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Family Owned Tanning Salon:
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Most tanning salon business owners purchase their liability and property insurance policies and then spend their daily efforts running their salon. It was no different for a salon owner in
Monterey, CA until AFTER a significant rainfall caused a need to submit an insurance claim. The valuable lessons learned from this policyholder's unfortunate experience will hopefully help
other tanning salon owners make sure they are properly protecting their assets.
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Record Rainfall October 2009:
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One thing is clear after the fall and winter of 2009; the severe drought experienced during years past is over. According to the California Nevada River Forecast Center, a wet and windy storm struck
California on October 13th dropping over 15 inches of rain in the Santa Lucia Mountains on California's central coast.
Although flash flooding occurs during this type rain event, that was the least of concerns for our tanning salon business owner.
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Water Damaged Property:
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This tanning salon in Monterey, CA suffered substantial damage to the interior walls, flooring and equipment that occurred when water leaked in from the roof following the record rainfall that allowed
water to collect on the roof.
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Read your Lease Agreement:
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If you don't own the building where your tanning salon is located make sure you read your lease thoroughly or have an attorney review it for you. A very popular lease for
landlords of income producing property, such as tanning salons, is called a Triple Net Lease. A Triple Net Lease requires the tenant to pay monthly rent as well as property
taxes, property insurance, and building maintenance.
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Cause of Water Damage Loss:
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Prior to this rain storm the roof of this tanning salon did not leak. During investigation of the claim an employee for a restoration contractor waded into standing
water on the roof and pulled a large plastic cup from the roof drain. An engineering report indicated the roof showed no signs of recent trauma or physical impact and
the roof membrane was not torn, punctured or otherwise damaged to allow water to leak. The clogged drain allowed water to enter the building.
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Additional Engineering Information:
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The engineering report also indicated the roof drain system does not meet code requirements or typical roof industry recommendations in at least three ways: drains with
clamping rings are recommended for built up roofs, the drain strainer was missing allowing the cup to enter the drain hole, and there were no secondary overflow drainage
provisions as California Building and Plumbing Codes require.
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Policy Limitations:
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The insurance carrier looks at claims and tries diligently to find every way possible to provide coverage and payment for damages.
Unfortunately this "perfect storm" had several policy exclusions that applied..
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Policy "Causes of Loss" - Special Form:
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The standard property form has the following clauses:
Limitations: 1. "We will not pay for loss or damage to property, as described and limited in this section...
C. The interior of any building or structure, or to personal property in the building or structure, caused by or resulting from rain,
snow, sleet, ice, sand or dust, whether driven by wind or not, unless:
1. The building or structure first sustains damage by a Covered Cause of Loss to its roof or walls through
which the rain, snow, sleet, ice, sand or dust enters; or...
The limitation above excludes coverage for the interior water damage because the water did not enter as a result
of the building being damaged by a Covered Cause of Loss.
The "Specified Causes of Loss" means the following: Fire; lightning; explosion; windstorm or hail; smoke; aircraft or vehicles; riot or civil commotion; vandalism;
leakage from fire extinguishing equipment; sinkhole collapse; volcanic action; falling objects; weight of snow, ice or sleet; water damage.
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More Limitations:
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The Causes of Loss - Special Form has the following additional limitations:
We will not pay for loss or damage caused by or resulting from any of the following,
Faulty, inadequate or defective:
Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction; of part or all of any property on or off the described
premises.
This exclusion applied because the roof design was faulty and does not meet California Building and Plumbing Code requirements. The faulty construction of the roof
allowed the water to pond to an excessive level without providing adequate sources of drainage.
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Deep Water:
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At the end of this claim the tanning salon owner was responsible for his own equipment and property damage. He also learned from his landlord that he was responsible for
damage to the building according to his Triple Net Lease.
The salon owner could not seek recovery from other parties due to maintenance because the Triple Net Lease placed maintenance responsibilities on him. The ultimate cost
of uninsured damages was over $40,000.
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Consultation:
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Review your insurance coverage with a THOMCO Tan Pro insurance representative to make sure you are properly protected. Visit our website at:
http://www.tanproins.com.
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Risk Management:
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For more information on risk management and loss prevention for tanning salons visit our risk management resource center at:
http://www3.thomcoins.com/riskmnt/tprmg.cfm.
You may also contact Bill Coons, Loss Control Director at 1-888-546-4042 or BillC@Thomcoins.com.
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For more articles, guidelines, and information especially tailored for the tanning industry,
Visit our Risk Management Resource Center at
http://www3.thomcoins.com/riskmnt/tprmg.cfm
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