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IPS / Lighthouse Insurance Group Blog: commercial insurance

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When a building is insured, a policy written for “replacement cost” provides for the repair or replacement of the damaged portion of the building with like kind and quality of materials.  That’s the good news!

The bad news can be that, when a building suffers damage, there may be one or more local building code ordinances that come into play.  The building ordinance in many cities may say that, if a certain percentage of a building is damaged, the undamaged portion of the building must be demolished and thereby requiring the entire structure to be rebuilt.  For example, if the city’s threshold is 50% and 60% of the building is damaged the city can require the undamaged 40% to be demolished so that the entire building needs to be replaced.  Even if the limit of insurance was adequate to replace the entire building, the standard replacement cost insurance will not pay to tear down and replace the undamaged portion.

Another example is that, maybe an undamaged portion of the building doesn't need to be demolished, but in order to rebuild even the damaged portion, an elevator, or handicapped accessible entryways and rest rooms, or fire suppression sprinklers may need to be added to bring the building up to code.  

These additional costs are not covered by the standard Building and Personal Property Coverage form found within most commercial policies.  However, they can be covered with the addition of Ordinance or Law Coverage.

Ordinance or Law Coverage has 3 components:

·         Coverage A – applies to the loss of value to the undamaged portion of the building

·         Coverage B – applies to the cost of demolition to the undamaged portion of the building

·         Coverage C – applies to increase expenses to

o   Replace the property to comply with current building, zoning, or land use ordinances

o   Repair the undamaged property to comply with current building, zoning or land use ordinances

o   Or to reconstruct or remodel the undamaged portion so that it complies with current building, zoning or land use ordinances

Properly structuring Ordinance or Law Coverage within your commercial policy can make the difference between being forced out of business due to the inability to pay for these additional costs that result from a covered loss, or enabling your business to spring back after a loss. 

Ordinance or Law Coverage is available in most homeowner’s policies as well.  If there was a covered loss to your home, would your city require you to upgrade the plumbing or electrical?  Things like this can be very expensive and the upgrade can only be covered by Ordinance or Law Coverage.

Review your policy to make certain that your insurance is properly protecting you.  If you have questions, call us at 800-220-5582 or contact us on the web.

Woman under umbrellaIt’s no surprise that a lot of successful business people use a number of resources for advice, particularly when it comes to financial, legal and insurance decisions. When it comes to protecting assets, either as a store owner or real estate investor, the need for the right insurance policies are crucial.

Of course, the main consideration in choosing insurance is the personal liability that comes with, say, owning that rental property. As such, an umbrella insurance policy can help owners if they are the subject of a major claim.

An umbrella insurance policy is like having a mega-liability policy by providing personal and estate protection in areas like:

  • Personal injury: If you’re sued because someone thinks you libeled, defamed or slandered them (to name a few), the policy provides coverage to help defend you in the lawsuit.

  • Loss assessments:  In general, only specific amounts for a claim are covered if you’re sued by a tenant or a visitor to your property. It also provides protection if a corporation or association sues you.
Here’s just one example of coverage for a million-dollar lawsuit because you backed over someone at your place of business or rental property:
  • An auto insurance policy’s bodily injury limit of $300,000 kicks in; still, there’s a $700,000 gap to cover, which is where the umbrella insurance policy comes in.

In short, the umbrella protection adds another level of liability coverage that is above the limits one might already have on their homeowners, auto, business or boat insurance. Furthermore, it just may offer a broader scope of protection from any claims that might be excluded by your primary insurance coverages.

We’ve got you covered. Call Insurance Planning Service at (734) 421-9900 for more information on Michigan umbrella insurance.

What happens to your insurance coverage when your building becomes vacant or unoccupied (idle)?

Most insureds are not aware of the restrictions in their property insurance when a building is unoccupied or vacant.

One of the more common coverage forms includes this provision:


When this policy is issued to the owner or general lessee of a building, building means the entire building. Such building is vacant unless at least 31% of its total square footage is:

  • Rented to a lessee or sub-lessee and used by the lessee or sub-lessee to conduct its customary operations: and/or
  • Used by the building owner to conduct customary operations

When a building has been vacant for more than 60 consecutive days before a loss or damage occurs, there is NO COVERAGE for vandalism, sprinkler leakage (unless you've protected the system against freezing), building glass breakage, water damage, theft, or attempted theft. For other types of covered claims, such as fire or wind, the amount payable would be reduced by 15%.

The logic is that buildings that are vacant for extended periods are vulnerable to vandalism and arson, partly as the result of only occasional maintenance and security oversight.

The Solution to waive these restrictions:

Tell your insurance agent if 70% of your building is vacant or unoccupied, that is, it's not being used by the owner, lessee, or sub-lessee to conduct their customary operations. Your agent will work with the insurance company to provide the proper coverage.

There is an endorsement available - Vacancy Permit - which reinstates coverage for the types of losses mentioned above. The Vacancy Permit endorsement is designed for use when the hazards that are normally associated with vacancy do exist, but the insurer has elected to underwrite the exposure. A premium is charged for this endorsement.

