Building insurance is a product that offers insurance cover to residential and commercial buildings. Specifically, owners can buy this policy to protect their buildings from risks due to fires or natural disasters, explosions, burglaries, etc. Let’s find how to minimse the premium of building insurance.
Tips to lower initial premium on building insurance
The premium for building insurance depends on various factors. And there are some steps you can take to minimize your building insurance premium.
Do not over-insure
When buying building insurance, you should insure only for the amount likely to be required to rebuild the following damage. This will generally be less than the purchase value or the original construction cost of the building. So, do not overestimate the insurance amount.
Be realistic about coverage
You should be realistic about the add-ons you want in addition to the basic plan. For instance, if rent is not your main source of income, is loss of rent an add-on you want to spend on? This is something you should consider if you want to lower your premium.
Explore various options
Try to contact as many insurance providers as you can before selecting one. This will help you choose the most cost-efficient insurance provider. In fact, one way to assess your options is to take the help of an experienced insurance broker such as SecureNow.
Use multiple insurers if needed
Often, you might need to buy office insurance along with building insurance to protect your business as well as the physical structure that houses it. In such cases, it might be cheaper to buy each of these insurance policies from different providers.
Keeping renewal premiums low
The premiums for any insurance are cheaper if you buy it for multiple years or pay annually for 12-month policies.
Of course, this is not something you have much control over, but if you have not made any claims in the past year, your premiums could be lower. Thus, in the absence of past claims, you are likely to get good discounts on your renewal premium.
You can select insurance with a higher excess or deductible. This can save you some money on renewal premiums. However, a higher excess does increase your claim cost.
Precautions that can help
Some security and maintenance measures can help you reduce the premium on your building insurance. These include
- installing burglar alarms and security locks on windows and doors;
- appointing sufficient security personnel;
- fireproofing the building and installing water sprinklers and fire extinguishers;
- using insulated water pipes; and
- protecting against potential flooding.
Case study: Steps to lower building insurance premium
Mr. Pereira recently built a shopping mall which has individual spaces that can be given on rent. Then, he decided to buy insurance cover for the building. Mr. Pereira has a friend, Neal, who has been constructing and renting commercial properties for over 15 years. So, he also has considerable experience insuring commercial buildings.
Neal pointed out that Mr. Pereira only needed to insure the building, and his tenants would be responsible for insuring their office contents. Additionally, he offered Mr. Pereira a few suggestions to help lower the premium on building insurance:
- Contact at least 10 insurance providers to get their quotes and check the cover they provide. This helps fix a cost-effective insurance provider.
- Obtain a cost estimate for rebuilding by taking professional help to avoid a higher insurance amount.
- Highlight good claim history with no claims in the past, which could lead to some discounts.
- Obtain a fire safety clearance certificate from the fire department and install necessary fire safety equipment at designated places. Also, inform the insurance provider of all safety measures taken to minimize risks.
- Pay a single premium for multi-year insurance to get the best discounts.
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