Are you a busy business leader curious about potential new insurance costs or puzzled by a recent surge in insurance premiums for a new build? Understanding these costs is crucial for keeping your budget on track and avoiding compliance issues. At XL Structural, we recognise the challenges of managing budget constraints and meeting regulatory requirements to ensure your buildings are both compliant and cost-effective. In this article, we’ll explore the key factors influencing the cost of insurance for commercial and industrial buildings. We'll address common concerns and provide valuable insights to help you make informed decisions and effectively manage your insurance expenses. Building Location The location of your building plays a significant role in determining your insurance costs. Insurers evaluate the risk associated with the geographical area where the building is situated. Factors such as crime rates, natural disaster risks (like earthquakes, floods, and storms), and proximity to fire stations and hydrants are considered. Buildings in high-risk areas tend to have higher insurance premiums. Conversely, buildings in areas with lower risk profiles may benefit from reduced premiums. For example, Christchurch's earthquake-prone regions typically see higher premiums due to increased risk, whereas buildings in Auckland might have lower premiums due to a relatively lower seismic risk. Climate Change Impact It is impossible to ignore the impact of climate change on insurance costs. The frequency and severity of severe weather events are increasing globally, leading to higher premiums as insurers seek sustainable pricing models. In New Zealand, flooding has been the most common weather event, accounting for over 90% of losses from natural disaster claims since January 2021. The New Zealand Government's National Adaption Plan, published in April 2022, outlines actions to address climate-related risks, reflecting the growing need for buildings to be resilient against such events. Building Construction and Materials The construction type and materials used in your building can greatly influence your insurance costs. Buildings constructed with fire-resistant materials, such as concrete or steel, generally attract lower insurance premiums compared to those made with wood or other combustible materials. Fire-resistant buildings are less likely to suffer extensive damage in a fire. Additionally, modern construction techniques and materials that enhance structural integrity and resilience to natural disasters can also result in lower premiums. In high seismic risk areas, the use of materials such as Expanded Polystyrene Panel (EPS) and Aluminium Composite Panel (ACP) requires robust risk management procedures, and insurers may limit coverage or increase premiums based on these factors. Building Size and Usage The size of your building and its intended use are also crucial factors. Larger buildings typically have higher insurance costs because they represent a greater risk to insurers in terms of potential loss. Similarly, the usage of the building impacts insurance premiums. For example, a warehouse storing flammable materials will have higher insurance costs compared to one storing non-flammable material. It's essential to accurately communicate the purpose of your building to your insurer to ensure appropriate coverage and cost estimation. Safety and Security Measures Investing in safety and security measures can significantly reduce your insurance premiums. Insurers favour buildings equipped with robust security systems, fire alarms, sprinkler systems, and other safety features. These measures lower the risk of damage and loss, making your building a safer bet for insurers. Installing surveillance cameras, security lighting, and access control systems can further enhance security and potentially lower insurance costs. In New Zealand, adhering to the Building Code’s safety requirements, which were updated in 2023 to include more stringent fire safety measures, can also be beneficial. Building Age and Condition Older buildings often have higher insurance costs due to their increased risk of structural issues, outdated electrical systems, and plumbing problems. Insurers may require a thorough inspection of older buildings to assess their condition before providing coverage. If the building is well-maintained and has undergone recent renovations or upgrades, it can help in securing lower premiums. Regular maintenance and timely repairs are crucial in keeping insurance costs in check for older buildings. For instance, buildings in Christchurch that have been retrofitted to meet earthquake safety standards often benefit from lower insurance premiums. Claims History Your claims history as a business owner can impact the cost of insurance for your commercial or industrial building. If you have a history of frequent claims, insurers may view you as a higher risk, leading to higher premiums. On the other hand, a clean claims history can work in your favour, potentially resulting in lower insurance costs. It's advisable to implement risk management practices to minimize incidents and claims, thereby supporting a favourable claims history. This is especially relevant in New Zealand where the Earthquake Commission (EQC) plays a significant role in claims related to natural disasters. Coverage and Policy Type The type and amount of coverage you choose for your building will directly affect your insurance costs. Comprehensive policies that offer extensive coverage, including protection against a wide range of risks, will naturally be more expensive than basic policies with limited coverage. It's essential to strike a balance between adequate coverage and affordability. Discuss your specific needs with your insurer to tailor a policy that provides the necessary protection without overburdening your budget. The Insurance Council of New Zealand (ICNZ) provides