Premium or coverage considerations (by the policyholder or the insurance company) may affect whether vandalism or sprinkler leakage claims would continue to be covered.

AGAIN, we stress that building owners keep their insurance agents informed of the occupancy conditions in their property so proper coverage can be continued under the policy.

Call Insurance Planning Service at 800-220-5582 or contact us online today.  We can help with questions you may have about your building insurance.

Source:  West Bend Mutual Insurance Co.

Michigan Insurance Company

We are proud to post the following press release regarding the Michigan Insurance Company's parent corporation, the Donegal Group, Inc.

MARIETTA, Pennsylvania, April 24, 2013 – Donegal Group Inc. (NASDAQ: DGICA and DGICB) was named to a list of 100 Most Trustworthy Companies for the second consecutive year, ranking the company among firms that have consistently demonstrated transparent and conservative accounting practices and solid corporate governance and management as determined by GMI Ratings, an independent financial analytics company, and reported by Forbes.

According to Forbes, GMI Ratings creates its list by examining more than 8,000 companies traded on U.S. exchanges. Every three months it assigns each company an accounting and governance risk score, or AGR, based on proprietary modeling designed to identify practices that historically have had a high correlation with increasing shareholder risk.

“We are pleased to be recognized once again by Forbes and GMI Ratings as a ‘Most Trustworthy Company’ based on their analysis of our accounting and governance practices,” said Donald H. Nikolaus, President and Chief Executive Officer of Donegal Group Inc.

More information regarding the GMI Ratings “America’s Most Trustworthy Companies” analysis can be found at A reprint of the Forbes article is also available as a “Featured Report” in the Investors area of Donegal Group Inc.’s website at

Donegal Group Inc. is an insurance holding company whose insurance subsidiaries offer personal and commercial property and casualty lines of insurance in 22 Mid-Atlantic, Midwestern, New England and Southern states. The insurance subsidiaries of Donegal Group Inc. and Donegal Mutual Insurance Company conduct business together as the Donegal Insurance Group. The Donegal Insurance Group has an A.M. Best rating of A (Excellent).

The Company’s Class A common stock and Class B common stock trade on NASDAQ under the symbols DGICA and DGICB, respectively. As an effective acquirer of small to medium-sized “main street” property and casualty insurers, Donegal Group has grown profitably over the past 25 years. The Company continues to seek opportunities for growth while striving to achieve its longstanding goal of outperforming the property and casualty insurance industry in terms of service, profitability and growth in book value.

image of couple on couch in their homeHome-based business owners choose to run their business from a residence instead of a designated office space. A home-based business can be run from an apartment, mobile home, garage, condo, house or a separate dwelling in the back yard. Most home-based business owners believe that their current homeowner or renter insurance covers damage to their business property; and in most cases it does, but there are some very important business related items that a standard insurance won’t cover.

Why Isn't Homeowner’s Insurance Enough?

As a home based business owner, you may not think much about adding additional coverage onto your existing homeowner’s policy, but keep in mind that a general homeowner’s policy doesn't cover everything in a home. Homeowner’s policies generally cover structural damage or contents damage caused by structural damage. However, the policy generally does not cover damage to contents alone. For that you may have to add additional coverage called contents insurance.

Contents Insurance

Contents insurance is an additional policy that covers the contents in your home. In most cases, contents insurance covers for damages that are not covered by your content’s warranty. Warranties generally cover electronics and appliances for damage caused by defects or mechanical breakdowns. However, they do not cover the damage caused by you or by natural disasters.

Home-based Business Insurance

Home-based Michigan business insurance covers your business contents as well as loss of income. Unlike a general contents insurance policy which would only cover the damaged contents, business coverage has a higher dollar amount of coverage and it covers you for loss of income due to damages to your business or contents. Home-based business owners generally don't have home-based business policies, because they falsely believe that their homeowners insurance will cover their home-based business; however, it is important to add home-based business coverage to help financially while getting your business back on track after a disaster.

Commercial Auto Coverage

If you have a vehicle that you use for business, you will need commercial auto insurance. General auto insurance policies don't cover vehicles used to haul goods or people. If your business has more than one driver or you haul goods, it may be best to get a commercial auto insurance policy to make sure that you're at it quickly covered in the event of theft or an accident. This type of policy has a higher dollar amount of coverage than a general auto insurance policy so it costs a bit more.

If you’re just starting your home-based business or you are a current home-based business owner who needs more information about the above policies, give Insurance Planning Service a call at 800-220-5582 and we’d be more than happy to assist you.

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Lighthouse Group Main Office in Grand Rapids, MI
Mailing Address | P.O. Box 530009, Livonia, MI 48153

Phone: 734.421.9900 | Toll Free: 800.220.5582 | Fax: 734.421.9911

Also serving these Detroit area communities in Michigan: Livonia, Farmington Hills, Ann Arbor, Southfield, Plymouth, Canton, Westland, Northville, Novi, Dearborn, South Lyon & Walled Lake