Commercial property insurance is crucial for any business that has a physical location, whether it is an office, a shop, a storage area for goods, and so on. These spaces do not only contain valuable physical assets but are also needed for day-to-day business operations. Commercial property insurance will save your business from loss if your commercial property is subjected to theft, vandalism, fire, and natural disasters.
It is important to understand that not all commercial property insurers are the same. To assist you in choosing the best for your business, this article covers the key things to look for in a commercial property insurer.
Let’s get started!
The Scope of Commercial Property Insurance
Commercial property insurance covers the following:
- Repair or replacement fees if damage (by a covered peril) or vandalism is inflicted to the commercial building/space
- Repair or replacement fees if the equipment within business premises (e.g. electronics, machinery, furniture, etc.) is damaged (by a covered peril), stolen, or vandalized
- Cost of employee possessions and company documents
- Income loss in case of property damage or if the space becomes inaccessible
If you want to learn more about commercial property insurance, check out our blog on what insurance you need for your commercial property.
What to Look For In Commercial Property Insurers
1. Has A Good Background and Ratings
You need a stable commercial property insurer that you can count on. Just by searching for information online, you can find out the following:
- How long they have been doing business- To successfully survive and thrive as an insurance company takes delicate balancing and financial strength. The number of years that the insurance company has been around provides you with an idea of how stable and reliable they are.
- Their values, mission, and vision - As a business owner, you may want to partner with a commercial property insurer with values, mission, and vision that aligns with yours. As two businesses working together, this can be very important in building a long-lasting partnership.
- Whether or not they have community involvement - This is a factor that speaks about the business’s stability as well as its values. Does the commercial property insurer have enough stability and community awareness to engage in activities that bring positive change?
- Customer reviews - Many commercial property insurers would have customer reviews on their websites. This can give you an idea of how well they serve their customers. However, the reviews on a company’s website will tend to focus on positive reviews or those with a positive resolution. For a full picture of what being a customer of a commercial insurance company is really like, you can instead look into third-party review sites or forums.
- Lawsuits - Lawsuits show you how ethical a commercial property insurer is and how well they treat customers, employees, partners, and so on. Understandably, these will likely not be on the insurance company’s website but if you want to do a thorough check of the commercial property insurer that you are choosing, proactively searching for incidents of lawsuits will be helpful.
2. Has A Thorough Understanding of Your Industry
Most commercial insurance providers will have a focus, whether they are targeting a certain size of business, a set of industries, or both. The advantage of choosing a commercial property insurer that focuses on your specific industry is that they will have a better understanding of the risks your business faces.
Furthermore, insurance providers that have a focus on your industry will tend to be more responsive and accommodating because your business falls within their target market. For example, KASE provides insurance coverage for the following industries:
- Hospitality and Lodging
- Security and Protection
- Tech and Media
- And more!
3. Has Reliable Financial Strength
There are a number of factors that indicate the financial strength of an insurance company. In most cases, doing a quick search online won’t give you all of the information below. However, just finding one or two of these will give a better idea of a commercial property insurer’s financial strength and stability. This is a more direct method than extrapolating from just the number of years that the insurer has been around.
Here are the three main financial strength indicators for any commercial insurer:
- Net Income - This represents the total earnings of the insurer. This is calculated by subtracting the total expenses of the insurance company from the total revenue that they made.
- Combined Ratio - The combined ratio of an insurance company is expressed as a percentage. A ratio above 100% means that the company is making underwriting profit. Meanwhile, a ratio that is below 100% indicated that the company is shelling out more in claims than what they receive from premiums.
- Policyholder Surplus - The policyholder surplus gives an idea of how well the commercial property insurer will be able to handle unexpected exponential losses. This is calculated by subtracting the total liabilities of the insurer from its assets.
4. Gives You The Coverage You Need for A Good Price
The coverage limit is the maximum amount that the insurance company can pay for each covered claim. An average business in Canada pays around $83 to $250 per month for a commercial property insurance coverage limit of $1 million.
Generally, the higher the coverage limit for commercial property insurance, the higher the premium is as well. However, aside from the coverage limit, these other factors will also affect the price of your commercial property insurance:
- Geography of location - The commercial property insurer considers this factor to know what environmental risks your property could potentially face. If the area is prone to disasters like tornadoes, earthquakes, landslides, and tsunamis, the premium would increase.
- Safety and security of location and business activities - The commercial property insurer will look into the crime rate of the area, the presence of dangerous/toxic substances, and so on. In addition, the safety of your business activities will also be considered. For instance, mining and demolition can be considered as relatively dangerous business activities and this will also affect the premium.
- Size of business premises - The larger your business premises, the more commercial property insurance will cost.
- The building itself - Because older buildings are more prone to property damage, older buildings tend to get a higher premium.
- The equipment/materials/products to be covered - The more that the equipment/materials/products cost, the higher the premium you are likely to pay the commercial property insurer.
- Replacement value or cash value - These are two main types of commercial property insurance. Replacement value coverage will shoulder all costs when repairs or rebuilding are required. Meanwhile, cash value coverage will pay out the depreciated value of the commercial property. Therefore, if you opt for replacement value coverage, the higher the premium you are likely to pay.
To some extent, determining the best price of commercial property insurance mainly depends on what your business can afford. However, it is recommended that you really look into what cheaper options from commercial property insurers have to offer.
You may be paying less but it may have a decreased coverage limit or has a large number of exclusions. In the long run, when an unforeseen calamity hits, cheaper may not be better.
5. Allows For Easy and Seamless Interactions
Consider how easy it will be to interact with your commercial property insurer. What channels of communication do they offer if you have questions? How available are they when you need them? How easy is it to pay your premiums? Here are a few things to look for:
- An easy-to-use platform for paying premiums
- An easy online claim reporting process
- 24/7 customer service availability
- Social media presence and involvement
Talking to an Insurance Agent or Insurance Broker?
There are a number of factors to consider when choosing the best commercial property insurer for you. Even with your best efforts, some aspects may remain uncertain. This is where insurance experts come in!
However, when talking to an insurance expert, you must know the difference between an insurance agent and an insurance broker and what they can offer.
Insurance agents are generally tied to a specific insurer; therefore, their knowledge and product offerings are tied to that insurer.
Independent insurance brokers, on the other hand, like KASE Insurance, are not tied to an insurer. They can scour through a multitude of options and easily offer you the best option/s for your business.
Award-Winning Commercial Insurance Broker in Toronto
KASE Insurance is a trusted and award-winning commercial insurance broker that provides customized insurance plans for businesses coming from various industries.
We’ve provided end-to-end insurance setup and ongoing assistance for numerous businesses over the years. We’ll be there every step of the way, from premium negotiating to following up on claims.