guidelines on understanding policy terms and coverage options. Under-Insurance Risks The COVID-19 pandemic has underscored the risks of under-insurance. High inflation, supply chain disruptions, and extended building costs have all contributed to increased claims costs. Ensuring your building's sum insured reflects current building costs is critical to avoid under-insurance, especially for specialised equipment and machinery that may have longer replacement times and higher costs. Recent data from the Reserve Bank of New Zealand shows an increase in construction costs by approximately 8% over the past year, highlighting the importance of regularly updating your insurance coverage to reflect these changes. Regulatory Compliance Compliance with local building codes and regulations can influence your insurance costs. Buildings that adhere to the latest safety and construction standards are generally viewed more favourably by insurers. Non-compliance or failure to meet regulatory requirements can result in higher premiums or even difficulty in obtaining insurance coverage. Ensuring that your building meets all necessary regulations not only promotes safety but also helps in managing insurance costs. The upcoming Financial Markets (Conduct of Institutions) Amendment Bill will further emphasise the need for compliance and may impact how insurance products are priced and offered. Deductibles Choosing a higher deductible can lower your insurance premiums. The deductible is the amount you agree to pay out of pocket before your insurance coverage kicks in. By opting for a higher deductible, you take on more risk, which can result in reduced premiums. However, it's important to choose a deductible that you can comfortably afford in the event of a claim. Balancing deductibles and premiums are a key consideration in managing your insurance costs effectively. Risk Management Practices Implementing effective risk management practices can have a positive impact on your insurance costs. Conduct regular risk assessments to identify potential hazards and take proactive measures to mitigate them. Employee training programs, routine safety inspections, and emergency preparedness plans are all part of a robust risk management strategy. Demonstrating to insurers that you have comprehensive risk management practices in place can lead to lower premiums and better coverage terms. Insurance Provider Finally, the choice of insurance provider can also affect your insurance costs. Different insurers have varying risk appetites, pricing models, and discount programs. It's crucial to shop around and compare quotes from multiple insurers to find the best coverage at a competitive price. Working with an experienced insurance broker can help you navigate the options and identify the most suitable insurance provider for your specific needs. Conclusion Understanding the factors that affect the cost of insurance on commercial and industrial buildings is essential for effective budget management and risk mitigation. By considering the building's location, construction, size, usage, safety measures, and more, you can make informed decisions that optimise your insurance expenses. Implementing risk management practices and maintaining compliance with regulations further enhances your ability to secure affordable and comprehensive insurance coverage. Remember, the right insurance policy is a critical component of protecting your investment and ensuring the long-term success of your business.

If you are thinking about building a new industrial workshop or factory you may want to consider having an overhead gantry(s) in the building. A gantry can be a real game-changer to the efficiency of a business, as we explain in this article. But how much will this cost? Will you need a much stronger building to support the gantry loads? If so, how much stronger will it need to be, and will the extra investment be worthwhile? We answer these crucial questions throughout this article. What is the Cost of the Gantry? What is the Cost of the Overhead Travelling Crane? What Extra Investment is Required for a Building to Support an Overhead Gantry? The Height of the Building Down Shop Beams Additional Gantry Options Underslung Gantry / Service Rail Jib Cranes What is the cost of the gantry? There are two parts to this question: The cost of the overhead travelling crane itself which depends on the lifting load it is rated for and the span of the crane. The cost for the extra materials and design required to ‘upgrade’ a building structure to be able to support a gantry. What is the cost of the overhead travelling crane? The most common type of gantry is the overhead travelling crane, which travels on rails up and down the building. This is commonly used for engineering/maintenance workshops and manufacturing facilities. We have created the below table illustrating the cost range we have observed in the past: 15-18m Span 18-24m span 24m - 29.5m span 3.2 Ton $82,500-$93,500 $93,500 - $110,000 $110,000 - $137,500 5.0 Ton $88,000 - $99,000 $99,000-$121,000 $121,000 - $143,000 8.0 Ton $99,000 -$115,500 $115,500- $137,500 $137,500 - $165,000 10.0 Ton* $115,500 - $126,500 $126,500 - $148,500 $148,500 - $176,000 *Please note that crane sizes are not limited to 10 tons as buildings can be designed to take cranes much larger, but 3-10 ton is most common. The above pricing excludes the crane guide rails which would typically add $20,000 to $30,000. The prices shown in the table are based on a travel length of around 40 to 50m. As you pursue longer options the cost of the crane does increase as there is more cabling and guide rails that need to be installed. A gantry is like any other item of machinery or plant - there is a large degree of price variance due to the build quality and the features you require, and we recommend you compare a few options and talk to a couple of different crane manufacturers before making