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Recommissioning Keeps Mechanical Systems In Check Upgrades Should be Reflected in Lower Insurance Premiums
September, 2007
By Ron Dawczyk
Lower insurance premiums benefit everyone - even insurance companies.
Insurers base their premiums on the risks involved. To do this, they evaluate the situation to determine the risks or potential for loss. Based on the results, the insurer decides whether to assume the risk and, if so, at what rate. Thus, the lower-risk client is the preferred client.
Lowering risks will not only help safeguard properties, but also improve eligibility for lower insurance rates. Here are some of the more obvious details to consider:
* Install and maintain high-efficiency mechanical equipment such as boilers, chillers and control systems.
* Maintain adequate lighting throughout the premises, for security and safety purposes.
* Keep electrical wiring, plumbing, stairways, carpeting, flooring, roofing, elevators and escalators in good repair.
* Install and maintain sprinkler systems, smoke and fire alarms and adequate security devices..
* Raise the deductible, where appropriate, to lower the premiums. Choice of deductible should be governed by how much you can afford to pay out-of-pocket should you have a claim.
Upgrading boilers, chillers, pumps, associated piping, control systems and venting can save money in many ways. Insurance companies will view mechanical upgrades as lowering risk potential. As a result, premiums may be lower. The added benefits are:
* With new, properly sized high-efficiency boilers, energy consumption will be lower.
* There are many cash incentives available in the form of rebates for mechanical upgrades that lower energy consumption.
* Proper control systems ensure boilers and chillers run only when absolutely necessary.
* Potential buyers will find the property more attractive.
GREEN GAINS
A building design approach known as "LEED" is quickly gaining momentum in North America. The LEED(tm) (Leadership in Energy and Environmental Design) green building rating system was originally developed by the U.S. Green Building Council (USGBC) to provide a recognized standard for the construction industry to assess the environmental sustainability of building designs. The Canada Green Building Council (CaGBC) has since adapted the USGBC LEED(tm) rating system to the specific concerns and requirements of buildings in Canada.
Energy efficiency is an important part of this strategy. Points are scored when a building reduces energy consumption, uses renewable energy, eliminates ozone-depleting chemicals, and when commissioning with periodic re-commissioning of building systems occurs.
Periodic re-commissioning is gaining popularity because, over the course of time, changes are made to the mechanical systems that alter them to the point were they no longer perform as designed. Re-commissioning will maintain your building at peak operating efficiency.
Last October, Fireman's Fund Insurance Co. made waves in the green building market when it offered a 5% discount to property insurance rates for commercial buildings that are LEED certified. "Green building properties are attractive to insurers because there's less risk in a building that is constructed with products and systems so state-of-the-art that they lower operating costs, increase resale [appraisal] values, create a healthier working/living environment, and provide an opportunity for greater worker productivity," Steve Bushnell, Product Director with the Fireman's Fund USA, announced.
When performing capital projects, property owners and managers may want to consider green building strategies as a method of lowering future insurance premiums. Sometimes it pays to be ahead of the curve.
RISK FACTORS
All insurance premiums reflect how insurance companies assess the risks involved for a particular property. Some of the risk factors insurers consider include:
* type of heating in the building
* type of cooling in the building
* type and condition of electrical wiring
* type and condition of plumbing
* fire protection equipment
* distance from other buildings
* lack of private and public safety features
* lack of occupancy
* location of the property
* condition of the property
* experience of the property owners
* type of security in place
* The number of previous insurance claims.
If you have not experienced a decrease in premiums over the last couple of years, it could be time to ask yourself some of these questions. Am I giving my business to an insurance company that is responsive to positive changes, or am I staying with the same company because I perceive it has my best interests at heart? Have I invested in my properties to lower the risks, as well as lowering energy consumption while adding to the property value? Have I informed my insurance carrier about the positive changes made to my properties?
Ron Dawczyk is the Mechanical Services Manager at Shewfelt (Mechanical) Construction, specializing in heating, cooling, electrical, plumbing, CCTV and security systems. For more information, see the web site at www.shewfelt.com
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