It is your responsibility to keep these new areas fully protected by your insurance coverage and to make sure they meet National Fire Protection Association (NFPA) codes and other safety regulations. The best time to address these requirements is in the early planning stages, well before breaking ground. This article offers guidance on how to prepare for your construction plan review.
Do You Need a Plan Review? Answer These Four Questions
Whether you are adding new space, installing new equipment, or updating your structural features, your commercial property insurance policies must reflect these changes. Business additions and renovations can boost your overall property value, so additional coverage may be necessary to maintain protection against potential losses.
The size and location of the changes and the industry you are part of will determine how much extra coverage you need. If you are in doubt as to whether your project requires a plan review, here are four questions to help you decide.
- Will the renovation project exceed $5 million in individual Total Insurable Value (TIV)? The TIV refers to the total value of the insured’s covered property, including business income values and any other covered property interests.
- Does the size of the new construction exceed 5,000 square feet?
- Does the project involve roof replacements exceeding 10,000 square feet?
- Will major modifications be needed for existing sprinkler protection installations, or will the project require new sprinkler installations?
If you answered yes to any of the above questions, then your commercial property insurance carrier will likely recommend a construction project plan review. The goal of the evaluation is to ensure that the project follows proper steps regarding building and fire codes.
Steps to Follow in the Property Plan Review Process
Here are the basic steps to follow when planning a renovation or new construction project for your business.
- Your team develops the idea for the new project, based on a business need or a desire to grow the business.
- Business leaders approve the project, and your team develops formalized plans.
- You contact Woodruff Sawyer and your property insurance carrier(s) to request a plan review and to find out if any critical changes to your project need to be made before construction begins.
Compliance guidance for fire protection should be at the top of your list. Your carrier will want to ensure the new project meets or exceeds civil, fire alarm, and structural requirements set by the NFPA, the American National Standards Institute (ANSI), and the International Fire Code (IFC).
The IFC specifies regulations to safeguard life and property from fires and explosions. Topics included in the code are:
- General fire safety precautions
- Emergency planning and preparedness
- Fire department access and water supplies
- Fire alarm systems
- Automatic sprinkler systems
- Storage and use of hazardous materials
- Automatic sprinkler systems
- Site safety plan
What Happens Next in the Review Process
Next, your insurance carrier will review your plan and, depending on their available resources, will typically respond to you within two weeks.
The response will include a list of action steps you need to take to bring the project to code or standard for your business occupancy risk. These action items will consist of recommendations for aligning your project with insurance risk control best practices and code requirements.
Your responsibility then is to make any necessary revisions to your construction plans with the project contractor and send them back to your carrier for their further review and comment. If the revised plans meet the carrier’s expectations, you will receive a letter of approval that includes specifics on your additional coverage.
This approval allows you to proceed with your new construction plans or renovations with the peace of mind that you are fully covered.
When Do You Need a Commercial Property Insurance Review?
Planning new construction or renovation project for your business is just one of the circumstances that should prompt you to ask for a review of your property insurance coverage.
Here are other circumstances that may require a comprehensive policy review:
- Purchase of new machinery or equipment
- Significant investments in technology or security
- Expanded product inventory
- Added shifts to your production schedule
- Increased replacement value
Additionally, the overall economy, inflation, labor and material costs, and regional trends can lead to your business being underinsured and, as a result, overexposed. It is essential to schedule an annual review of your business insurance needs to ensure you have adequate protection in place.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.