ABC Realty LLC – Mixed-Use Lessor Risk Successfully Placed with Westchester
ABC Realty LLC is a Rhode Island–based real estate holding company that owns and manages a mixed-use property located in Providence. The risk consists of a three-story, early 1900s joisted masonry building featuring two residential apartment units above a high-end Mexican restaurant tenant.
The insured operates strictly as a lessor risk, with no direct restaurant operations, but retains exposure through property ownership, tenant activity, and building maintenance responsibilities.
Coverage Structure & Program Highlights
This account was structured as a comprehensive commercial package with excess liability support, delivering a cohesive solution for both property and casualty exposures:
Primary Package – Westchester Surplus Lines (Chubb):
- Commercial Property:
- $850,000 building limit on a replacement cost basis
- $150,000 business income coverage
- Special causes of loss with enhancement endorsements and sub-limited extensions (e.g., sewer backup, valuable papers, off-premises property)
- General Liability:
- $1,000,000 per occurrence / $2,000,000 aggregate
- Lessor’s risk classification with apartment and premises exposure basis
- Equipment Breakdown:
- $1,000,000 per accident limit
Excess Liability (Westchester underlying + Chubb umbrella):
- Underlying GL (Westchester): $1M / $2M
- Umbrella (ACE/Chubb):
- $5,000,000 excess limits over the GL
- $0 self-insured retention
The placement delivers a total $6M liability tower, pairing strong primary underwriting with a reputable excess carrier.
Noteworthy Risk Characteristics
While the account presented as a relatively modest real estate risk, several factors created placement challenges in the standard market which led to it necessitating surplus lines placement:
- Mixed-use occupancy combining habitational units and restaurant exposure, which introduces fire, grease, and liability concerns due to cooking operations.
- Older construction (circa 1900) with only partial system updates (electrical, plumbing, heating), increasing perceived severity exposure for property carriers.
- Non-sprinklered building, further compounding fire risk, particularly given restaurant tenancy.
- Lessor’s risk profile, where the insured relies on tenant risk transfer (COIs and additional insured status), which underwriters often scrutinize.
- Urban location with close building proximity, limiting separation and increasing potential for spread-of-loss scenarios.
Why This Was a Success
Despite the above challenges, the account was successfully placed through a coordinated approach leveraging the surplus lines market:
- Secured broad property coverage with replacement cost valuation and enhanced endorsements, protecting an aging but maintained asset
- Delivered full liability protection with a clean excess tower, bringing total limits to $6M
- Structured coverage through strong carriers (Westchester/Chubb) with high financial ratings
- Addressed underwriting concerns through documentation of risk management controls, including:
- Active property management by ownership
- Tenant insurance requirements (additional insured + COI compliance)
- Proper restaurant safety controls (UL-300 suppression system, hood maintenance, extinguishers)
Summary
ABC Realty represents a classic example of a “tough but defensible” small real estate risk—one that blends habitational and restaurant exposure in an older urban building. By leveraging surplus lines expertise and aligning best-in-class underwriting partners, the placement achieved comprehensive protection across property and liability lines where standard markets may have declined or restricted terms.
This account demonstrates the value of thoughtful structuring, risk storytelling, and market access in delivering successful outcomes for complex small commercial risks.
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