Spend a day Google searching for your local, newspapers, magazines, and business gazettes. Most editorials will have a list of contacts. With this information you willl be able to email your press releases. Send these contacts a simple email containing property details, how much it sold, property photo and information on seller, buyer or leasing business. Some press releases will be picked up while others would not. The likelihood of your stories being printed will depend on the news flow for that week.

1. COMMERCIAL REAL ESTATE
By Jimmy Stepanian

2. Our Market
• Individuals or business organizations that own
premises, buildings and related structures for the
principal purpose of leasing or rental of space
for occupancy as offices, retail, service, light
manufacturing or industrial and warehouse uses.

3. Eligible Risks
• This classification is broadly described as
“Owners of non-residential buildings primarily
engaged in the leasing and/or rental of buildings
to others.” SIC Code 6512. This SIC code
includes a wide range of business. Farmers is
only interested in the non-residential buildings
found on the next screen.

4. Eligible Building Types
• Office Buildings
• Retail Shopping Centers
• Manufacturing, Industrial, Assembly,
Processing or Service Buildings
• Warehouses, Private Commercial
• Mixed Occupancies – Office, Retail,
Light Manufacturing, Industrial,
Assembly, Processing, or Service
Buildings

5. Office Buildings
• Office Buildings are usually divided into smaller
units which are rented or leased to a tenant(s) or
lessee(s) for their occupancy and use as private
offices or work areas including lobbies,
conference rooms, storage and restrooms. A
snack bar, sandwich shop, or cafeteria may be
present.

6. Retail Shopping Centers
• We are interested in:
• Buildings leased or rented to, and
occupied by one or more retail stores
and/or shops each of which sell a
single product line.
• Restaurant buildings or service type
occupancies.
• Adjacent parking lots maintained for
the exclusive use of the customers and
employees.

7. Light Manufacturing, Industrial,
Assembly, Processing or Service
Buildings
• Farmers desires buildings leased and
occupied by one or more businesses
engaged in light manufacturing,
industrial, assembly, or processing
activities. Service type occupancies are
also permitted.

8. Light Manufacturing Means:
• Light manufacturing is defined as those
manufacturing, industrial, assembly or
processing operations that do not require open
flame, high heat, furnace, foundry, or smelting
processes to cast, mold, form or extrude metals
or plastics.(Low temperature plastic extrusion or
molding is acceptable.)

9. Mixed Occupancies
• Farmers is interested in the following
types of occupancies/operations:
• Buildings leased or rented and
occupied by two or more businesses
for office, retail store, or for
manufacturing, industrial, assembly,
processing or service purposes.
• The occupancies must qualify under the
rules of the individual industry profiles
shown on previous slides, otherwise
they are not eligible.

10. Warehouses, Private
Commercial
• These buildings are leased to a single business
entity for warehousing or storage of their non-
hazardous business property. These warehouses
will typically have a small office area, restrooms,
a receiving and loading dock, freight elevators,
and open storage areas.

11. Desirable Characteristics
• The Commercial Real Estate program is
designed to attract and retain potentially
profitable quality accounts that will
continue to renew over a long period of
time. These accounts share the
following characteristics:
– Experience in this type business
– Financially successful
– A concern for loss prevention and safety.

12. Desirable Characteristics
(Continued)
• A well-maintained premises
• Low turnover of tenants
• Low hazard tenant operations

13. Insurance To Value
• Your customer must maintain a minimum
amount of insurance which is at least 80% of the
current replacement cost of the building and
contents values to be eligible for coverage under
this program.

14. Maximum Insurable Value
• The maximum value Farmers will write on one
building is $10,000,000.

15. Maximum (PML)
• The Probable Maximum Loss (PML) for any
one policy cannot exceed $40,000,000.

16. Ineligible Characteristics
• Buildings more than seven stories in height.
• Building(s) at a location in which less than
70% of the total combined square footage
is occupied. Area pertaining to service or
maintenance of the building such as
heating/air conditioning, electrical,
mechanical, elevator, janitorial,
lobby and security station rooms may be
disregarded.

