Insurance Risk Survey
Understanding Insurance Risk Surveys
Insurance Risk Survey
Understanding Insurance Risk Surveys
What is an Insurance Risk Survey?
An insurance risk inspection report is a detailed document prepared by an insurance company or a third-party professional that assesses the potential risks associated with insuring property.
What is the purpose of an Insurance Risk Survey?
The goal of an insurance risk inspection report is to provide a comprehensive overview of the potential risks of the property that is being insured. For the occupier of the property that is being suveyed, the report can highlight areas for improvement to reduce risk and, potentially, insurance costs.
What information does an insurance risk survey contain?
Information About The Property Use
Information on the property use such as occupancy details, business activities, hours of operations, employee details
Safety and Compliance
Evaluation of safety measures, security systems, and compliance with relevant regulations.
Photographs
Visual evidence supporting the risk assessment, such as pictures of the property, equipment, or diagrams illustrating specific concerns.
Risk Management Recommendation
Suggestions for mitigating identified risks, improving safety, and enhancing compliance. This could involve repairs, improvements, or changes in practices.
Inspection Summary
A summary of the findings, including an overall risk rating or grade.
Why would an insurer request a survey?
A risk survey inspection report is vital for insurance companies to effectively manage and lessen risks. It allows them to offer coverage at competitive prices that truly match the policyholder’s actual risk level.
An insurer would request a risk survey inspection report before offering insurance cover to a client for several critical reasons:
Risk Assessment
The primary purpose of the report is to assess the level of risk associated with insuring the client or property.
To assist with Premium Calculation
The findings from the report are crucial in determining the insurance premium. Properties or clients with higher risk levels are typically charged higher premiums to compensate for the increased likelihood of claims.
To determine what cover can be offered
The specifics of the insurance coverage, including exclusions and limits, can be tailored based on the risk profile identified in the inspection report.
How much does an insurance survey inspection cost?
The cost of a risk survey inspection report can vary widely based on several factors, including the type of property or business being inspected, the complexity of the risk assessment, the location, and the specific requirements of the insurance company.
Size and Type of Property or Business
Inspection fees tend to be higher for larger properties or businesses because they require more time and effort for a thorough risk assessment. Additionally, the type of property or business, whether it’s industrial, commercial, or residential, can influence the cost.
Location of the property
The location of a property or business can affect inspection costs, as remote or hard-to-reach areas might lead to higher prices because of the travel time and expenses involved.
To give you a rough idea, for residential properties, a basic inspection might start in the range of a few hundred dollars, whereas more detailed assessments for commercial properties or complex risks could run into the thousands. It’s important to note that these are very general estimates, and the actual cost can only be accurately determined after the specifics of the inspection job are known.
Insurance companies sometimes cover the cost of these inspections as part of the underwriting process, but in other cases, the property owner or business may be responsible for the cost.
REAL LIFE EXAMPLES
Risk Survey Requested by Insurer
The insurer for this business in question requested that a risk survey inspection to be conducted of the premise.
Risk Survey Conducted
The inspection was conducted by a licensed inspector who provided a detailed report highlighting key areas of concern.
Results
Based on the report’s recommendations, the business would need to make some improvements including:
– Upgrading the electrical system to meet current safety standards.
– Installing a modern fire suppression system.
– Improving the storage practices for hazardous materials.
– Implementing a routine maintenance and safety inspection schedule.
Action Taken by the insured
With the improvements that were recommended, the business approached several insurers, including their existing insurer, to obtain new insurance quotes. The risk improvements were well-documented, allowing the business to demonstrate a significantly reduced risk profile.
Outcome
As a result of the risk mitigation measures implemented, the business received several insurance quotes that were substantially lower than their previous premiums. Ultimately, they chose a new insurer that offered comprehensive coverage at a significantly reduced rate.
This example illustrates how conducting a risk survey and acting on its recommendations can lead to tangible improvements in safety and compliance, which in turn can lead to more favorable insurance terms. Insurers are more likely to offer competitive premiums when they can verify that a business has taken steps to minimise risks, thereby reducing the likelihood of a claim.
