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Commercial Property Insurance: The Why Behind the Questions

Reviewing your current policy could save you money!

All I want is a proposal. Why so many questions regarding commercial property insurance?

From time it time, it makes sense to review your insurance for your apartment or commercial property.
When it comes to this decision process, most don’t really know what they are looking for insurance in an agent or an insurance policy, or what the process itself is like. Most agents ask many questions regarding the property, which can be frustrating at times. We’re here to help clear up any confusion and guide you through the most common questions asked when writing a new proposal.

If you do decide to review your current insurance policy, here is a short list of what is needed by your agent to review the policy properly:

Area and square footage and value: Most property owners are at least looking for replacement cost for their property. This is for replacement at the time of the loss. While the insurance carrier will not actually determine your replacement cost, they can help by using area and details of the construction of your property. If it is a larger, more spread out property with many buildings, the carrier may not have to use the full valuation. Not using the full valuation can save you money on premiums.

Prior claims: The best way to determine the future is by looking at the past. If there has been a record of claims activity, the carrier will make the determination that claims will more than likely continue on the property. Most carriers try to obtain current, hard copy loss-runs for the past five years and most agents can help your obtain these. However, just because there is a claim on the property does not mean that the premiums will be higher. Sometimes, there can be what the industry calls “shock losses” that may be an anomaly and may not continue. It’s always a good thing to clarify this with your agent.

Updates to the property: Of course as the owner of a property, the carrier will want to see that repairs have been made and that the property is being well-maintained. The main questions from insurance agents generally center around the roof, the electrical system, and plumbing and air conditioning. As an owner or a new buyer, try to find out what has been done to your property and when it was done. The better maintained the property is, the lower the prospect of future claims.

Type of tenants: Student, subsidized, seniors or assisted living. Different types of tenants create different types of properties, thus, creating different types of premiums.

Pools and entertainment at properties: If the property itself has a pool and is used for entertainment purposes, they can create a higher liability exposure. Insurance carriers want to make sure safety issues are addressed. If they are present, they can create higher liability exposures.

Of course, there can be many more questions needed when reviewing your commercial insurance policy. However, we’ve compiled a list of the most common ones. Contact Ramey King for a competitive review and proposal for your property!