17. Ineligible Characteristics
(Continued)
• Newly constructed building(s) at a location in
which less than 70% of the total combined area
of the insured buildings are occupied, are
Submit for Approval (SFA).
• Detached smoke stacks, radio or TV
Towers or Remote Transmission Stations
• Risks located in Town Class 9 or 10.

18. Ineligible Characteristics
(Continued)
• Buildings known to have asbestos or plastic
foam insulation, such as polyurethane or
polystyrene.
• Buildings and premises that are not well
maintained or in compliance with all critical loss
control recommendations.

19. Ineligible Characteristics
(Continued)
• Buildings over 40 years of age that have not
been renovated.
• Note: “Renovated” indicates the building
has been substantially reconstructed. This
means that all new wiring, plumbing,
heating, air-conditioning systems, and
roofing materials have been replaced
meeting all current building codes for the
type of occupancy. Buildings which meet
this description can be considered a new
building for determining building age using
the renovation completion date.

20. Inherently Hazardous
Occupancy or Operations
• The following occupancies are considered
inherently hazardous and are not eligible:
– Handling, storing, producing, or using
significant quantities of combustible or
flammable liquids, gases, dust, explosive, or
use of urethane foams, fiberglass, pyroxylin, or
combustible fillers, glues or laminates.
• Examples of these occupancies would be chemical
manufacturers or dealers and tire recapping.

21. Inherently Hazardous
Occupancy or Operations
• Premises where large numbers of persons
assemble or reside, such as schools, hotels,
motels, theaters, lodges or resorts,
recreational facilities, auditoriums or
playhouses, bars and nightclubs.

22. Submit for Approval
• The following risks are not to be bound
and must be submitted for approval. A
loss control survey or inspection will be
ordered by the underwriter as part of
the procedure.
– Buildings more than 30 years of age unless
completely renovated to current building
codes. Note: Buildings over 40 years old
that have not been renovated are ineligible.

23. Submit for Approval
(Continued)
• Risks which within the past three years have had their
insurance coverage canceled or non-renewed, or were
without insurance coverage for a substantial period.

24. Submit for Approval
(Continued)
• Building Owners who require tenants to
maintain the boiler, heating, plumbing and
electrical systems.
• Inexperienced Building Owners with less than
one (1) year of ownership, unless management
of the property is contracted to a professional
property management company.

25. Inherently Hazardous
Occupancy or Operations
• Manufacturing, industrial or fabrication
industries producing primary metals or
plastics that require the use of open flame, high
heat, extensive welding, foundry
molding, forming or extrusion processing.

26. Inherently Hazardous
Occupancy or Operations
• Storage or processing operations
involving electroplating, fusion, thermal
coating or concentrations of
combustible, toxic, flammable,
explosive, corrosive or other such
materials, such as with wood working
or refinishing, lumberyards, feed, hay or
grain, boat marinas, diesel truck repairs,
dismantling, salvage or junk, public or
freight handling warehouses.

27. Inherently Hazardous
Occupancy or Operations
• Occupancies located near highly controversial
businesses or organizations such as abortion
clinics, trade unions or halls, or political or
campaign offices.

28. Submit for Approval
• Business operations conducted on the
premises by the Insured. A complete
description of the these business operations is
required in the remarks section of the
application or attached with the new business
submission. Evidence of insurance for the other
business operations must be included.

29. Submit for Approval
• Buildings occupied for any manufacturing
purposes. Full description of the activities,
operations and products must accompany the
submission.
• Newly constructed building(s) at a location at
which the total occupied area is less than 70%
can be submitted for approval (SFA).

30. Submit for Approval
• Buildings with highly unusual construction
characteristics.
• Requests for coverage in heavy windstorm or
coastal areas
• Requests for earthquake coverage

31. Coverage/Contract
• Farmers Commercial Real Estate policy is based
on the Standard ISO Businessowners contract
which you studied earlier. If you desire to review
that contract, refer to the Retail/Service
materials.

32. Primary and Premier Options
• Farmers offers both a Primary and a Premier
coverage option to commercial real estate
owners.
• Each of these packages includes property and
liability coverages. The Primary coverage
package is included on all policies. The Premier
coverage package is an extra cost option.