any final decisions. What extra investment IS required For a building to support an overhead gantry? An overhead gantry crane does add quite a lot of load to the structure. Deflections allowed are much lower than a building that does not have a crane (deflection is an engineering term that means how much a member moves or changes shape under loads). The reason for this is if the building moves significantly under loads of the crane or weather, this could have catastrophic results, e.g. the crane coming off the rails. There is also the cost of the down shop runway beams which are the large beams on each side of the building that support the crane. These also need to be very stiff to support the weight of the crane and the weight it lifts. Several factors make the cost go up or down, including: The height of the building A building with a crane is likely going to need to be higher than a building without one. The height has to be reverse-engineered either from the required hook height of the crane (maximum lift height) or the height of the doors. For example: Say you require a building with a roller door height of 6.0m. Without a crane, a stud height of 6.6m would be adequate to allow for the headroom. However, if you were to add in a gantry crane the calculator would be something like: 6.0m (for the height of the door) + 0.6m (for the ‘roll’ of the door) + 0.4 or 0.5 (for the down shop beam) + 1.1m (for the overhead crane and some tolerance) + 0.5 for the portal structure = 8.6 to 8.7m. As you can see, the building needs to be about 2m higher to allow for the gantry crane. The cost per m² of increasing the height of a building by 2m depends on the size and shape of the building. For larger buildings, it may only add $5-$10 per m². Whereas, for smaller buildings (say under 1500m2, it could be more like $10-20 per m². It also depends on your wind zoning as buildings in lee or SED wind zones may require additional strengthening for the columns. Also, if the crane loads are high, the columns may need to be strengthened to reduce the deflection or ‘sway’. All of this can push the costs of the extra height to more like $10-$15 per m² for larger buildings. Please note that m² is a blunt and crude pricing guide in this context, due to the extra height not being proportional to the floor area. For specific projects, it is best to talk to the XL team to get an accurate estimate based on your specific circumstances. Down shop beams The cost of down shop beams is dependent on: The length of the building The rails are directly proportional to the length of the building. One way to reduce the cost of this is to only put the down shop rails in part of the building, meaning you can save the cost of it now and fit them when you need them. Size of the bays As the down shop rail is spanning from column to column, the further apart the portals are the larger the down shop rail needs to be. Usually, the most cost-effective bay size is between 6.5 and 7.5m. For the lighter down shop beams that suit lighter cranes and narrow bays, the cost can be around $600 per LM. This can increase to $2000 per LM for larger cranes on wider bays. e.g. 80m gantry travel length = 160 lineal metres of down shop beams. It is also possible to add larger girder trusses to increase the gap between columns. This is particularly useful when there is a building divided into two sections with cranes on each side. A great example of this is in the manufacturing building below, where every second column is removed creating 12m wide openings between centre columns. Another example is in the building below. This has 10.0m bays, and we removed one column on the side with a girder truss. This gave a 20m wide opening in the side so that large fabricated beams could be taken out sideways. Additional gantry options Underslung gantry / service rail A simpler and more cost-effective option for a full overhead gantry is to design one or two of the portals to act as a supporting truss. We achieved this for Rotor Work NZ’s aircraft hangar where we installed a rail under the central portal which allowed the engineers to lift helicopters and engines for maintenance. Usually, this type of rail can only lift loads of up to 1.5 tons and doesn't require extensive re-engineering of the portal. This makes it a cost-effective option, typically only adding $5,000 to $10,000 depending on the span of the building and weights lifted. The disadvantage of this type of gantry is that you are limited to lifting loads directly under the portal. This can be quite limiting in manufacturing operations where loads need to be lifted and moved to other parts of the building. Jib Cranes Jib cranes can either be freestanding, like the image below: Or mounted to a wall/column in the building, like the image below: These cranes are great for areas where materials need to be lifted, rolled, swung, or positioned over an item of plant that requires regular maintenance. Free Standing Jib cranes don't affect the structure of the building, but they may need a special foundation design if they cannot bolt directly to the slab. Wall or column mounted Jib cranes are a little more tricky and may require the column they attach to be strengthened. This can be achieved by making the column larger or increasing bracing in the building. If the column doesn't have to be strengthened, there is no cost. However, if the column and bracing do need to be changed, the cost could be up to $20,000. If you’re about to get started on a new industrial workshop or factory and you’re contemplating including an overhead gantry in the building, feel free to reach out to our team to get some expert advice. Note: This article does not cover retrofitting a gantry into an existing building. We are not experts in that field and recommend either talking to a crane manufacturer such as Baker Cranes or talking to the person/company who designed the existing building.