Are you interested in commercial property investment? You'll need to factor in the commercial property insurance cost along with other essentials. Let’s discuss some of these factors here.
Here are the most important factors that affect the cost of commercial property insurance.
One of the main factors that impact commercial property insurance costs is the size of the property. It's the same way with home insurance, in which property size sets the parameters for the overall cost per square foot. In some cases, large warehouses can get deals on square footage costs compared with smaller buildings.
Where is the business located? If it's in an area with high crime, expect to pay more each month for your premium compared with if the business were located in a low-crime rate zip code. Additionally, the state where the business is located can affect your insurance rate since the state oversees insurance regulations. The city where your business is located can also impact your premium.
The older an old building gets, the more safety and financial risks it poses. Insurance companies have learned from decades of experience that old buildings don't just collapse mysteriously. Every construction material has a certain lifespan, such as a roof generally lasts 10 to 50 years, depending on the quality and maintenance. The older a building gets, the more you can expect to pay for coverage.
Old equipment also poses safety and financial risks, which insurers are well aware of. That means the closer your equipment gets to its end-of-life stage, the more you can expect to pay for insurance. At the same time, you will likely also pay more if you invest in newer heavy-duty equipment.
An insurer may lower your premium if you take proactive steps to improve the security and safety of your operation. That means investing in equipment such as alarm systems, video surveillance cameras, and bright lighting at night. Ask your insurer if such an investment that lowers risks will also lower your monthly bills.
Before deciding on a commercial property investment, explore your insurance coverage options. If you choose replacement coverage, you will likely pay more each month. Instead of replacing the item based on current market value, another option is actual cash value (ACV). This option costs less, as it subtracts depreciation from the value of the insured item based on its age.
Here are some of the many different types of options you can add to a standard commercial property insurance plan:
Investing in commercial property has many complicated areas to explore. Getting help from experienced insurance experts makes it easier in the long term. Contact us here at Graystone Insurance Group for more information on getting the right coverage plan and how to adjust your commercial property insurance cost.
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