Asia Commercial Property Insurance Beyond the Premium
A cheaper property insurance renewal can hide a bigger deductible or narrower cover. Here is what Asian business owners should compare before celebrating the saving and accepting the quote.
A cheaper renewal quote is good news for your budget. It becomes less exciting if the deductible has quietly increased.
When comparing commercial property insurance in Asia, check the premium alongside deductibles, insured values, limits, exclusions and conditions. A lower price can be good value, but the headline saving cannot tell you whether protection is unchanged.
What does the deductible change?
The deductible, sometimes called an excess, is the part of a covered loss your business bears.
Consider a Manila retailer comparing two hypothetical annual quotes. One costs ₱60,000 with a ₱10,000 deductible. Another costs ₱45,000 with a ₱50,000 deductible.
Assume a ₱200,000 loss is fully covered under both policies, with no other limits or adjustments. The first pays ₱190,000. The cheaper policy pays ₱150,000.
You saved ₱15,000 on the premium but retained ₱40,000 more of that loss. Procurement’s celebration may need a smaller cake.
A higher deductible can make sense if your cash buffer can absorb it. Check whether it applies per event and whether flood or storm losses use a different amount or percentage.
Are the limits and property values adequate?
Compare the sum insured, meaning the amount insured for the property, and any smaller limits applying to particular risks or expenses. These smaller caps are called sublimits.
Confirm that buildings, equipment, renovations and stock are listed correctly. Ask whether settlement uses replacement cost or a value reduced for wear and tear, and what conditions apply.
Avoid cutting declared values simply to lower the premium. Where an average clause applies, underinsurance can reduce even a partial claim proportionately.
The insurer does not necessarily pay your entire smaller claim just because it falls below the headline sum insured.
What changed in the renewal wording?
Ask for a written comparison with last year’s policy, including the schedule and endorsements. Endorsements amend the standard wording.
Check whether flood, typhoon, earthquake, accidental damage and machinery breakdown are covered, excluded or require additional cover. “All risks” still comes with exclusions. Apparently, “all” has a legal department.
Review any requirements involving alarms, sprinklers, maintenance or storage. Tell the insurer about changed premises, operations and stock levels.
For general information only, not personal financial, investment, tax or legal advice. Investments carry risk. Check information independently and seek qualified advice for your circumstances. Editorial policy and corrections.
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