Question 1

What's the difference between replacement cost and actual cash value?

Accepted Answer

Replacement cost pays to rebuild or replace damaged property with new materials of like kind and quality, with no depreciation deducted. Actual cash value (ACV) pays the depreciated value at the time of loss — a 15-year-old roof on ACV might pay 25 cents on the dollar of the actual rebuild cost. Replacement cost runs 10%–25% higher in premium but is almost always worth it for Florida buildings, where roofs and HVAC depreciate fast.

Question 2

What does commercial property NOT cover?

Accepted Answer

Standard commercial property excludes flood (separate NFIP or private flood policy needed), earthquake (separate rider), wear-and-tear and gradual deterioration, employee theft (needs crime/fidelity coverage), data and intangible assets (need cyber), and equipment breakdown from internal failure (needs equipment breakdown rider). Vacancy beyond 60 days also typically voids most coverage unless specifically endorsed.

Question 3

How does the named-storm deductible work in Florida?

Accepted Answer

Florida policies apply a separate, higher deductible — typically 2%, 3%, 5%, or 10% of the building's insured value — when damage results from a named tropical storm or hurricane. On a $2M building with a 5% deductible, the first $100K of any named-storm claim comes out of pocket. The lower the deductible percentage, the higher the premium; most South Florida commercial property carries a 3%–5% wind deductible.

Question 4

Do I need flood insurance if I have commercial property?

Accepted Answer

Yes, almost always — commercial property policies specifically exclude flood damage from rising water, storm surge, and groundwater. Florida's coastal counties have the highest flood exposure in the U.S. NFIP commercial flood caps at $500K building / $500K contents, which is undersized for many businesses. Private commercial flood markets fill the gap with $5M+ limits and broader coverage including business interruption from flood events.

Question 5

What is a coinsurance clause and why does it matter?

Accepted Answer

Most commercial property policies require you to insure the building to at least 80%, 90%, or 100% of its replacement value. If you're underinsured at the time of loss, the insurer pays only a proportional share of the claim. On a $1M building insured for $700K with an 80% coinsurance clause, a $200K loss would only pay roughly $175K instead of $200K — the rest is your penalty for under-insuring. Annual replacement-cost reviews prevent this.

Question 6

Are tenant improvements covered if I'm leasing?

Accepted Answer

Yes — tenant improvements and betterments (TIB) are a standard commercial property coverage line for leased space. Your build-out, fixtures, custom electrical, finishes, and equipment installations are insured separately from the building itself (which is the landlord's responsibility). Most Florida commercial leases explicitly require tenants to carry property coverage on TIBs at full replacement cost, plus additional named insured status for the landlord.

Question 7

How does roof age affect commercial property insurance?

Accepted Answer

Roof age is a primary underwriting factor in Florida. Most carriers won't write new policies on commercial roofs older than 15–20 years and require roof certifications or replacement on renewal. Florida's 2022 reforms allow carriers to apply roof depreciation schedules even on replacement-cost policies for roofs over 10 years old. A documented roof condition certification or recent replacement can unlock better carriers and lower premiums.

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