What's Important to Insurers and Why (Commercial, Retail & Industrial Property)
Insurers do not view all property types in the same way when underwriting a policy, different properties present different types of risks and specific information is required depending on tenant activities.
For example, there will be a higher level of fire protection required for cooking tenancies than there will a vanilla office tenant.
The following provides a general overview of what's important to insurers across Commercial (office), Retail and Industrial Property during the underwriting process.
Commercial Property Insurance
Commercial Property generally means Office type buildings.
Commercial Property is fairly straightforward to insure compared with Retail and Industrial property, meaning there are multiple insurer options offering competitive rates.
The main areas insurers look out for with Commercial Property are Aluminium Composite Cladding (ACP) and vacancy:
Aluminium Composite Cladding
If a Commercial Property has ACP fitted it’s going to raise a flag with insurers where:
-Its located on the ground floor where fires are more likely to start, especially if there are cafes/restaurants.
-It runs vertically on the exterior of the building allows a faster rate of fire spread versus horizontal.
A large amount of claims are made against vacant property due to damage being caused and going unchecked. When it comes to vacancy, insurers like to see:
-Regular checks carried out ideally every 7 days
-Services (electric/water/gas) are turned off while ensuring alarms are still enabled
Note : this is for buildings that are entirely vacant for extended periods of time e.g. 3 months plus.
Retail Property Insurance
Retail Property includes Shopping Centres and Strip Malls
Retail Property still provides plenty of insurer options however the pricing can differ more compared to Commercial Property.
When it comes to Retail Property, insurers will look at cooking tenancies and layout of the property:
With cooking tenants comes fire risks – more cooking tenants equals more fire risk, help yourself by:
-Ensure tenants carry out professional cleaning including filters, flues and grease traps.
-Making sure adequate safety equipment is fitted including thermostatic cut offs, fire blankets and extinguishers.
Insurers view enclosed centres as higher risk due to access and evacuation, so make sure:
-Evacuation procedures are tried and tested if there is a fire, the public need to escape the building quickly and easily.
-Adequate fire protection sprinklers will help to extinguish a fire in an enclosed space
Note: Public Liability claims are not uncommon in shopping centres, make sure the centre is well maintained to reduce slip/trip claims occurring.
Industrial Property Insurance
Industrial Property includes manufacturing and logistics tenants and their activity impacts insurance more than other property types. Light fabrication type activities are generally fine, while any recycling or flammable goods may limit your insurance options.
Either way, house keeping and tenant best practices will be under the spotlight with insurers for Industrial property:
Tenant really need to keep on top of their general housekeeping, insurers need to see:
-Correct storage of any hazardous/flammable goods meaning AS standard fire lockers or outside of the building.
-Keeping the workplace clean and tidy e.g. regular emptying of bins, not storing wooden crates next to buildings.
Ensure tenants have safe operational practices including:
-Safety processes in place including evacuation procedures and clearly marked, clear walkways for example.
-Storage of stock storage (especially heavy items) over 4m may reduce insurer options, limit the height where possible.
Note: If there are multiple buildings on site, make sure waste is not stored between them as a fire could easily jump from one building to another.