It can be tricky to parse the complex ins and outs of commercial insurance in California. What does it cover? What are the requirements? How does a company calculate premiums? These frequently asked questions don’t always have the most straightforward answers.
But things get even murkier when considering Tenant Improvements and Betterment (TIB) coverage. In this case, there can be uncertainty over insurance obligations or on whose shoulders the responsibility of long-term maintenance falls on.
In this blog, we discuss business insurance in California, break down TIB coverage in simple terms, and learn how measures like employing commercial lighting services can impact insurance claims.
Understanding Commercial Property Insurance in California
This type of insurance provides coverage for a physical office or retail space, as well as all fixtures within, such as lighting, furniture, or inventory, of a business.
A property-related commercial insurance policy protects establishments from the effects of disasters like wildfires or windstorms. It also provides coverage against theft and vandalism, and in some cases, could even extend to damage caused by water or hail.
This kind of insurance does not cover certain natural disasters like earthquakes, mudslides, or floods, which are quite common in California. Companies that operate in specific risk areas will need to seek out supplemental policies.
While this type of insurance is not required by California law, business owners do not take it for granted because of the benefits it provides:
It covers the cost of damage or repairs.
It covers lost income in case of closure due to a calamity. This includes moving and relocation costs as well as employee wages.
Commercial insurance could help a business owner secure a loan more easily.
Commercial or retail insurance is often a requirement for certain lease agreements.
What Is Tenant Improvements and Betterment Coverage?
Tenant Improvements and Betterment is the one area of commercial or business insurance that needs to be better understood and usually has landlords and business owners at loggerheads.
TIBs refer to modifications or upgrades a business owner makes to the property they have leased from a landlord. These improvements are paid for by the business owner, but the ownership is transferred to the landlord when they move out. After all, these upgrades to the property cannot be removed without causing significant structural damage.
The most common forms of Tenant Improvements and Betterment include partitions, new ceilings or floors, and fixtures like commercial lighting upgrades.
The TIBs could be insured by the landlord or tenant, provided the lease clearly states which party is responsible. Usually, these upgrades are covered by the landlord under a commercial property policy. However, in some cases, when the lease states otherwise, TIBs will have to be insured under the tenant’s property policy.
No matter who is responsible for covering upgrades, these improvements significantly impact the value of the building. Hence, they affect commercial insurance requirements.
Let’s take a look at how changes in lighting systems can affect insurance policies.
How Lighting Can Impact Premiums and Claims
Lighting is one commercial improvement that can greatly influence insurance coverage and premiums. Opting for energy optimizing solutions can increase the value of a property and protect the tenant’s investment, especially when they are included under Tenant Improvements and Betterment coverage.
Lighting upgrades carried out by experienced professionals can impact premiums in the following ways:
It reduces risks: By upgrading to more energy-efficient and newer fittings, businesses can significantly reduce the risk of fire and electrical hazards. This could result in lower insurance premiums.
It’s newer: The age of light fixtures can significantly impact an establishment’s insurance policy. Fittings that have reached the end of their life will cost more to insure, while newer ones will net lower premiums.
It increases security: Well-lit commercial establishments have a lower risk of theft and vandalism. Insurance providers may consider this a proactive measure to improve the safety of a business and adjust premiums accordingly.
It’s installed by a professional: Lighting heavily relies on a building’s existing electrical systems. When improvements are made by professionals, the insured has additional protection against potential damage.
It increases property value: Along with improving aesthetics and functionality, energy-efficient lighting solutions also increase a property’s value. The commercial insurance policy could be revised accordingly.
Make the Most of Lighting Upgrades with NRG Incentives
Now that we’ve outlined the impact commercial lighting upgrades can have on insurance policies and the intricacies of business insurance in California, it’s time to take action. If you’re looking for lighting solutions that lower your expenses and open your business up for better insurance coverage, look no further than NRG Incentives.
At NRG Incentives, we design, manufacture, and deploy top-notch lighting solutions across California. With our knowledge, attention to detail, and commitment to customer service, we have the answers for all your lighting-related queries.