As ever, when it comes to insurance you will find that the devil is in the detail especially when it comes to commercial real estate. Thankfully, there are a number of actions that landlords can take to mitigate risks and also maintain their insurance going forward. It is worth noting that this process is ongoing and not just simply a one-off procedure.
Fully understanding tenant activities
In simple terms, if you do not fully understand your tenant’s business then how can you arrange appropriate cover? Therefore, when looking for a potential tenant you need to fully understand what their business entails, the potential risks and perhaps take into account previous properties they may have leased. Where possible, it would also make sense to request a reference although in reality this is not always possible.
It will come as no surprise to learn that kitchen fires are one of the most common risks associated with commercial tenants. In order to not only protect the property and tenants, but also avoid invalidation of your insurance cover, you should ensure:-
- Suitable extraction equipment is installed
- Well-defined cleaning procedures are in place
- Any equipment is installed correctly, maintained and checked on a regular basis
- The tenant operates high standards of housekeeping
- Staff are trained to use the kitchen equipment
While we often hear stories of insurance companies failing to pay out on domestic cover due to various discrepancies or technical issues, the situation is much tougher when it comes to commercial insurance. It is therefore vital that you read the small print in the policy conditions especially when it comes to issues such as commercial kitchens and other business operations where there are fairly obvious risks.
Business continuity
When it comes to business continuity this is fairly straightforward, if the business is unable to use the premises due to an incident such as fire, they may struggle to cover their lease payments. The vast majority of commercial insurance companies will offer assistance with regards to risk management. This ensures that businesses are minimally impacted by incidents such as fire in a kitchen and able to return back to “normal” as soon as possible.
In the event of an incident such as a kitchen fire, the insurance company will also likely undertake a post incident visit to discuss ways in which to reduce the risks going forward and prevent a repeat. For many people this may seem like “locking the stable door after the horse has bolted” but in reality lessons can always be learned and risks reduced.
If you put yourself in the shoes of your insurance company, if for example you continue to have the same type of incidents in your kitchen and fail to learn from previous issues, does this not insinuate a degree of negligence?
Using new technology
It goes without saying that any landlord, whether commercial or private, should undertake a review of their premises at least annually. This will allow any potential issues to be noted and addressed, often leading to significant long term savings.
Modern day commercial premises will often incorporate the latest in building management systems which certainly improve the safety of individuals and the building. However, when it comes to regular reviews such as roof inspections these can prove costly using more traditional methods. Thankfully, rather than erecting often expensive scaffolding and placing individuals at risk while inspecting roofs, many landlords now use drones with high-resolution cameras. These are not just toys!
These high-resolution cameras allow you to inspect a roof for example in minute detail. They are also able to gain access to areas of roofing which may sometimes be difficult via traditional methods. This technology also offers the ability to store camera footage from previous reviews, proving you took action, if they are ever required by your insurance company. There are obviously guidelines and regulations with regards to the use of drones as they must be controlled by suitably qualified pilots.
Legislative changes
It is a reflection of the current legal and regulatory environment that we regularly see changes to legislation with regards to commercial real estate. It is therefore vital to monitor and act on changes in legislation because failure to do so could lead to large fines and even legal action. The vast majority of commercial real estate insurance companies will offer some kind of update service alerting their customers to legislative changes which may impact their business. While for many these emails may seem boring and irrelevant, ignoring that one piece of legislation relevant to your operation could be extremely costly!
Choosing the right insurer for you
When looking at commercial insurance it is vital that you only approach insurance companies that offer tailored products for your particular type of operation. Many insurance companies also offer advice to commercial landlords to ensure their operations are legal – this also prompts the building of a trust factor between the two parties. At the end of the day the insurance company would prefer to keep your business in the long-term therefore, offering general guidance and assistance makes perfect sense for all parties.
One last note, while it can sometimes be tempting to go for the cheapest premiums, as a commercial landlord you do need to balance the reputation and financial standing of the insurance company against the services that they offer. Cheapest is not always best when it comes to insurance!
