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Thinking about expanding your restaurant, buying a new property, or leasing a space for your next venture? It’s an exciting time. But some hospitality operators skip a critical step: insurance due diligence.
You need to look past curb appeal to understand the hidden risks of a property before signing on the dotted line. Is it insurable? And will you be able to afford the premiums? Here’s a brief list of issues to explore:
Put on an “underwriter’s hat.” An insurance company will look beyond the surface to assess the physical condition of the building, so you want to do the same.
Is the location prone to extreme weather, wildfires or earthquakes? These environmental risks can affect your insurance costs and coverage availability. Don’t assume your property is safe; you need to verify its specific vulnerabilities.
The neighborhood and its infrastructure play a role in your property's overall risk. A great location for foot traffic might also come with challenges that impact your insurance.
Looking at the property through the lens of an underwriter helps you avoid surprises when you apply for insurance.
A thoughtful review protects your investment and prevents surprises that could disrupt your business — from unexpected insurance costs to claims that blow up your budget. It helps you make an informed decision, ensuring your new property is a foundation for growth, not a source of unexpected risk.
Your due diligence allows you to craft a thorough and compelling narrative for prospective insurance companies. Underwriters appreciate detail-oriented businesses that understand and actively manage risks.
Also, you can use the insurance, loss run and inspection information to negotiate repairs and terms before closing.
The contents of this article are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.
