We have many customers that are commercial property investors. They are conscious of the age of the building, craftsmanship, and the profit margins that can be made. They spend much time in the evaluating of the property and the costs to bring the building up to current standards. In the time that is spent, they avoid a very important component, who is residing in the building?
The company that is leasing the property space is an important consideration in the rating of the insurance premium. The building may have been built to the highest of standards and is maintained to perfection, but the commercial property investor insurance premium can be high because of the work that is performed inside the building. Insurance companies not only look at the building, but also want to know its occupants when considering premium or insurability. There are a few things to consider when buying an occupied building or in the process of leasing commercial space.
Hazards
There are certain products that are considered high hazard. The materials that insurance carriers look adversely on are wood, plastics, flammable chemicals, and dust. These are more, but these are the highest of concern. These are products that you should take into consideration when leasing your space to a prospective tenant. Your insurance premium will be directly affected because these products are located in your building.
Code
Take the time to make sure that your tenant has sufficiently brought their space up to code. Make sure the machinery, exhaust systems, and their written production process is of the highest standards.
Best in class
Insurance companies will be willing to insure a high risk property or give a more favorable rate, if the property is the best in its class. Best in class can encompass many characteristics. The most important is that all potential incidents are addressed and have procedures in place to avoid. There may be a large hazard present, but if the insured has done all in their power to control this hazard, it has greatly lessoned the chances of an incident.
Profit margin is the driver in investing in commercial space. Insurance is a large piece that can cut into your margins. Be aware of the factors that contribute to your premium, and do all you can to control them.
