Reducing commercial property insurance costs

Sterling Industrial arrange building insurance for the majority of its industrial estates and commercial premises around the UK.

Insured risks include; loss or damage by fire, storm, lightning, impact by vehicles, or burst pipes.  Unless the lease states otherwise, a fair proportion of the landlord’s cost in providing insurance for each estate is then recovered from the tenant of each unit.

We work hard to ensure annual insurance premiums are kept as low as possible, not only because we want our units to remain competitive in the letting market but also because we pick up the cost of insuring all vacant premises.  Unlike many commercial landlords, we don’t receive any kickbacks or premiums from insurers or insurance brokers, so tenants can be assured that they are not being overcharged.

Factors affecting the level of insurance premium payable are numerous and largely outside of landlords’ and tenants’ control, for example the cost of rebuilding the insured property in the event of destruction), but there are some key issues landlords and tenants can manage to reduce the cost of future insurance premiums:

  • Claims track record – the track record of the insured property will be taken into account by insurers and premiums for estates/ portfolios of estates will increase with higher incidences of insurance claims. Your neighbours’ claim record is just as important as your own as claims made across a portfolio or estate of industrial units will impact on all buildings within that portfolio or on that estate
  • Risk management – insurance company inspectors visit industrial estates regularly to establish whether any activities on site might increase the risk of future claims. Even if an occupier’s claim history is excellent, inspectors will not tolerate bad practice on site that might increase the risk of fire, damage or other incidents
  • Be proactive at all times – regularly seek to identify risks that your leased property may be exposed to and act to resolve them
  • Prioritise risk – ensure you take action on the highest priority risks, based on a combination of their likelihood of occurring or the cost should they occur

Sterling Industrial has worked with Lockton, the world’s largest privately owned insurance brokerage and Zurich Insurance to develop and recommend the following minimum house-keeping standards for occupiers of commercial property:


  • prohibit storage in plant rooms, service riser cupboards, technical areas or roof voids. Such areas should be kept locked to prevent unauthorised access
  • maintain a clear area of at least 1.0m around electrical distribution panels or heating appliances
  • maintain clearance of 0.5m from light fittings in storage areas and 1.0m in warehouses
  • keep aisle spaces clear in warehouse and storage areas
  • avoid accumulation of waste in any areas and store recent waste in suitable waste containers
  • make suitable arrangements for storage of flammable liquids, gases or hazardous chemicals, with adequate containment provided in case of accidental spillage or rupture

In buildings / facilities with automatic sprinkler protection installed:

  • control storage heights and racking configurations in accordance with sprinkler system design
  • solid shelving > 1.0m wide should be replaced with gridded or slatted alternatives
  • maintain minimum clearance of 0.5m below sprinkler heads

Fire safety

  • provide fully maintained portable fire extinguishers in all areas
  • fire exit routes, automatic fire shutters, detectors or doors must be unlocked and clear at all times
  • test fire alarm systems on a weekly basis and keep a record of your testing program
  • Act upon the guidance set out in HM Government document “Fire Risk & Safety Assessment for Factories and Warehouses” click to download This guidance gives advice on how to avoid fires and how to ensure peoples safety if a fire does start

Hot work

  • hot work is work that involves open flames or sparks, or any other activity that generates heat.
  • hot works should be controlled and recorded using a formal Hot Work Permit System


  • smoking should be strictly prohibited within buildings and only permitted in designated external areas with suitable waste receptacles provided

External storage

  • any combustible external storage including waste bins and skips must be located as far away from the building as possible at all times
  • lockable skips are recommended to avoid the risk of accidental or malicious ignition
  • wheeled bins should be secured in position or located within a secure enclosure in order to prevent them from being moved by potential arsonists

Portable heating

  • the use of portable heating appliances is recognised as an extremely high risk and should be avoided

Electrical equipment & battery charging

  • temporary electrical wiring should not be permitted
  • introduction of Portable Appliance Testing (PAT) will ensure the ongoing electrical safety of portable electrical appliances
  • maintain minimum clear areas of 1.5m around battery charging units with no storage above
  • charging cables and all electrical cables should be maintained free from damage

Vehicle impact

  • take measures to avoid accidental vehicle impact of building structures

Implementation of the above measures as part of occupiers’ routine site management procedures would quickly result in reduction of insurance claims, having a positive impact on the levels of future insurance premiums charged by insurers.

Blocked Fire Exit


Fire Risk – Pallets stored against building


Hazardous hot works


Environmental Risk – Unbunded chemical and oil storage