In the current challenging market for obtaining insurance cover it’s an advantage to know how your commercial property risks might be viewed. This has direct bearing on how your risk profile is assessed so it’s worth getting ahead of the game by looking at your property through an insurer’s eyes. Here’s a quick guide to making a start.
As a broad guide insurers focus on four key areas, based on the acronym COPE
Construction materials and common risks
Construction risk insurance considerations cover the location of a commercial building, the materials it was built with, its age and the quality of the safety systems within the property structure, as they affect the likelihood of it being damaged. This applies particularly to fire, electrical and security systems.
Identifying the construction materials in your commercial property may require access to specific hard to reach areas and involve getting underneath your building, as well as into the roof space to ascertain what building materials and structures have been used.
Bear relevant risks in mind: fire, flood, wind, hail or storm damage, for example. How will your structural foundations hold up? Will the roof remain intact in a hail storm or high winds? Some construction materials such as expanded polystyrene (EPS) panels for insulation or aluminium composite panels (ACP) in external cladding, or asbestos present significant fire and health risks.
These are all factors that can be remediated to improve your risk profile.
Occupancy factors and property usage
Occupancy refers to the nature of the business being conducted in the property — risk exposures for a retail store are completely different from those of a manufacturer or engineering business that involves ‘hot work’ such as welding or angle grinding, cooking or other heat treatments, or where there is use of heavy equipment and vehicles on site. Again the safety measures around these activities also influence how the risks are evaluated from an insurance perspective.
Is your operation 24/7 or only open during restricted hours? Do you rent part of the property to a tenant? These are details that can also have a bearing on the terms of insurance cover offered.
Protections against common property threats
Identifying the types of threats that could damage your commercial property will help you assess the value of your protection and the actions that support efficient and effective commercial property protections. Outlined here are the most common commercial property threats and tips for risk protection.
Lightning strikes Install lightning rods
Electrical circuit board safety setup
Leaks and hail
Roof inspection, check for gaps or holes
Electrical systems Regular inspection by an electrician and electrical circuit board safety setup
Plugs, connections, insulation
Property is secluded
Property is unattended at times
Unlit areas of potential illicit access at night
Lack of response to alarm alerts
Recognising and responding to underlying exposures
Exposures refers to the risks that are inherent in your business or property: proximity to a waterway that might flood, storage and use of combustible materials, processes involved in treatments or manufacturing, for example. Doing a slow and considered walk-through, taking photos or notes, helps identify areas and activities that warrant attention. Don’t overlook the exterior of the building and the carpark.
Awareness of these exposures enables you to develop risk management or safety protocols which you can document and deploy. Having daily and monthly checklists helps reinforce observation of the protocols. Some activities may require their own set of procedures, such as pallet management, goods handling, storage, hot work, electrical systems, dust accumulation and staff smoking arrangements.
Taking these actions helps provide your insurer with the assurance that you are being proactive about risk management in your business, making your enterprise a more attractive insurance prospect and improving your chances of securing favourable terms on your cover.
Get expert insurance and risk management advice
Commercial property risks and insurances can be one of the most critical areas of focus for a business. As a high value asset and high cost risk, expertise and support from a broker is of critical value.
Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient’s industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers’ control.
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