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Five Key Ways to Strategically Manage Your Commercial Property Owners Insurance

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You’ve likely read or seen stories this past year on individual homeowners facing daunting policy increases upon renewal — or, even worse, the dreaded notification from your insurer that you are no longer eligible for renewal. The fact is carriers are often making difficult choices when it comes to where and how to cover residential dwellings in potential hazard zones.

The same is true for commercial property owners as well — If you are an apartment, multi-family, commercial or storage property owner, you also face several issues when it comes to renewal, with experts predicting a 10 – 25% increase in rates for 2024-2025. Below are five tips to help you successfully manage the insurance gauntlet and how to ensure you have sufficient and appropriate coverage to meet all your needs:

1. Use Your Broker as an Ally and Resource: First and foremost, use your broker as a key member of your asset protection team. Keep in touch with and be on the lookout for notices from your broker to review any specific alerts or news you need to be aware of regarding carrier or coverage updates. Your broker is also a great source of information when it comes to alternative plans or other local resources relating to insurance products on the market.

2. Start Early! Contact your broker well before (at least 4 – 6 weeks) your policy is due for renewal. As part of the preparation for any questions you may have, spend some time reviewing all your current documents and policies and make sure you have things like recent bills or any communication from your carrier easy to access. Another benefit of starting early is the fact it gives your carrier ample time to work with you on renewal or policy questions without being stressed by a rapidly approaching deadline date. Your carrier or broker may need to do some additional research or due diligence when it comes to your specific needs so setting a large time cushion creates peace of mind.

3. Review and Update all Limits: Part of the prep process is spending time reviewing all your insured items, valuables and assets. Is your property correctly covered if you needed to rebuild an entire building? Pull up your current year coverage limits and evaluate for inflation or labor cost increases as well as replacement values for all essential merchandise, supplies or inventory.

4. Update Your Property Improvement Records: Your carrier will want to know anything related to an improvement, update or significant repair that has happened at your property. These improvements don’t need to have happened in the last 12 months; any major improvement or update project needs to be documented. When it comes time for renewal and you are attempting to up coverage limits, the carrier may ask for documentation/justification for the increases. If you don’t already have one, create a comprehensive spreadsheet of all improvements and upgrades that impact the value of your commercial property — and keep that spreadsheet updated!

But what if you are a newer owner or do not know the full history of your property? It is essential to try and make your documentation as detailed as possible, so if you don’t have a record, contact your real estate agent or or prior owner to fill in as many holes as possible. Why? ensuring your insurance quotes reflect the actual condition of the building. For example, if you purchase a building constructed in 1975 but don’t have any information about roof or electrical work, it might appear to your carrier that they are insuring a property with nearly 50-year old electric breakers, wiring and roofing! This would drastically impact your rates.

When it comes to these improvements and how they may impact your rating, there are a few key factors to consider (and must include dates and specifics of updates):

  • Roof: Type, materials and all updates or renovations
  • Electrical: Recent updates, specifically electrical panels with manufacturer name; some are considered unacceptable, including Zinsco, Federal Pacific or Sylvania
  • Plumbing: List of elements replaced (water heaters, toilets, sinks) and any piping repairs or replacements
  • HVAC: Updates or replacement of heating or air units and/or key elements such as ducting

5. Identify Other Ways to Mitigate Risk: Safety features not only help lower overall risk for accidents or claims, but also may help lower your insurance premium. Talk to your broker and carrier to see if any of the following may help lower your premium: Updating fire alarm systems, installing sprinklers, conducting a safety walk through with a licensed inspector or conducting additional training sessions. Installing energy efficient appliances or alternative energy sources such as solar panels may give your property an edge to be slightly more ‘energy independent’ than another in the space, potentially impacting a lower premium.

The insurance landscape continues to evolve and it is essential to stay up to date on all changes and policy requirements and keep your coverages where they need to be. Set a time with your broker or agent today to review everything in your portfolio and adjust as needed.

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