33. Coverage Differences
• Most of the differences between the Primary
and Premier coverage options relate to coverage
limits. For example, the Premier coverage option
provides $25,000 in Money and Securities
coverage. The Primary coverage option provides
only $10,000.

34. Coverage Differences
• In addition, the Premier coverage package offers
four coverages not available on the Primary
coverage program. These are:
– Equipment Breakdown Coverage
– Extended Replacement Cost Coverage
– Tenant’s Move Back Coverage
– Extended Premises Boundary

35. Limits Differences
• Coverage Primary Premier
Pollution $10,000 $25,000
Clean-up
Outdoor Signs $10,000 $25,000
Premises
Boundary
Definition 100 feet 1000 feet

36. Limits Differences
• Coverage Primary Premier
Accounts
Receivable $5000 $10,000
Valuable
Papers $5,000 $10,000
Money &
Securities $10,000 $25,000

37. Limit Differences
• Coverage Primary Premier
Employee
Dishonesty $10,000 $25,000
Fire Extinguisher
Recharge $2,500 $5,000
Lock Replacement
$100 per lock
$100 per lock
$5,000
total $10,000 total
Computer
Coverage $10,000 $25,000

38. Optional Coverage Summary
• Earthquake Coverage
• Earthquake sprinkler leakage
• Building Ordinance or Law Coverages
• Mine Subsidence (Indiana or Illinois)

39. Optional Coverage Summary
• Outdoor Fences and Walls
• Non-owned and/or Hired Auto
coverage if not included with insured’s Business
Auto Coverage
• Glass Deductible Buyback

40. Optional Coverage Summary
• Employee Benefits Liability
• Employers Liability (Stop Gap)
• Fine Arts Coverage

41. Optional Coverage Summary
• Aggregate Limits Per Owned Location
• Additional Insured Endorsement
• Owned Auto

42. Coverage Descriptions
• In this section we will discuss some special
coverages which have been included in the
Commercial Real Estate program, but are not
found in the ISO Businessowners policies.
These unique coverages add value to our
contracts and distinguish them from our
competitors.

43. Extended Replacement Cost
• Up to 125% of the Property
Coverage Limits of Insurance is
provided by the Premier Package
Endorsement to pay the repair or
replacement of the building(s) at the
described premises if the buildings(s)
were insured to 100% of their
replacement cost.

44. Extended Replacement Cost
• The insured must accept each annual adjustment
in the building(s) limits and notify us within 90
days of the start of any physical changes,
additions or remodeling to the building(s). This
coverage does not apply to earthquake, outdoor
signs and other outdoor property, or
enforcement of ordinance or law.

45. Back-up of Sewers and Drains
• The Primary Package Endorsement will pay up
to $1,000 per occurrence at each described
premises for loss or damage caused by water
backing up or overflowing from a sewer or
drain, or from sump pump or other systems
designed to remove subsurface water. Limits up
to $5,000 are available under the Premier
Coverage endorsement.

46. Tenant’s Move Back Coverage
• Will pay up to $10,000 per occurrence for
expenses the insured incurs to move displaced
tenants back to the described premises after
completion of repairs made necessary because of
loss or damage by a covered cause of loss to the
building. This coverage is a part of the
Commercial Real Estate Premier Package
Endorsement.

47. Employers Liability-Stop Gap
• This endorsement may be attached for those policyholders
who have employees located in states where private carriers
cannot write Workers’ Compensation. This insurance pays
damages the insured is legally obligated to pay up to the
limits of insurance from bodily injury by an accident to an
employee of the insured. The bodily injury must arise out of
and in the course of employment during the policy period
in the state listed in the schedule.
• Bodily injury includes disease if it results from an accident
or is caused by conditions of the employee’s employment
during the policy period.

48. Employee Benefits Liability
• This coverage form will pay damages because of any negligent act, error or
omission committed by the insured in the administration of the employee
benefit program (as an example, failure to enroll an eligible employee). The
occurrence must be after the retroactive date shown in the Declarations and
before the expiration of the policy. Expenses and costs in connection with
claims or suits, judgment and prejudgment interest will also be paid. An
automatic extended reporting period of 60 days is allowed after expiration of
the policy, if no subsequent policy is purchased.

