NAI Norwood Group Finds Space for One Source Apparel, LLC

Portsmouth NH – NAI Norwood Group is pleased to announce the lease of 9,785 SF to One Source Apparel, LLC at 755 Banfield Road in Portsmouth. Craig Frank of NAI Norwood Group represented One Source Apparel in the transaction.

One Source Apparel, LLC specializes in manufacturing high quality apparel. They are headquartered in Portsmouth, NH with offices in Ho Chi Minh, Vietnam and Shanghai, China. Principals John Vendola and Fred Butts had been in search of a new space for quite some time. They were happy to find their new home on Banfield Road.

“We are thrilled with the work Craig Frank did for us in our office search.”  As a fast growing company, finding the correct office space that would provide our people the environment and tools necessary to continue to succeed was critical.  This was a challenge in Portsmouth, but with Craig’s diligence and network he was able to find us the perfect new home.” 

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their 45+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 28 Deer Street Suite 301, Portsmouth, NH 03801 (603) 431-3001.

Understanding Your Exposure with Coinsurance

By Craig Frank, NAI Norwood Group cfrank@nainorwoodgroup.com

In today’s economy, everyone is managing risk more than they have in the past. Commercial real estate is no different. Insurance is a huge portion of risk management that property owners and investors have to manage. However rather than looking at insurance as a common area expense that is paid out of cash flow, lets analyze it from the stand point of what happens when a loss occurs.

Understanding a Coinsurance Clause
Coinsurance is an insurance policy stipulation that a building, personal property or business income including loss of rents be insured for at least a certain percentage of its insurable value. Failure by the Insured to adequately carry the required amount of insurance will result in the Insured becoming a Coinsurer in the loss. We will focus on Building and typical Coinsurance percentages are 80, 90 or 100%. There are several different methods by which an insurance company may “value” the amount it will pay for a loss such as Replacement Cost (RC) or Actual Cash Value (ACV). For our discussion we will assume RC, so this valuation compensates the Insured for the actual cost to replace or rebuild the property with comparable material and
quality.

Loss Example
Replacement Cost of Building: $2,000,000
Coinsurance: 80%
Amount of Insurance Required: $1,600,000 (2,000,000 x .80)
Amount of Insurance Carried: $1,000,000
Loss: $400,000
Deductible: $5,000

Calculating the Loss Paid by Insurance
The insured is only going to get a fraction of this loss covered by their insurance company because of the co-insurance clause.

Amount of Insurance Carried: X Insurable Loss - Deductible = Amount of Loss Paid by Insurance
Amount of Insurance Required

$1,000,000 X $400,000 - $5,000 = Amount Paid by Insurance
$1,600,000

.63 X $400,000 - $5,000 = $247,000 (Amount Paid by Insurance)

One can see that it is important to understand how the Coinsurance Clause within the insurance policy functions. In this example the Insured was underinsured for the minimum requirement of the Coinsurance Clause by $600,000. As a result the Insurance Company will pay $247,000 of loss and the Insured will become a Coinsurer and pay $153,000. Had the Insured carried a limit of $1,600,000 (Amount required to meet the 80% Coinsurance Provision) the loss would have been paid in full, less the deductible by the Insurance Company.