Commercial property insurance is unavoidable as it is crucial for business risk mitigation. However, it 's always prudent to pay attention to factors that may increase or lower the cost of this coverage to protect the bottom line. From the geographic location and size of your business building to coverage options, several factors can impact your insurance premiums. Here are six of them:
The cost of replacing your business building impacts the cost of insuring it. Generally, the bigger the physical premises, the higher your premiums will be. However, a small high-end office with expensive furnishing, fixtures, and fittings may cost more to insure per square foot than a larger warehouse.
Commercial property insurance premium rates vary by geographic location. In certain cities or states, business or industrial buildings generally cost more to build, replace, and insure than in other locations. Similarly, property insurance costs are usually higher in areas where events like wildfires, earthquakes, or hurricanes occur more frequently.
Often, older buildings are more expensive to insure than newer ones. The systems in these structures, such as wiring and plumbing, are mostly aged and costlier to repair or replace if damaged in a covered event.
Be ready to pay higher premiums to insure any older equipment used for business operations or processes. It 's often harder to repair these assets due to factors like the unavailability of parts. When such equipment breaks down, the only viable remedy is a full replacement rather than repair. Therefore, it may cost more to cover your older machinery with property insurance.
If your business owns heavier or more sophisticated machines, you may pay higher insurance premiums for those too. This might be the case even for modern or newer equipment.
Investing in physical security and safety can help lower your commercial property insurance premiums. Consider features like access control, surveillance, and alarm systems to minimize the risk of intrusion, burglary, and theft of business property, including inventory and office equipment.
Your building 's fire rating impacts insurance costs too. A fire alarm system with smoke detectors is the minimum fire safety standard to avoid higher-than-average coverage costs. However, the interior composition of a structure also matters. For example, wooden workspaces may require more extensive coverage with sprinkler systems to reduce the risk of fire damage. You may be able to negotiate a discount on premiums if your business building is relatively safer.
The type and amount of coverage will determine how much you 'll pay for commercial property insurance annually. Basic coverage types are:
Also, your commercial property insurance costs will increase if you purchase supplemental coverages (riders). These may include:
At Kneller Insurance Agency, we can help minimize your commercial property insurance cost without creating coverage gaps. Contact us today to learn more about selecting the right coverage for your business.
