Eric Doll, Senior Vice President at Venbrook Insurance Services, specializes in the commercial insurance industry providing insurance services related to running a business. We interviewed him to learn more about commercial property insurance and how it affects our clients.
Eric is a long-time Stance partner and trusted professional in his field. When Stance Commercial Real Estate was first taking roots, Eric and our founder Joe started a networking group. “The idea would be to get to know each other first personally, before we even started doing business together,” Eric says. “It’s been fun to watch (Joe and Heidi) build Stance and turn it into what it is today.”
Now Eric continues to assist our Team and our clients with all things related to commercial insurance policies. Continue reading to see what helpful advice he has to offer.
Minimizing Insurance Costs
The number one question clients will ask when it comes to insurance is, “what will it cost?.” Especially during unpredictable times where the economy fluctuates, having all of the right information is crucial.
“Right now the cost of insurance is historically higher than it’s been in more than a decade,” Eric says. “A lot of my new clients are coming to me saying they’ve experienced an increase and are trying to drive down that cost.”
Eric notes that one of the best ways to minimize the cost of commercial insurance is to control risk. Don’t purchase buildings that will need major repairs in the next couple of years. Look for buildings with new roofs, updated electrical wiring, or are free of other hazards. Location should also be considered. Buildings in extreme weather prone areas may be required to pay additional insurance.
“A couple of the other big things to look for are the coverages themselves. Not all policies are created equal,” Eric says. “You have actual cost value versus replacement costs, and that’s how you value the building itself. The replacement cost is the depreciated value of the building, so if you’re buying a building for $5 million, but it’s depreciated by 25-30% then at the time of you having a claim, you might only receive 60- or 70% of the limited insurance that’s specified in the policy.”
Nuances To Look For
When investing in commercial property, the kind of insurance coverage you plan to purchase may affect your ability to secure a loan. “A lot of times what people don’t realize is if you’re getting a loan, the lender often has requirements for the types of commercial insurance and the coverages that you have,” Eric says. “The lenders dictate what a lot of your insurance is actually going to look like.”
Details ranging from a building’s purpose, to what the building is made of, may affect insurance costs. Concrete is becoming more desirable than other building materials. The purpose of a building all affects premiums. For example, the insurance for an apartment building could be three times as much as the insurance of a multi-million warehouse.
Eric reminds investors and buyers, “If you’re purchasing investment property and it’s your first time in you need to know that insurance cost will vary depending on the type of asset that you were purchasing. “
Buyers Compared To Landlords
Buyers will face different commercial insurance premiums than landlords, which is something to consider for those wanting to move from leasing to owning. Some landlord building insurance providers prefer owner-user plans. Some prefer coverage for landlords only.
In the case of owner-user policies, “the number one thing you really want to make sure of is that in the lease agreement you’re not both covering the building,” Eric says. “A well-worded lease…will make sure that there’s only one policy in place, and that the liability is assumed by the landlord or the tenant or otherwise specified in the agreement.”
“It comes down to the lease agreement and this is where Joe and Heidi can really help with negotiations,” Eric notes. Negotiating a lease or purchasing agreement is always flexible.
The first step is to stay educated as a client, and to partner with a commercial real estate broker you can trust. Our Team at Stance Commercial Real Estate is known for negotiating lease or purchase agreements that perfectly fit our clients needs.
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Have more questions on commercial insurance policies? Contact Eric Doll through Venbrook Insurance Services. Ready to lease or purchase or need more information? Call Joe anytime at (909) 772-1212.