Real Estate Insurance: Best Terms Pricing vs. Split Rating

05 Oct 2022
Real Estate Insurance: Best Terms Pricing vs. Split Rating

If you’re a Commercial Real Estate property owner, one thing to pay attention to when shopping for insurance is the difference between Best Terms Pricing and Split Rating.

Best Terms Pricing

Best Terms Pricing specifically relates to a subscription insurance policy. These kinds of policies are typical when insuring any kind of high value Commercial Real Estate property like a condo building or apartment building. With a subscription policy, there are multiple insurance companies involved covering the risk. It can be two, eight, or as many as it takes. Each insurance company takes a certain percentage of the value until you reach 100%. 

Traditionally, with Best Terms Pricing, each company involved in covering the property charges a uniform rate for their services based on the highest rate being asked by the companies. This means, if you are dealing with multiple insurance companies that are all offering reasonable prices for their services, if one of them asks for double, then every company’s rate goes up to match them. As you can imagine, this can be a major issue for real estate owners. In B.C. and Alberta, the practice of Best Terms Pricing have actually been outlawed at the government level.

Split Rating

Because of this, some companies have adopted a practice called Split Rating. With Split Rating, instead of companies matching their rate to the highest asking price, you actually get their individual rate for services rendered. This means no more companies matching to the highest bidder. Instead, they charge what they were always meant to and there is no situation in which you, the property owner, don’t benefit from this.

At The Standard, we’re proud to offer split rating to our high value commercial real estate clients when quoting them on insurance. The last two years with the pandemic has been especially hard on the property insurance market. Coupled with inflation, it’s been a particularly difficult period for property owners. This is another reason we want to do what we can to provide some relief to our clients.

Why Choose The Standard?

We live and breathe Real Estate Insurance at The Standard. We’re involved in the space heavily, whether it be through local associations, or directly with property owners and engineers at every level. With this insight and our proactive research into the market, we want to make sure our clients are taking care with trustworthy, expert advice you can count on and by providing our clients with a smooth and consistent experience getting the coverage they need. 

Real Estate is a huge investment. Make sure you’re dealing with someone who will advocate for you and help you manage your bottom line.

Miran Saradzic is Commercial Account Manager and Real Estate Insurance expert at The Standard. He works out of our location in Winnipeg, Manitoba.

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