If you are looking for a commercial property owners insurance quote, there are three main ways to go about this.

Firstly, you can phone an online provider, whether this be a broker or a commercial insurer direct.

Secondly, you can visit one of the many websites that state they will compare costs for you.

Thirdly, you can visit your local broker and obtain a quotation face to face.

In addition to these three, there are many different smaller methods such as your bank or mortgage company providing you with a quote.

Whichever of the options that you choose to follow, there will be a differing set of questions asked of you. The reason for this is that ultimately it will be a business insurance company that will provide you with the quote. The different companies all want slightly differing information, depending on their underwriting and risk acceptance criteria.

The main question though, for commercial, industrial or business building insurance is the rebuilding cost. This is the amount of money it would cost, at the inception or start of the policy, to rebuild the property in the event of a catastrophic loss. This is the type of loss, such as fire, where the whole building needs to be reconstructed. This cost, which will ultimately be your sum insured, if you take out a policy. Needs to include the following:-

1) The cost of clearing the site, including demolition of any remaining structure.

2) The cost of rebuilidng any underground, or below ground, foundations. These are normally not destroyed in a fire, but will need replacing.

3) All architects, surveyors, legal, regulatory and professional fees in rebuilding.

This is where you need to make sure that the cost is sufficient. It is not correct to base the rebuilding cost purely on the purchase price or the market value.

The best way is to get a professional valuation, by an approved building valuation surveyor. Althought there is a cost involved, at least you have a yardstick to base your policy on. If there are any problems regarding the sum insured, you will then have comeback on the surveyor.

If you have a business insurance policy, or you have just received a quote, you may be told by the broker that “average” applies to the cover.

You may well wonder what average means and how this affects the insurance. Your policy may contain a clause that is called something along the lines of Reinstatement Basis or Reinstatement Condition. It is one of the standard general definitions of a policy and applies to the vast majority of commercial insurance products. It is more commonly called average and it is extremely important.

An insurer wants to receive the correct premium for the risk they are facing. A 17 year old, male, living in an inner city with a sporty car is going to pay more than a middle aged family man in the country. So, if the 17 year old lies and says he is 47, he will not only get a cheaper premium but he will also have any claims he makes turned down as h has misrepresented the risk to insurers. They do not, and cannot, check on the validity of the information provided at quote stage. This is why you complete a proposal form or accept a statement of fact and this forms the basis of the policy. ie, if you lie the the policy is invalid.

Now think to a commercial policy. If you have a stock holding of £50,000 and you only declare £25,000 to the insurers, you will be underpaying that element of the cover by, say 30-50%. If there is then a loss the insurers will apply the average clause. You under-insured by 50%, so any claims settlement, whatever the amount, is reduced accordingly. So, if a flood destroyed £10,000 of your stock, the insurers would only pay 50%.

The same applies to buildings, with commercial building insurance, you need to declare a re-building or reinstatement cost for the property. If you mis-represent this amount to insurers then any claim will also be reduced.

For example, if your 1,000 square foot warehouse is £200 per square foot to rebuild, you should insure for £200,000 plus 20% for additional fees, costs and a contingency, ie £240,000. If you insured for less than the correct figure, you could face a reduced payment.

The secret is, to get a proper commercial valuation of the rebuilding cost, every 3-5 years. It may cost £2-300, but it reallyis worth it because you are safe in the knowledge that if the figure is wrong you have not only done all you can, you have also got the potential of suing the valuer.

Chances are that if you have a commercial property insurance policy in force, there will be a condition or warranty relating to any non-standard constructed roofs. If your property or properties have a normal pitched roof covered with slates or tiles, then this does not apply. However, if part or all of your roof is flat, then you need to exercise care as to what exactly is, or is not, covered by your policy.

Most policies will provide the usual  range of perils such as storm, flood, fire, theft, burst pipes etc. But, properties that have flat roofs are usually more susceptible to certain types of loss than a traditional roof.

Concrete roofs are not so bad. You do not see many of them nowadays (in new builds) but throughout the 70’s and 80’s this was a popular form of construction because it was quick and sturdy. What insurers are concerned about is flat roofs that can, over time, deteriorate in condition. We are particularly talking about felt or asphalt on top of timber. In the main, this type of construction was used on extensions as opposed to the whole roof on a new build. There are many properties though where the whole property is roofed with felt on timber.

If you are receiving rental income on the property, or you occupy the property yourself (for your trade) then you will have arranged a policy through a business insurance broker. 9 times out of 10, the policy will have been sold based on price. The cheaper the policy though, the more careful you need to look at the conditions and/or warranties.

For example, you may have a standard business insurance policy which has a nice, low, £100 excess. But, if you look carefully, any losses attributable to the flat roof may be subject to a significantly higher excess. £500 is the norm and this can rise to £750. This means that for every loss relating to the flat roof, you will pay a huge chunk of any claim, if not all of it. Also, the policy may state that you need to have the roof inspected every year, or bi-annually, by a competent contractor (ie not yourself) and any defects remedied.

This covers three points. Firstly, the increased excess may make the cheaper policy youhave bought not such a good deal. Secondly, the cost of getting a contractor even to look at a roof can be a few hundred pounds and thirdly, you will need to provide written evidence that you have had the roof inspected within the last twelve months. So you cannot get away from the additional costs.

All in all, it may seem like a good deal to get a cheaper premium, but as we always point out, the devil is in the detail.