Thinking of relocating your business? Here’s what you need to know.
“Location, location, location” may be the eternal catch cry of the property industry, however there’s more to consider when deciding where to establish a commercial business.
Proximity to customers, reliability of transport and the impact on your staff are all important considerations when relocating your existing business. So too is the impact the location will have on your insurances.
Unfortunately, most business owners consult an insurance broker to ask this important question only after the lease is signed and the proverbial horse has bolted.
Asking the right questions
Why is it important to consult an insurance broker when moving your business?
JMD Ross has seen many clients experience premium adjustments of more than 40% because of their decision to move to a new location. Key underwriting factors that may impact premium and coverage considerations include:
- Age and construction of building.
- Fire protection.
- Presence of asbestos or EPS.
- High hazard peril area.
- Nature of the occupation of neighbouring businesses.
Most lease agreements require the tenant to pay a portion of the owners insurance costs for their building. If a business owner decides to move from a low-risk property to a high-risk property, they may incur an additional – and most likely unforeseen – insurance burden.
Real world examples
JMD Ross clients that have recently relocated or expanded their operations have experienced increased insurance costs due to:
- Utilisation of storage facilities (even where no EPS is present).
- Logistics operations (unknown type of other items in the facility).
- Asbestos roofs (this is rarely considered and often unseen by the tenant).
- High hazard peril areas (proximity to bushland or remoteness from emergency response providers).
Moving into a premises with an asbestos roof is fraught with complexity from an insurance perspective. Some insurers won’t provide cover if the building has an asbestos roof, forcing the business owner to find a new policy, invariably at less advantageous terms. At the very least, much higher rates will be charged and endorsements applied to minimise cover for any claims involving the roof.
Conversely, property owners need to consider the nature of the tenant’s occupation as businesses that are regarded as higher hazard by insurers will attract increased costs for building insurance.
If you’re a business owner looking to change location, or a property owner with a prospective tenant, seek advice from JMD Ross early to avoid any nasty surprises.
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- John Duncan 0418 976 772 jgduncan@jmdross.com.au
- John Davaine 0413 610 523 jdavaine@jmdross.com.au