Single Policies vs Portfolio
You may have a number of individual portfolios or individual policies for each property. Below are the advantages and disadvantages of both
- More flexibility in choice of insurer /cover
- Claims not all with one insurer therefore the risk of loss is spread
- No common renewal dates
- Buying power diminishes
- Common renewal date
- More flexibility in different types of property
- Increased buying power
- Lack of choice in insurer
- Claims with one insurer any major loss affects premium on all policies
Commercial tenants can come in all shapes, sizes and activities. Make sure you have sufficiently vetted and asked what your tenants activities are.
Dependent on this will depend on the premium and risk your insurers are taking on.
It is also important you check they have sufficient insurance in place, you broker can usually sense check these on your behalf.
What if I lose rent due to fire or flood?
If you have tenants forced to move out due to fire or flood then you can usually claim for any lost rent whilst your proper is being restored to normality.
The key is to make sure you have updated your rents sums insured. If you have a lot of properties you may need to just do a one off exercise then index link the rents to increase with inflation each year to take the pain out of calculating these, then review every 3 years to ensure they are not escalating beyond market conditions.
Check your lease
Check your lease to see what is and isn’t included for your tenants. If it is a full repairing and insuring lease make sure they have noted the interest of you the property owner or and lender who has a mortgage against the property.
What happens if I have sandwich panels / composite panels on my building?
Check if you have any composite panels on your buildings.
Composite panels are cheaper, lightweight and an easy way to construct a commercial property.
However there are some serious implications when looking at your insurance exposures.
We have seen in recent times that some composite panels do very little to contain fire with some causing exponential damage and make it dangerous for emergency services to deal with.
As such it is one of the most important material facts to disclose to your insurers so that if the worst happens they have been made fully aware of their exposures. Whilst this could increase the premium it is better than having a claim dismissed and receiving no payment if your building burns down.
What if I have residential properties on my portfolio?
Usually residential portfolios are kept separate to commercial portfolios however there are a couple of scenarios where you can have residential properties on a commercial insurance portfolio.
1. Mixed Use – if you have say a row of shops with flats above them then you can insure these as part of the overall portfolio.
2. Small Percentage – if you have a large portfolio and need to include a couple of residential properties on the portfolio then your insurer will usually be flexible and allow you to include these on one policy.
Trouble at t’mill
If you own a mill or a part of a mill then you will know it can be a tricky place to insure especially when it is a multi-tenanted mill.
The good news is as a Burnley firm we know a thing or two about mills insuring some the areas most prestigious buildings here are a few things to look out for when arranging your mill insurance.
If you have a multi – tenanted building then this increases the risk to the insurer as such it is often better to have similar trades renting the spaces as this will make it easier for the insurer to understand the risks they face when insuring the building.
If some parts of your building are unoccupied this is usually fine as long as its not continual long periods and only represents up to 30-40% of the building. Obviously the lower the percentage the easier it is to find cover.
What value should I note as the building sums insured?
Insurance documentation is confusing even more so with property sums insured. You will normally have two values listed on your policy
1. Declared Value – the actual rebuild value of the property NOT the market value.
2. Day One Value – This is the rebuild value of the property with an additional percentage to take into consideration inflation adjusted costs throughout the policy year, so if costs of rebuild increase then you don’t need to worry as insurers have inflated your cover automatically.
You should always get a RICS approved valuation to ensure you have the correct valuation.
Did you know you can obtain this from as little as £150 from a virtual RICS (https://www.rics.org/uk/) building surveyor? Blending technology with traditional methods they are able to obtain accurate RICS valuation which is the only one insurers will approve.
This gives you a cost-effective way in which to obtain a true rebuild value of your policy then for peace of mind you can index link this to increase with inflation and review every 3 years to make sure it is in line with market movements.