Navigating Commercial Property Insurance: Strategies to reduce insurance cost and alleviate your cash flow.
In recent times, the topic of commercial property insurance has become increasingly prevalent, with notable rises in insurance premiums capturing the attention of property owners and tenants. As insurance costs continue to rise, finding ways to optimise coverage while simultaneously reducing premium increases has become essential for protecting investments and maintaining profitability. Here are some actionable strategies to consider:
Review Coverage & Inflationary Adjustments: Periodically review insurance coverage options with a qualified broker to identify cost-saving opportunities. Adjusting coverage limits or excess deductibles may reduce premium increases. Reviewing the inflationary component of the reinstatement value can also prevent over-insuring your assets and minimise premium increases.
Complete a Comprehensive Tender Process: Despite a good relationship with an existing broker, it's prudent to benchmark insurance terms and costs with other underwriters. Conducting a comprehensive tender process ensures fair value and may lead to lower premiums, mitigating the likelihood of continued cost increases.
Manage Insurance Payment Terms: Managing cash flow around insurance renewal time can be challenging, especially when owning multiple assets. Consider re-charging insurance invoices separately from monthly operating expenses as a solution. Although this may be un-popular with tenants, standard ADLS lease agreements allow landlords to request payment on demand, providing flexibility in managing cash flow.
Implement Loss Prevention Programs: Demonstrating proactive management to insurers can help reduce premiums and curb increases. Regular inspections ensure tenants comply with fire safety regulations, maintain up-to-date disaster response plans, and complete common maintenance tasks like gutter cleaning and roof washing to mitigate damage during adverse events.
At Insight Equity, we are committed to providing comprehensive property management solutions that prioritise risk mitigation and insurance optimisation. Our team can assist you in implementing effective property management practices to reduce insurance costs and maximise property value.
