Announcing Dave’s Producer Corner!

Johnson Strategies (JS) is proud to announce a new and very special product. It will be available to every subscriber to this blog site and is customized for P&C agency personnel and producers.

It’s called Dave’s Producer Corner, and it exploits the talents and immense knowledge of one of JS’s most well-known contributors, David Thompson, CPCU, AAI, API, CRIS.

It will keep you in the game, in front of customers, making you more knowledgeable about your products in either the personal or commercial arena.  It may also include selling tips to help close a sale or handle customer attitudes like Skepticism, Objection and more.

It will arrive at least once a month (maybe more) via brief, concise, articles posted on these pages.    

No fluff, no long introductions or explanations, just the facts any busy producer would like to have at their fingertips.  

And, like all JS articles it’s free to everyone who merely chooses to subscribe (see below).

Today is the first installment of Dave’s Producer Corner dealing with Commercial Property Vacancy issues. 

Please enjoy and spread the word to others about this valuable and free product from Johnson Strategies, LLC. 

And, of course, Dave’s Producer Corner is in addition to other content and opinion pieces you are already enjoying from this website.  Feel free to comment below and let us know subjects you’d like to see discussed under Dave’s Producer Corner and/or related subject headings.

Vacant Commercial Buildings (DPC: Edition 1; Article 1)

Issue–Vacant buildings under a commercial property policy can be problematic for both landlord and tenant. Some buildings that don’t look “vacant” to a layperson, might be vacant under the standard commercial property policy.

Discussion--From the landlord’s perspective, a building is vacant unless at least 31 percent of the total floor space 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.

For the tenant, such building is vacant when it does not contain enough business personal property to conduct customary operations.

Example 1--Consider a new retail shopping complex with 30 separate spaces available for tenants. It may take many months, or perhaps years, for all 30 spaces to be leased by a tenant. If at least 31 percent is not leased AND used by the tenant, the building is vacant even though several tenants are using their space. How many landlords would consider their building to be vacant when they had tenants in there?

Example 2–From the tenant perspective, assume the space was occupied by a pizza restaurant under a five-year lease. They outgrew the space and relocated to a location with more floor space, taking most of their cooking equipment with them to the new location but had a year left on the lease. Without cooking equipment, a pizza restaurant can’t conduct “customary operations” and the space would likely be considered to be vacant.

Recommendation–The “vacancy permit” endorsement is available to solve this coverage issue and should always be offered and explained to commercial tenants and landlords.

The Takeaway—Independent agencies and producers need to develop methodologies, including surveys, questionnaires, reminders and/or visiting properties, to make certain issues regarding vacancies are as clear and unambiguous as possible.  And, as always, take notes and maintain written documentation of such conversations.

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