What Factors Influence the Cost of Commercial Property Insurance? 

Commercial property insurance protects landlords who rent out their property for commercial purposes. This type of insurance policy is required due to the wide range of costly incidents that can occur when you allow another party to occupy the commercial property, such as a steel structure or barn.

This coverage is also known as commercial landlords’ insurance. To obtain this type of insurance, the lessor must enter into a formal rental agreement with its tenant, naming itself as the lessor and the occupying organization as the tenant.

For around 300 years, insurance underwriters have used four factors to determine what your premiums for commercial property insurance are, and we’ll go over these four factors, which you can remember in a simple acronym called cope C-O-P-E, which stands for CONSTRUCTION, OCCUPANCY, PROTECTION, and EXPOSURE.

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1 – Construction   

Construction is primarily determined by the building materials used, as well as the size and age of the structure. The building materials influence the building’s flammability or combustibility, as well as its durability. For example, if your building is made of flammable materials, such as wood-frame construction, i.e., you have four walls, a roof, and floors that are all made of wood and are all flammable, you will pay more for commercial property insurance than if your building has four walls, a roof, and a floor that are all made of masonry, stone, steel, or a combination of non-combustible materials.

The size of your building is the second consideration. The larger the structure, the higher the cost of property insurance. And also the age of your building, for example, when your building was last updated, is it a 100-year-old building where the major electrical or mechanical systems have never been updated, if that’s the case, you’ll pay more for commercial property insurance than if you had a newer building with newer mechanical systems that were all up to code, and so those are important factors for the first part of the acronym C for Construction.

the Cost of Commercial Property Insurance

2 – Occupancy 

Occupancy refers to your activities in the building, including what you do and how you manage the risks associated with those activities. For example, if you have an office building where there isn’t a lot going on and people are just sitting behind desks or in meeting rooms and doing knowledge work, whatever you want to call it, and there aren’t a lot of risks, you’ll pay less for your property insurance than if you had a body shop or a manufacturing plant where a lot is going on, maybe some type of operation where there’s a chemical mess, and you’re using flammable materials in,  you’ll pay more for those operations than you would for an office building, school, or similar structure.

What Factors Influence the Cost of Commercial Property Insurance

3 – Protection  

Protection has to do with what kind of alarms or security systems you have in the building, such as a fire alarm, burglar alarm, fire extinguishers, sprinkler system, what protections you have in the building to protect it in the event of a problem, such as if you’re in an area where the fire service is reputable, such as a fire department that’s highly rated by your state’s insurance commissioner, all of these are factors that insurance underwriters will look at.

Commercial Property Insurance cost

4 – Exposure 

Exposure and this is the one you have the least control over, but your exposure is determined by your geographical location, how close your building is to a forest fire area, a coastal area, a high wind area, a flood zone, or to another building if you have a low-risk building if your activities are low risk, but your building is next to something that would be considered high risk, you will pay more for your commercial property insurance than if you were not next to that high risk.

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Independent advice by approachable staff online or by phone

Access to a wide range of insurers to source suitable insurance cover for your needs

Bespoke Insurance Schemes & Portfolio Policies available

We can tailor your policy to suit your exact needs to give you complete peace of mind

Competitive Premiums

Cover available for the buildings while the property is being converted, renovated or extended

Over 40 years experience working with the best insurers in the UK

Excellent communication so that you understand what risks you are insured against

Why choose the Property Insurance Centre

Independent broker with staff you can speak to by phone or online

Access to a wide range of insurers to source suitable insurance cover for your needs

Bespoke Insurance Schemes & Portfolio Policies available

We can tailor your policy to suit your exact needs to give you complete peace of mind

Competitive Premiums

Cover available for the buildings while the property is being converted, renovated or extended

Over 40 years experience working with the best insurers in the UK

Excellent communication so that you understand what risks you are insured against

Why choose the Property Insurance Centre

Independent broker with staff you can speak to by phone or online

Access to a wide range of insurers to source suitable insurance cover for your needs

Bespoke Insurance Schemes & Portfolio Policies available

We can tailor your policy to suit your exact needs to give you complete peace of mind

Competitive Premiums

Cover available for the buildings while the property is being converted, renovated or extended

Over 40 years experience working with the best insurers in the UK

Excellent communication so that you understand what risks you are insured against

Specialists in Commercial & Residential Insurance

We have over 40 years experience as Residential and Commercial Insurance Brokers. We find the right policy to suit your needs and understand the risks that a property owner can face in the course of ownership. We work closely with our Insurers to get the best rates and our experience and excellent relationships with them mean that we can provide cover for even the most difficult to place risks.

Whether you have an adverse claims history, a high value property or a large portfolio of properties, we can source suitable cover for you. Whatever your requirements, we can tailor a specialist property insurance policy to suit your exact needs and provide you with a range of quotes to choose from. Established in 1976, we are not a call centre but a specialist insurance broker with a traditional office mentality, where the client comes first.

Looking for a quote now? Give us a call on 0800 085 3761 or complete one of our quote request forms.

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