Cross the (Property) Line. Hidden Risks May Lurk Next Door
The fields and trees that once surrounded the home of your insurance carrier’s potential new client have recently been replaced by a school on one side and a shopping center on the other. How does what’s next door affect someone looking to change their property insurance policy? Property loss and liability exposures caused by what’s adjacently located can sometimes be forgotten during the underwriting process both for new policies and renewals.
A great underwriter should know when they could matter and are more likely to impact a future insurance claim.
Water Exposures
Bodies of water such as lakes, streams, creeks, and oceans are considered beautiful to look at and may increase the property’s value, but they could also heighten risks without the proper precautions.
Flooding is a potential peril that could cause property damage and lead to claims. An underwriter should check if there’s risk of damage from the body of water flooding, whether it’s after a heavy rain or a worse hazard, such as a hurricane.
There are also liabilities related to water. If the water is on the policyholder’s property, someone could come from the adjoining property and fall in or get hurt. A claim could be filed against your policyholder, especially if it’s a pool without a fence around it.
Proximity/Characteristics of Nearby Properties
The proximity and height of neighboring properties should be considered for the policy.
We’ve all seen dominoes fall one after another if they are spaced close enough together. Sadly, we’ve also seen fires ignite multiple structures in proximity of one another. Houses and structures closer than 100 feet could increase the risk for a fire to spread to the policyholder’s building. However, it does depend on building materials. A cement and steel parking garage is less flammable than a nearby wooden cabin.
The height of neighboring structures could also pose a risk as items could fall out of the windows and hurt someone or something – which could result in having to subrogate a claim. There could also be substantially more damage to a policyholder’s property if the taller building were to collapse on or near the smaller edifice.
While that scenario may have someone thinking open lots surrounding the property may be the safest, that isn’t necessarily the case. Underwriters should also take into consideration if a policyholder’s property is too secluded, which could mean less of a chance of a fire or burglary being reported in a timely manner because no one is there to see them.
Types of Businesses/Services
Some nearby businesses pose obvious threats to a home or business. These include gas stations, power plants, a store that sells fireworks, or a location that uses explosives.
Other less obvious businesses and services may pose risks.
Schools, day cares, and shopping centers near another business or home may mean people coming onto your insured’s property to park or cut through. Parking garages may entice people to look to the residential street or business’s lot for overflow parking areas or to avoid a fee. Event locations or places of public assemblies, including churches, could also mean unwanted foot traffic or people parking on your insured’s property. The visitors could damage, vandalize, or steal the policyholder’s property, which would result in a claim. There is also a liability risk if someone gets hurt.
And while vacant buildings may seem like they don’t pose a threat, they could actually raise more red flags for an underwriter because it shows lower property value and that the property owner may not keep the property up to code and required standards, which could lead to liability claims.
Changing Neighbors Could Affect Renewals
Land is a commodity that in some areas is in short supply. That means if you are looking at a property up for renewal, what was there at the start of the term may not be there now.
Consider who the new neighbors are and if they now pose a new hazard that hadn’t previously been accounted.
JMI Reports Can Spot the Risks
JMI Reports offers a full range of underwriting assessments for properties nationwide. And we consider all facets of a property – inside, outside, and surrounding area. We can help make sure you have what you need to account for the risks to make consistent, accurate decisions within the underwriting time frame.
