Factors Determining Commercial Property Insurance Rates
Property insurance coverage is one of the most basic and most important insurance needs of businesses. This is because it protects the most vital part of your business operations – your business properties. Here are some of the factors that will determine how much you pay for your property insurance.
Construction
This refers to the design of the building as well as the materials used to construct it. The construction is important because some materials or building designs are more susceptible to damage than others. For example, frame buildings that are constructed with wood or other combustible materials are more likely to get damaged in a fire than steel frame buildings reinforced with concrete. Another example is flat-roofed buildings that experience more water damage than sloping roofs.
Location and Geography
The location of your property also influences the type and extent of risks it faces on a daily basis. Some areas face higher vandalism, flooding, tornado or fire risks than other areas and insurance and these risks must be taken into account when determining insurance rates. For example, a restaurant located near woodland with a history of wildfires will be considered at a high risk of fire damage, especially if the nearest fire department isn't exactly close by.
Occupancy
In this context, occupancy refers to the use of the property or the nature of your business. As you can imagine, this is also a key factor here because the nature of your business operations also determines the risks the building face on a daily basis. For example, a restaurant that faces higher risks of fire damage than a law firm because of the restaurant's cooking business.
Age of building
The insurance carrier will also consider how long the building has been in existence since it was constructed. The age of the building is important because many buildings weaken as they age, exposing them to more risks. For example, an aging roof is more likely to experience wind damage than a newly constructed property. Not only that, but damaged aging buildings may also need to be brought up to code during reconstruction, which increases the reconstruction costs.
Public Protection
This refers to the measures that the government has in place to protect businesses or residents in your area of operation. For example, the insurance carrier will evaluate the typical response time and capacity of the local fire department. It may also consider the measures taken to prevent local water bodies from flooding.
Contact your local commercial insurance service for more information and assistance.
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