‘A Minefield Of Traps': To Handle Insurance Claims, Shopping Centers Need A Legal Team Early
A violent hailstorm. Defective construction. Stolen copper piping. There are hundreds of different reasons a shopping center owner might need to file an insurance claim. Often, owners believe that they are best off pursuing these claims on their own. What these owners don’t realize is that by doing it alone, they may receive a much smaller payout than if they had worked with an attorney.
When shopping center owners handle insurance claims themselves, they may unknowingly miss or close themselves off to opportunities to recover more than what was initially thought to be lost. Bringing in a legal team with a deep knowledge of insurance policies long before a loss occurs can ensure that shopping centers get their full due.
“There are many more routes to recover insured losses than owners may realize, but unless they are stipulated in the policy, they won’t be available,” said Alexander Cohen, partner at Abir Cohen Treyzon Salo LLP, also known as ACTS Law.
While floods, fires and vandalism constitute good cause to file an insurance claim, owners may not be aware just how wide a scope of losses an insurance company must cover for those they insure.
“Imagine if at the start of the holiday season, the city decides to start doing construction on the nearby roads and customers can’t turn into the parking lot,” ACTS Law partner Boris Treyzon said. “If loss of business is stipulated in the policy, insurance companies should cover that.”
He cited another case in which insurance covered costs for a business’ marketing and advertising after a shopping center had been shut down by a flood. The owner used the funds to pay for social media marketing, direct mail campaigns and even a relaunch party to tell the community that the mall was back open for business.
At ICSC RECon in Las Vegas, Cohen and his team of attorneys spoke to commercial property owners who did not realize how unprepared they were to handle their insurance claims alone. Many commercial owners mistakenly thought they had recovered to the fullest extent allowable under their policies.
"Through consulting with the team at ACTS Law, ICSC attendees realized that by handling their own claims, they were missing an opportunity to boost their internal rate of revenue," Cohen said.
Many specialized recovery areas are unknown by the average shopping center owner, Treyzon said, which is why shopping center owners need to evaluate their insurance agreements with trained legal experts.
“Most insurance agreements state that the insurance company will return the mall to ‘pre-loss conditions,’ but that term means something entirely different to owners than it does to an insurance company,” Treyzon said. “We engage creatively with the insurance policies to make sure they cover the widest possible scope."
In addition to proper preparation, owners must seek legal advice immediately following a loss. If owners wait to seek counsel, Cohen said, they may wind up unknowingly taking a binding position on some or all of the losses.
“When a property owner is faced with so much pressure from the insurance company, from the bank and from their tenants, owners tend to make on-the-spot decisions,” Cohen said. “But snap judgments could have long-term ramifications in terms of how much of the loss can actually be recovered.”
Treyzon said ACTS Law maintains an around-the-clock dynamic response system to ensure that its attorneys can be on the ground gathering evidence as soon as a loss occurs. He recounted the story of a shopping center where metal piping had been stolen in the middle of the night.
“At two in the morning, I was standing there on the fifth floor in my rain boots, taking pictures of all this water rushing out,” Treyzon said. “That’s the kind of dedication you need to negotiate with insurers.”
ACTS Law specializes in a niche area of insurance law known as bad faith litigation. By law, insurance companies must deal fairly with their policyholders. If the insurance company delays the process excessively or adopts unreasonable interpretations of their policies, policyholders can sue their insurers for bad faith.
“Insurance claims present a minefield of traps for the unwary,” Cohen said. “Having lawyers trained in bad faith litigation on their side can help owners know that they are not being taken advantage of.”
As an insurance lawyer, Treyzon said he can quickly parse a complex insurance policy. Shopping center owners have businesses to run and may not be able to take the time to carefully comb through an insurance policy for ambiguities.
“These policies really can be works of art,” Cohen said. “We had a shopping center here in Los Angeles, where a disgruntled former employee made some threats. Obviously, some of the stores lost a lot of business that week. But because we had written those sorts of occurrences into the policy, they were covered for that business loss.”
This feature was produced by Bisnow Branded Content in collaboration with Abir Cohen Treyzon Salo LLP. Bisnow news staff was not involved in the production of this content.