Insuring Post-Frame Buildings

Insurance can be costly,and should be a consideration when selecting a construction method.

Insurance for buildings can be costly, and should be a major consideration when choosing a construction method. This is particularly the case in commercial structures.

The insurance industry uses the following criteria to evaluate the loss potential of buildings:

  • Occupancy load (type of business)
  • Exposure (possible risk of loss)
  • Construction type (wood, steel, or concrete)
  • Special hazards
  • Protection (sprinklers, fire alarms, etc.)

Occupancy loads and exposure are the two primary decision considerations for insurance companies because these factors in particular influence the risk of loss.

The construction type (post frame, steel frame, etc.) portion of the rate does not typically vary by more than 5% from the most combustible to the least combustible designation for larger commercial/industrial buildings.

This is based on research performed in the Midwest.

Bert Cohn Associates, Inc., 1992, “Insurance Rate Comparison for Selected States, Tentatives and Lost Cost Basis Rates.” Prepared from Specific Commercial Property Evaluations Schedule, July 1990 Edition, by ISO Commercial Risk Services, Inc. Compilation and graphics by Bert Cohn Associates.

In addition, buildings of three stories or less are often underwritten using a global, or class rate, system that does not differentiate by construction type.

Increased building protection from sprinklers, periodic security checks, fire alarms connected to the fire department, and other safety elements, can dramatically lower insurance rates because of the reduced possibility of large fire losses. The inclusion of fire detection and protection systems in a building’s design is most helpful to get the lowest possible insurance rates.

Insurance ratings are often building-specific. They are based primarily on the statistical loss experience and loss severity of the building type as it pertains to a specific geographic region. In some cases, insurance companies will use loss statistics compiled by the global Insurance Services Office (ISO). In other cases, insurers use their own loss experience data. Both factors can influence the final quoted insurance rate.

All of this means the cost of insuring a post-frame building should be comparable to the cost of insuring a steel-frame building. The key to getting the very best insurance rate is to solicit bids from several insurance brokers who use different insurance companies.