What is the need of Building Insurance?
After hearing about all kinds of insurance policies out there, you might get to thinking that building insurance is one of the easiest to understand of them all. In fact, you are absolutely right about that, but not for the reasons that you may think of.
First reason why building insurance is easier than others is that the risks for buildings are generally quite well-determined. They are all set up and mainly depend on how the building is built, where it’s located, what the neighborhood looks like and what its intended purpose is. From there, it becomes quite easy to calculate a periodic rate and an insured amount depending on all those factors.
The second reason is that building insurance is somewhat of a general contract. It is the base type of insurance, upon which all other incidental insurance policies are added. For example, you will usually go shopping for building insurance and the agent will tell you “Would you also like to add earthquake insurance on top of it for an extra?” It usually doesn’t happen the other way around.
But, easy as it may seem, building insurance can have its fair share of hassle, especially if you, as buyer, represent a company, and you are talking about a large building. So, in order to make things a bit easier, let’s review some steps that might get your rates lower and your spirits higher.
One, it is important to know what building you are talking about. An evaluation is mandatory not just because the insurance company demands it. It is also important so that you can truly know what you’re going to be facing in the future. Older buildings, for instance, don’t necessarily have higher rates, and newer ones don’t necessarily have lower rates. A solid 19th-century, 20-inch-thick, brick-laid-wall building with a great history of maintenance and with a well thought-out plan for plumbing and electricity will surely be a lot less at risk than a modern prefab building. Evaluate your building the best way that you can and, if you are not a professional in architecture (as most people aren’t), try and get someone who is to help you. This knowledge might save you trouble in the future.
Then, it is really important to know what meteorological phenomenon the building is about to be up against in the area it is located in. A wise shopper should know whether or not there is, for example, a risk of tornadoes, and, if yes, how big it is and how often does it present itself. For reasons that should be obvious to anyone, insurance companies will want to know that as well. Incorrect representation will leave you with many paid rates, a crumbled or severely-damaged building and a legitimate refusal of the insurance claim.
Local habit also plays an important role. Different areas of the world have different laws, making certain provisions mandatory. Know the laws and spend a little time studying the insurance policy market offer before you go shopping. This might save time and money in the future.
It goes without saying that a low crime rate area is better for your policy, although this will apply more towards building contents insurance. Most of the insurance claims are for stolen property in buildings, and few, very few, for intentional damage against the building itself. However, covering your fittings and ornaments as well within your building insurance might offset your costs in case someone decides, for whatever reason, to put a rock through one of your windows. That being said, do not ignore this aspect. Windows and doors are, after all, an part of your building and its usability will depend in them being intact.
As stated before, the building purpose also plays a very important role in insurance. Residential buildings will surely fare better than buildings used as warehouses for flammable material. Cheaper rates will usually be paid by citizens, in opposition to companies, mainly because, in most parts of the world, some form of building insurance is mandatory for companies. And definitely the highest rates will be paid by companies for buildings with the purpose of manufacturing or storing explosives, ongoing experiments or very flammable material, as well as potentially hazardous substances.
Keep all the above in mind when seeking building insurance. And always look for cool extras, such as hazards insurance, earthquake insurance, contents and fittings insurance, and others.