With foot traffic down and remodeling needed to accommodate social distancing, commercial renovations are on the rise.
A shining star has emerged from the unfortunate performance of construction during COVID-19: commercial property renovations. With foot traffic down and buildings closed, business owners and landlords are completing long-awaited renovations or remodeling to accommodate social-distancing requirements. Hospital and medical renovations have also increased, as have highway and infrastructure projects.
For commercial insurance agents, this is an excellent time to review clients' liability, property, and workers compensation coverages, as well as identify needs for prospects who may be remodeling.
Top of your list should be a commercial builders risk policy. Builders risk protects a person's or organization's insurable interest in materials, fixtures and equipment to be installed during the construction or renovation of a building or structure. Typically, it covers physical loss or damage from theft, vandalism, fire, materials in transit, backup of sewers, flood and earthquake. After a covered loss, it may also pay additional soft costs and business income, loss of rent and extra expenses due to a project's delay.
Here are some other tips to consider as your clients take on commercial construction:
- Contractors and subcontractors should carry inland marine insurance, which covers products, tools and equipment in transit or stored off-site. Commercial property insurance only covers losses at the location listed on the policy, so you will need to add this protection.
- Contractors may also need standalone coverage or an endorsement on their existing commercial liability policy for construction equipment they lease or borrow.
- Trade contractors, such as plumbers, electricians and carpenters, may need installation floater coverage to protect their materials or inventory when in transit or in temporary storage.
- Business owners may need additional insurance coverage too. Will the renovation add value to their property? Are there materials, equipment or contents that need to be insured separately? Do they need increased liability coverage for their operation?
- Make sure contractor clients are covered under workers comp and their employees are classified properly. Excavation work and roofing could increase their rates.
- It's highly likely more than one of your clients will come to you after construction begins. Make yourself familiar with those insurers who are willing to cover a project that's already in progress.
- Supply chain disruptions, labor shortages, health and safety concerns, and funding challenges can delay completions. Your client could even find that obtaining a permit or inspection puts them behind schedule. Anticipate that projects may take longer than expected, know the renewal or policy extension options in advance, and factor them into the policy recommendation you make.
The pandemic has created an unexpected set of challenges, but it also has opened the door for a new perspective. There's no better time than the present to connect with your clients to review their evolving insurance needs.
Alan Ferguson, president of US Assure, leads corporate strategy and the day-to-day operational decisions for the company. US Assure exclusively distributes, underwrites and services Zurich's builders risk insurance program across the U.S.