
Crossing Rough Rivers: How Strong Is Your Bridge?
Let’s face it—the past few years, and even as far back as ten, have been tough when it comes to rates in both insurance and reinsurance.
When it comes to determining how insurance companies arrive at rating different type of commercial property, it’s important to determine and understand the various scenarios for rating damage by fire. The main factors to keep in mind are, of course, not only the building’s susceptibility to actual damage but the extent that can be expected.
It may seem next to impossible to determine these things, as there’s no way to determine every single combustible material and how much damage would be sustained. There are just too many factors. However, we can understand the different classes of construction and extent of probable damage when it comes to what the best rate category is for each property.
There are basically six classes of construction that have been established by the Insurance Services Office (ISO) in its Commercial Lines Manual (CLM) for purposes of developing rates for insuring commercial property, based on susceptibility to damage by fire and categorized from least to most fire resistive: Frame; Joisted Masonry; Non-Combustible; Masonry Non-Combustible; Modified Fire Resistive; and Fire Resistive.
There’s a lot to think about and consider for each category when it comes to rating and underwriting, making it imperative to understand everything about the rated commercial property itself, the design and structure, interior and exterior, and event height. Let’s get started with the basics and some examples of each.
Frame buildings (the most expensive to insure with the highest rate per $1000 of insurance)
Joisted Masonry (concrete and brick on the outside and frame inside, up to 6 stories in height)
Non-Combustible (one of the lower premium classifications)
Masonry Non-Combustible (one of the lower premium classifications)
Modified Fire Resistive (one of the lower premium classifications)
Fire Resistive (the lowest premium classification)
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As can be seen, when it comes to insurance, it’s imperative to keep in mind what type of construction risks exist and what the risks are for each, so the correct rates are used for that specific type of building construction. The rate of insurance will be different and dependent on whether frame, joist masonry, fire resistive, etc.
Let’s face it—the past few years, and even as far back as ten, have been tough when it comes to rates in both insurance and reinsurance.
With the hottest temperatures of the season set to arrive within the next few weeks, it is important to for your property manager clients to prepare themselves and their buildings! Extreme heat can stress property management assets beyond their limits.
A customer slips on the wet floor in a strip mall and injures herself, breaking her hip. Is your client prepared for the financial hardship that can ensue from this accident on their property if they do not have a commercial umbrella policy in place?