49. Non-Owned and Hired Auto
• Non-Owned Auto Coverage provides Bodily
Injury and Property Damage protection to the
named insured arising out of the use by others
of any non-owned autos in the course of the
business. This includes autos owned by
employees or members of their households.
Note:
This coverage does not apply to use of the
auto by the named insured, nor does it
benefit the owner or operator of the auto.

50. Aggregate Limits of Insurance
• Applies the aggregate limits of insurance for
business liability and medical expenses separately
to each of the owned locations.

51. Company Placement
• This plan has eligibility requirements which
determine proper placement of the risk in either
Mid-Century Insurance Company, Truck
Insurance Exchange or Farmers Insurance
Exchange. Refer to the Three Company
Marketing Plan Placement Guide.

52. Mid Century Insurance
Company
• Risks that represent the lowest potential for
severe losses and the highest probability of
underwriting gain will be eligible for placement
in Mid-Century Insurance Company. In order to
attract these Ultra-Preferred accounts, pricing
will reflect Ultra-Preferred underwriting
characteristics.

53. Truck Insurance Exchange
• Preferred policyholders that do not meet the
Underwriting Rules for Ultra-Preferred
placement may be eligible to be written in the
Preferred Program in the Truck Insurance
Exchange.

54. Farmers Insurance Exchange
• For those acceptable quality risks that
do not meet the guidelines of the
Preferred or Ultra-Preferred programs,
but otherwise meet Underwriting
eligibility requirements, coverage will be
available under the Standard Program.
Risks acceptable to the Standard
Program will be issued in the Farmers
Insurance Exchange, but must be
eligible and meet quality standards.
The Standard program does not accept
substandard risks.

55. Mid Century Quality Criteria
• All risks accepted for placement under
this plan will be graded using quality
criteria which looks at the following:
– Building Age (Non-Modified) --15 years
or less Actual age
– Age of roof--10 years or less
– SIC of Occupancy (Tenant’s occupation)--
All tenants are eligible for Farmers
placement

56. Mid Century Quality Criteria
(Continued)
• Supporting Business (Product Density)-- Other
Farmers commercial policies written, or
three years of personal lines for client
• Premier endorsement-- Purchases Premier
endorsement
• Professional Management Company --
Professional management company

57. Mid Century Sizing Criteria
• Property Value (Building & Contents)
($1,000,000 or more)
• Number of locations (Three or more)

58. Truck Quality Criteria
• All risks accepted for placement under this plan
will be graded using quality criteria which looks
at the following:
– Building Age (Non-Modified) -30 years or less
Actual age
– Age of roof-20 years or less
– SIC of Occupancy (Tenant’s occupation)All eligible
occupancies as defined in Real Estate Business
Guide

59. Truck Quality Criteria
(Continued)
• Supporting Business (Product Density)-Other
Farmers commercial policies written, or
three years of personal lines for client
• Premier endorsement- Purchases Premier
endorsement
• Professional Management Company -
Professional management company

60. Truck Sizing Criteria
• Property Value (Building & Contents)-
$500,000 or more
• Number of locations (Two or more)

61. Farmers Placement Criteria
• Must meet minimum underwriting requirements
for risk quality. No other criteria apply.

62. Premium Modification Plans
• Premium Modification plans are filed with state
regulatory authorities to recognize characteristics
of individual risks based on their loss experience,
premium size, management, employees,
dispersal of the risk and type of operations.

63. Premium Modification Plans
Available
• Premium Size Credits
• Individual Risk Premium Modifications (IRPMs)
• Commercial Automobile Package Discount
• Profitability Discount

64. Premium Size Credit
• This plan automatically applies a credit
(in states where permitted) based on the
total premium developed for a
Commercial Real Estate policy. The
greater the premium, over a minimum
level, the larger the percentage credit
applied. See the Rules, Rates and
Territories, or the AIMs On-Line
Reference program, for premium size
percentage credits.

65. Premium Size Credit
• Example:
– In one state, the premium size credit starts at 1% at
$750 in premium. It grows to 20% when the
premium reaches $24,001. (Please refer to the
premium size credit table applicable to your
state ).

