As a business or property owner, your commercial insurance in the past has been an item you have yet to have to think a lot about after it renews each year. This is now rapidly and, many times, frustratingly, changing. Many insurance carriers today are “re-underwriting” their entire book of business. You may end up being told your insurance is not going to be renewed for myriad reasons, even though you have not had any claims or are not in a wildfire area, or even for erroneous assumptions on the part of your insurance carrier, leaving you feeling pretty angry and disenchanted, to say the least.
So, where do you go from here?
First, if you have not heard from them already (and I REALLY hope you have), contact your current insurance broker – talk to them ASAP in detail about what they are seeing in the marketplace with businesses or properties like yours. Get a feel from them about what you might encounter for coverage options and increases. ASK them how the process and timing will go and what they will need from you to assist them. Give them ALL of the information they request promptly, even if you think, “They should know this or have this information.” Updated information is needed for them to provide an accurate quote, and it is imperative.
Insurance carriers are inundated with submissions for quotes, and the more thorough the application they receive, the more favorably they will look at your account. Remember, your broker is, or should be, your ally – work WITH them to find solutions.
Second, be aware: we are seeing significant premium increases, even if you stay with the same carrier and your policy is renewed. Brace yourself if you have been non-renewed; some lines of insurance increases have been as high as 40%, especially on property coverage. Increases are guaranteed if your policy cannot be rewritten in the same manner and on the same policy form as it has been written.
Third – look closely at your business, building, and website. THINK like an insurance underwriter:
What services does your website say you offer? Is it accurate? If you are a contractor with a license that is limited to cabinetry work, but the underwriter sees a photo of a beautiful deck you built…. lots of questions will occur or even a refusal to offer a quote. Does your website or a Google search show a clean, well-kept premise and parking lot free hazards or potholes that might concern an underwriter?
Is your building in good condition and free of debris? Is the paint neat and clean, and does the building have “curb appeal”? Have all of the trees, plants, and shrubs been trimmed away from the building to reduce fire hazards? Is there defensible space around the building? Have you “hardened” any of the areas adjacent to your structure, such as brick walkways, or removed the grass, trees, or shrubs? Are there fire extinguishers installed and serviced regularly, and are they tagged with their current expiration date?
Does the building have a sprinkler system? Has a “main drain” test been performed to verify that the system is functioning correctly? As a tenant, ask your landlord for a copy of this test (they are usually performed every 5 years), and as the property owner, be certain you have this test performed every 5 years. Share this with your insurance broker.
Do you have a fire or burglar alarm system? Who is notified in the case of a break-in or fire? If you are utilizing a service company to provide the protection, be sure to ask them for a certificate verifying the presence of the system that you can provide to your insurance broker.
What is the condition of the roof? Do you have records of all of the building updates that have been performed? Has a licensed electrician recently inspected the electrical system, and do they feel it is up to code with no outdated/unsafe electrical panels? Is the building ADA-compliant? What updates have been made to the plumbing? Remember, the insurance carrier will want to know the condition and AGE of the roof, wiring, plumbing, and heating, at a minimum, if the building is over 20 years of age. The building systems must be in excellent/updated condition for an underwriter to view your account favorably or even qualify for coverage. Some insurance carriers even require copies of receipts to verify that repairs and updates have been made, so be sure to retain those in an easily accessible location.
As a landlord – did a qualified attorney prepare your lease(s) for all of your tenants (even if you own the building as an individual and your company is the tenant – your business should be required to have insurance, and you should have a lease) and do you require and collect certificates of insurance from your tenants? Are all of the certificates up to date (with no expired policies)? Do you have a property manager who regularly inspects the premises if you do not do so? If so, tell your insurance broker! Do you know what your tenants are actually doing in their units?
One last note – even if your insurance is renewing “as usual,” it behooves you, as a property or business owner, to keep very accurate records of work and updates performed on your building. If you are a tenant and you know the structure has not been professionally maintained, you may want to ask your landlord to make some updates. Ariel views are now being conducted on many properties. If, for example, it can be determined by an aerial view that a roof is old or in disrepair, your insurance may be canceled!
Try not to fall into this category – be as proactive as possible to keep your building updated.
There are myriad issues to be addressed that impact insurance – the above are just a few.
There ARE solutions for your insurance, even if it feels difficult right now. Be sure to work with an experienced broker who will answer ALL your questions and communicate with you about your options.