For several years, the TNRMT has provided real property coverage on a blanket basis, with no coinsurance clause. This is the broadest coverage available in the industry. A co-insurance clause allows the insurance company to compare the insurance limit carried on the damaged building to its replacement cost at the time of a loss. Should the company determine that the building isnít sufficiently insured to satisfy the terms of the co-insurance clause, then they are not obligated to pay the full amount of the loss. For instance, an 80% co-insurance clause requires that a building with a replacement cost of $1,000,000 must be insured for at least $800,000. If it is insured for less than $800,000, then the insurance company will only pay 80% of the claim-a substantial penalty.
TNRMT does not have such a co-insurance provision. This means that in the event of a covered loss to a building, there is no need to consider whether or not the coverage amount on the building is adequate. TNRMT is thus more able to promptly resolve claims at their full value. This does necessitate that TNRMT have current and accurate replacement cost values on file for all member buildings.
Recently, the TNRMT Board of Trustees revised the appraisal contract with Risk Assurance Inspections (RAI) in order to continue to provide our members with the most up-to-date replacement values. As a result, RAI will again perform on-site appraisals of every member over the course of the next 3 years, which began on July 1, 2015.
The visits will be conducted according to which Grand Division of the state you reside. Over the next several months, all TNRMT members in East Tennessee will be visited, the following year West Tennessee accounts will be inspected, and finally, in the third year, Middle Tennessee will be inspected. Desk reviews will continue to be done in the years a physical inspection is not conducted to ensure that each building accurately reflects the cost necessary to rebuild the structure.
We ask you, our members, when contacted by RAI, to assist them in inspecting all your buildings and to use this process as an opportunity to review and update your records as well. RAI will be armed with the most current list of properties that you have provided to NGU Risk Management. We would suggest that each member review this list for accuracy and appoint an employee who is well acquainted with your property to assist and possibly accompany RAI in this inspection process.
If you have any questions regarding this process, please feel free to contact us.
Tom Montgomery, NGU, firstname.lastname@example.org
Ruby Keith, NGU, email@example.com
Betsey Sullivan, NGU, firstname.lastname@example.org