Do you need to shop for building insurance? Commercial property insurance is complex. As a result, you’ll want to look for a broker who specializes in real estate insurance. Your broker should support you year-round as an active advocate, helping you get the best value.
Of course, the more you know about the process, the better equipped you’ll be to choose the right partner – and the right policy.
Before you shop . . .
Collect the following information when you start to shop for building insurance:
- Declaration pages from your current policy
- Loss-run reports from your current carrier, dating back at least three years
- Detailed information on any claims filed during the loss-run period
- Information about the building: year built, square footage, construction type, number of units, number of floors, etc.
Once you have bids in hand, you’ll want to compare the coverage and pricing. Cost is important, but so is adequate protection. Some things to look for include the following:
- Insurance carrier rating. This rating assesses the ability of a carrier to pay its financial obligations (e.g., claims). The broker should provide this information. You can also find it online.
- Exclusions. What losses are excluded by the policy? You’ll want a policy that includes Special Form Coverage, rather than Basic or Broad Form Coverage. Special Form Coverage includes all perils except for those specifically excluded, while the other two only cover those perils that are listed.
- Valuation method. How does the policy establish the value of insured property in a loss? Actual cash value (ACV) pays claims based on the depreciated value of an asset, while replacement cost value (RCV) means that the claim will repair or replace the damaged property without deducting depreciation. (Hint: Go for replacement cost coverage.)
- Coverage gaps. In addition to property and liability insurance, you’ll want to make sure you have adequate protection for common perils, such as loss of rent, sewer backup, directors and officers liability (D&O), flood, earthquake, and boiler and machinery breakdown. In New York City, ordinance or law coverage is a good idea; this protection provides additional funds to bring an older building into compliance with current construction codes.
For more guidance in shopping for commercial insurance coverage, download our free insurance planner.