66. Individual Premium
Modification Plans
• Underwriters have overall final
responsibility for assigning the modification.
However, those agents with Commercial
Real Estate Field Underwriting authority
will be authorized to determine the
modifications to be applied on the new
business policies that are rated and bound
by the agent in the field. The Individual Risk
Premium Modification Plan Worksheet–
Commercial Real Estate (Worksheet #1 for
25% States 31-3096 or Worksheet #2 for
40% States 31-3096) must be completed and
submitted with the application.

67. Individual Risk Premium
Modification Plan
When the IRPM worksheet is used to evaluate a
Commercial Real Estate account, you will use
the following sections:
– Management
– Premises
– Protection
– Building Features

68. Management
When evaluating the management of a
Commercial Real Estate account, we consider:
– Safety Activities
– Business Experience
– Management Experience
– Loss Prevention Attitude

69. Premises
When evaluating the premises of a
Commercial Real Estate account, we
consider:
– Extent of Hazards (Compared to hazards
expected for the class)
– Housekeeping (Interior and exterior)
– Lighting (Interior and exterior)
– Traffic Control (Vehicles and pedestrians)

70. Protection
When evaluating the premises of a
Commercial Real Estate account, we
consider:
– Control of Hazards (Guarding or
reduction of hazards)
– Fire Protection (Extinguishers)
– Safety Self Inspections (Extent &
frequency
– Security Hardware, Alarms & Watchmen

71. Building Features
When evaluating the building features we
consider:
– Construction Materials Used
– Workmanship
– Comparison to Current Building Codes
– Intended Occupancy Use

72. Profitability Discount
• New business and renewal policies for
policyholders who have owned the buildings 3
full years and who provide verified prior
insurance loss history for that period, are eligible
for a Profitability Discount.

73. Profitability Discount
• The Factor shown in the table on the next
screen will be applied to policies with premium
of $2,000 or more (prior to application of this
credit and the Individual Risk Premium
Modification), except premium from:
– Earthquake
– Auto
– Mine Subsidence
– Employers Liability

74. Profitability Discount Table
Accounts producing the following
loss ratios would receive these
discounts
3-Year Loss Ratio** Factor
• 0 - 10% 0.85
• 11% - 20% 0.90
• 21% - 35% 0.95
• 36% & Over 1.00
**Loss Ratio includes all paid and reserved losses
including allocated loss expense during past 3
years.

75. Auto Package Discount
• A 5% package discount applies to commercial
automobiles written in conjunction with any
Commercial Real Estate policy.

76. IRPM Worksheet Guidelines
• The proper application of the premium
modification plans is an extremely important
aspect of pricing a risk. Each risk characteristic
applicable must be evaluated and a debit or
credit applied as warranted. Debit and credit
factors are then totaled and may result in an
increase or decrease in the premium.

77. IRPM Worksheet Guidelines
• Each characteristic must be documented and
retained as a permanent part of the underwriting
file. Improper or arbitrary application of credits
or debits could result in serious penalties for
violations of state regulations on discriminatory
pricing. It is important that the modifications
not be applied as a competitive rating tool.

78. Marketing Support Materials
• Farmers has developed a number of marketing
materials for your use in rating and producing
Commercial Real Estate Business. As you
proceed with your solicitation and presentation
efforts, please refer to the following materials.

79. Marketing Support Materials
• A Premier Program Designed for
Commercial Office Building Owners
• Visual 33-1152
• Folder 33-0152

80. Marketing Support Materials
• Farmers Insurance for the Retail Center Building
• Visual 33-1154
• Folder 33-0154

81. Marketing Support Materials
• A Premier Insurance Program Designed for the
Industrial Building Owner
• Visual 33-1153
• Folder 33-0153

82. Self-Inspection Check Lists
• The Office Building-A Property
Owners Loss Prevention Program (51-
0690)
• The Retail Center- A Property Owners
Loss Prevention Program (51-0689)
• The Light Industrial Park- A Property
Owners Loss Prevention Program (51-
0691)
• The Hidden Cost of Loss (33-0139)