The Structure of Buildings and the impact on insurance premiums

Investing in new commercial premises is a major financial decision for any business however all too often little or no thought is given to effect that the choice of building materials can have on insurance premiums. Precast concrete has a well proven track record of being the building material of choice where fire risk is a direct threat to life – in apartment / office block developments for example. However in warehouse / factory / agricultural / recycling developments it is often the case that ‘’standard’’ construction materials (steel, timber etc) are chosen without necessarily considering whether or not using more precast concrete in the construction process might in turn reduce long term insurance liabilities. In terms of the potential effect on insurance premiums there are a number of factors to take into account when considering the construction process – 1. Get your underwriter / broker involved as early as possible so that you understand what your premiums / exclusions are likely to be (given your type of business / risk profile / building design) 2. Get your underwriter / broker to list measures that might be implemented during the design process to mitigate the risk of fire and ensure that your design engineer / architects are fully bought into the need to reduce fire risk. This will often be an ongoing process that might involve liaison with other organisations such as the Fire Brigade, Environment Agency, Local Planning Authority. 3. There are often some clear cost benefits which can be weighed up – changing design verses reduced premiums. However precast concrete is generally a much cheaper building material that ‘’standard’’ construction materials so there can be clear business case for using precast concrete wherever possible. 4. Make sure you get final approval for the design from all relevant authorities before presenting to your underwriter / broker. Most importantly your underwriter / broker should be in a position to quote your premiums prior to construction – making sure there are no nasty surprises. Summary Most of the above may seem like common sense but it is all too easy to miss the opportunity to design out / reduce fire risk during the design / planning process. Architects can have their own style / approach and may not fully embrace the use of precast concrete as a construction material. Remember insurance premiums can cripple a company – so if you have the benefit of designing a building from scratch you should take every opportunity to reduce them.