailer, and we were
named the No. 1 U.S. corporate solar
installer by SEIA. And we won’t stop
with solar investments.
We also are committed to expanding
our sustainable energy use for buildings
by investing in wind energy partner-
ships. For the second year in a row, we
were named an Energy Star Partner of
theYear, taking the highest honor from
the Environmental ProtectionAgency
for energy-efficient companies and, in
total, 76 percent of Target’s buildings are
Energy Star certified.
Target is committed to using our real
estate in Colorado to contribute to clean
energy initiatives, and we encourage
our commercial real estate neighbors to
do the same. s
Brandi Peppers
Regional account
executive,
American
Technologies, Inc.,
Englewood
Rob Williams
National
general adjuster,
Cunningham
Lindsey, Greenwood
Village
John Leisen
Vice president,
properties, Target,
Minneapolis
Southern Current
A completed solar installation at a Target in Greensville, South Carolina, is similar
to the Colorado projects.