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What’s going on inside that commercial building?

When a Verisk field representative surveyed a two-story commercial property in a sidewalk-lined business district in 2016, he noted that the first floor was divided into small office spaces, with one rented to a physical therapy practice. Above, there were apartments.

When the field rep returned to the building in 2020, he discovered the property owner had extensively remodeled, removing stucco to reveal a brick facade and eliminating dividing walls on the main floor to create an open space in use by a cidery and wine bar.

Between surveys, this structure experienced an extensive remodel that replaced the ground-floor suite of divided offices with an open space housed by a cidery/wine bar, significantly changing the exposure profile.

Between surveys, this structure experienced an extensive remodel that replaced the ground-floor suite of divided offices with an open space housed by a cidery/wine bar, significantly changing the exposure profile.

This drastic change in building use significantly shifted the exposure for the insured. While an office may bring few potential hazards, a bar with food service greatly increases the fire hazard exposure for the property.

Around 1 million new businesses open and nearly as many close their doors each year.1 That’s a lot of activity, and commercial property insurers need to be informed about how those changes affect the structures they are insuring. A new business tenant might bring unique potential exposures the old one didn’t, as was the case when the cidery/wine bar replaced the offices.

An examination of ProMetrix® data revealed insights into how often building occupancy changes by identifying shifts in Commercial Statistical Plan (CSP) classification codes over time. This four-digit code identifies the type of business conducted by a building’s occupants.

Verisk research shows that building use is the property attribute most likely to experience a change between surveys.

Under pressure to allocate their resources most effectively, insurers can focus on verifying the property characteristics and types of occupancies most likely to experience a change that can materially affect coverage, premium, and claims.

Verisk research shows that building use is the property attribute most likely to experience a change between surveys. Construction class, square footage, number of stories, and building age are more likely to remain stable between surveys. In addition, some types of business change far more often than others. An analysis of a dozen years of ProMetrix commercial property data found that one in three clothing stores will experience a change. Apartments were the least likely to shift in building use, which makes sense because converting an apartment building into another function involves more extensive remodeling than swapping one retail tenant for another.

Insurers under pressure to allocate their resources most effectively can focus on verifying the property characteristics and types of occupancies most likely to experience a change that can materially affect coverage, premium, and claims.

ProMetrix provides up-to-date and actionable data

Verifying critical property attributes that change frequently—particularly occupancy—must be a top priority to help ensure accurate underwriting. Verisk has expanded our survey methods to refresh our field-verified data with greater frequency using virtual, mobile, and automated technologies to respond to the need for this data in the increasingly fast-paced commercial lines marketplace. We can provide updated and actionable data more swiftly and efficiently by pairing the risk type to the appropriate survey method. In the case of a significant change in building use, Verisk recommends requesting a new on-site survey.

Learn more about how occupancy can impact commercial property underwriting in the latest edition of Inside the Data-Verisk Commercial Property


Jim Armstrong

Jim Armstrong is director of ProMetrix Product Innovation at Verisk. Reach Jim at JArmstrong@verisk.com.

Chris Palermo

Chris Palermo is senior product manager of Commercial Property Underwriting at Verisk. Reach Chris at Chris.Palermo@verisk.com.


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  1. Frequently Asked Questions, U.S. Small Business Administration, December 2021, https://cdn.advocacy.sba.gov/wp-content/uploads/2021/12/06095731/Small-Business-FAQ-Revised-December-2021.pdf, accessed on May 5, 2022.

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