There’s a large, untapped commercial inspection market out there just waiting for qualified inspectors to fill the void. As an insurance underwriter, a part of your underwriting process when writing coverage for a commercial property is likely having a commercial inspection done to determine the state of the property and to uncover any inherent risks or potential liabilities.
You may have found that finding a qualified commercial property inspector is more difficult than finding an inspector specializing in residential inspections and there are significant differences in these two types. You want to ensure that the inspector you hire is able to do a thorough and reliable job.
Commercial Inspectors vs. Residential Inspectors
Commercial inspections are considered a specialized niche within the residential property or home inspection industry, with important differences between the two. Because a commercial inspection is typically more complicated than a home inspection, it’s also generally riskier for the inspector. While homes may be somewhat different from each other, the degree of variations is minuscule when compared to the differences in commercial occupancies. Depending on the type of business a commercial building may be housing, variations may include:
- Size
- Shape
- Number of structures included
- Features
- Utilities
- Processes being undertaken and more
While a home inspector may perform a commercial inspection, specialized knowledge and skills are needed to do the job properly. Home inspectors follow Standards of Practice. Following these standards is voluntary. Commercial inspectors are guided by the Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process, which was developed by ASTM International (formerly known as the American Society for Testing and Materials). Following these standards is also voluntary.
While following the guidance set out by ASTM International in their ASTM E2018-15 Standard is voluntary, the information contained in this publication should be read and understood by your commercial building inspector. This will ensure that he or she is following accepted industry standards. Information covered in ASTM E2018-15 includes all areas that should be covered in a properly conducted commercial property inspection.
What an Expert Commercial Property Inspection Provides
To accurately underwrite an insurance policy on a commercial property, you need to have a comprehensive understanding of the property’s condition, from top to bottom, and everything in-between. Your inspector should focus on four things during the inspection:
- The condition and life expectancy of the building’s five major systems; the structural integrity, the roof, the electrical system, the plumbing system, and the HVAC system. The inspector will ensure that all these items are in proper working order and, if not, will estimate repair or replacement costs to bring any faulty system up to par. The fire safety system, including the sprinklers, emergency egress, and alarms will also be checked.
- The building’s exterior health will be determined, including exterior walls, the roof, and general structural integrity. Included will be any exterior structures, sidewalks, parking lots, and landscaping. The cost for needed repairs will be estimated. Your inspector may need to bring in outside experts such as those specializing in roofing, construction, or building code compliance.
- The building’s interior spaces will be fully checked, including walls, floors, and ceilings of all areas. Two main purposes of the internal inspection are to verify that all areas meet local building codes and that there are no safety-related risks or hazards apparent.
- Your inspector may request to review any number of documents in an effort to help determine the property’s value and the cost of ownership. These documents may include appraisals, building plans, construction permits, and certificates of occupancy. They may also include environmental studies, surveys, maintenance records, floor plans, and fire safety system records.
The Property Condition Report (PCR)
All inspection findings will be compiled into a final Property Condition Report to be used in conjunction with your property risk analysis to determine whether a policy should be written for this property, in what amount, and at what cost. The PCR should include noted observations with evidence and photos to support all findings. It should also include recommendations for corrective actions if needed, and a cost estimate for any needed repairs.
An ideal setup for you as a property insurance underwriter is to have a qualified, reliable property inspector able to handle both residential and commercial inspections. Such a company is Insurance Risk Services. They’ve been a leader in the property inspection industry for more than four decades and have consistently remained on the cutting edge of the latest property insurance inspection technology developments. They provide invaluable risk analysis services to help make your underwriting job easier and more accurate. Consider taking the opportunity to utilize their available services with both residential and commercial property inspections.
