Backstory
Sunrise Apartments, a 300-unit multifamily housing complex in Southern Florida, is managed byCoastal Residential Group. Given Florida’s frequent hurricanes and tropical storms, the company maintained a commercial property insurance policy. However, due to the age of the buildings, their policy only covered actual cash value (ACV) for roof damage rather than full replacement cost.Understanding the potential financial risk, Coastal Residential Group securedHalo Coverage with a$1 million policy limit to help mitigate the gap betweenACV and full replacement cost in the event of a storm.
- INDUSTRY– Multi-Family Housing
- ANNUAL GROSS REVENUE– $1.5 Million
Risk Description
Coastal Residential Group’s property insurance did not provide full replacement cost for their roofs, meaning:
- Total roof replacement cost for the complex: $4.2 millionPrimary insurance payout under ACV terms: $2.8 million
- Funding gap left for replacement: $1.4 million
- Halo Coverage limit: $1.0 million
While Halo Coverage would not fully cover the gap, it would significantly reduce the out-of-pocket burden, helping the company avoid major financial strain and maintain the property’s habitability.
Incident
In September 2023, a tropical storm with 90+ mph winds caused extensive damage to the roofing system atSunrise Apartments
- High winds tore off sections of shingles and waterproofing layers, leading to severe leaks across multiplebuildings.
- Emergency mitigation efforts helped prevent interior damage, but a full roof replacement was necessary.
- Under their ACV-based commercial policy, Coastal Residential Group received only$2.8 million—far short of the $4.2 million replacement cost.
Resolution
Coastal Residential Groupfiled a claim under their Halo Coverage policy, which responded as follows:
- Claim Filed:The management company submitted damage reports and insurance statements confirming the ACV payout.
- Claim Processed:Halo Coverage determined the loss met its coverage criteria and calculated the eligible payout up to the $1 million policy limit.
- Claim Paid: $1.0 million was issued to cover a significant portion of the replacement cost gap.
Claim Breakdown:
- Total Roof Replacement Cost: $4.2 million
- Primary Insurance Payout (ACV Coverage): $2.8 million
- Halo Coverage Payout (Limited to Policy Cap): $1.0 million
- Remaining Out-of-Pocket Cost: $400,000
While the company still had $400,000 to cover, the $1 million Halo Coverage payout absorbed the majority of the funding gap, allowing them to:
- Complete roof replacements on schedule
- Minimize financial disruption and avoid passing costs to tenants
- Remain compliant with updated Florida building codes
Key Takeaways
- Standard property policies often leave businesses exposed by only covering actual cash value (ACV) rather than full replacement cost. Without supplemental protection, businesses must absorb massive expenses when major repairs are needed.
- In this case, Halo Coverage provided a crucial $1 million payout, significantly reducing financial strain and enabling timely repairs. While it didn’t fully cover the shortfall, it ensured Coastal Residential Group could restore their property without drastic financial repercussions.
- For property owners managing large, aging assets, Halo Coverage provides critical financial protection against coverage gaps in commercial insurance policies, ensuring smoother recovery after severe weather events
Get Started