As ever, when it comes to insurance you will find that the devil is in the detail especially when it comes to commercial real estate. Thankfully, there are a number of actions that landlords can take to mitigate risks and also maintain their insurance going forward. It is worth noting that this process is ongoing and not just simply a one-off procedure.
Fully understanding tenant activities
In simple terms, if you do not fully understand your tenant’s business then how can you arrange appropriate cover? Therefore, when looking for a potential tenant you need to fully understand what their business entails, the potential risks and perhaps take into account previous properties they may have leased. Where possible, it would also make sense to request a reference although in reality this is not always possible.
It will come as no surprise to learn that kitchen fires are one of the most common risks associated with commercial tenants. In order to not only protect the property and tenants, but also avoid invalidation of your insurance cover, you should ensure:-
- Suitable extraction equipment is installed
- Well-defined cleaning procedures are in place
- Any equipment is installed correctly, maintained and checked on a regular basis
- The tenant operates high standards of housekeeping
- Staff are trained to use the kitchen equipment
While we often hear stories of insurance companies failing to pay out on domestic cover due to various discrepancies or technical issues, the situation is much tougher when it comes to commercial insurance. It is therefore vital that you read the small print in the policy conditions especially when it comes to issues such as commercial kitchens and other business operations where there are fairly obvious risks.
Business continuity
When it comes to business continuity this is fairly straightforward, if the business is unable to use the premises due to an incident such as fire, they may struggle to cover their lease payments. The vast majority of commercial insurance companies will offer assistance with regards to risk management. This ensures that businesses are minimally impacted by incidents such as fire in a kitchen and able to return back to “normal” as soon as possible.
In the event of an incident such as a kitchen fire, the insurance company will also likely undertake a post incident visit to discuss ways in which to reduce the risks going forward and prevent a repeat. For many people this may seem like “locking the stable door after the horse has bolted” but in reality lessons can always be learned and risks reduced.
If you put yourself in the shoes of your insurance company, if for example you continue to have the same type of incidents in your kitchen and fail to learn from previous issues, does this not insinuate a degree of negligence?
Using new technology
It goes without saying that any landlord, whether commercial or private, should undertake a review of their premises at least annually. This will allow any potential issues to be noted and addressed, often leading to significant long term savings.
Modern day commercial premises will often incorporate the latest in building management systems which certainly improve the safety of individuals and the building. However, when it comes to regular reviews such as roof inspections these can prove costly using more traditional methods. Thankfully, rather than erecting often expensive scaffolding and placing individuals at risk while inspecting roofs, many landlords now use drones with high-resolution cameras. These are not just toys!
These high-resolution cameras allow you to inspect a roof for example in minute detail. They are also able to gain access to areas of roofing which may sometimes be difficult via traditional methods. This technology also offers the ability to store camera footage from previous reviews, proving you took action, if they are ever required by your insurance company. There are obviously guidelines and regulations with regards to the use of drones as they must be controlled by suitably qualified pilots.
Legislative changes
It is a reflection of the current legal and regulatory environment that we regularly see changes to legislation with regards to commercial real estate. It is therefore vital to monitor and act on changes in legislation because failure to do so could lead to large fines and even legal action. The vast majority of commercial real estate insurance companies will offer some kind of update service alerting their customers to legislative changes which may impact their business. While for many these emails may seem boring and irrelevant, ignoring that one piece of legislation relevant to your operation could be extremely costly!
Choosing the right insurer for you
When looking at commercial insurance it is vital that you only approach insurance companies that offer tailored products for your particular type of operation. Many insurance companies also offer advice to commercial landlords to ensure their operations are legal – this also prompts the building of a trust factor between the two parties. At the end of the day the insurance company would prefer to keep your business in the long-term therefore, offering general guidance and assistance makes perfect sense for all parties.
One last note, while it can sometimes be tempting to go for the cheapest premiums, as a commercial landlord you do need to balance the reputation and financial standing of the insurance company against the services that they offer. Cheapest is not always best when it comes to insurance!
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