Commercial Property Insurance For Landlords – Commercial property insurance, essential for any real estate owner, covers your buildings and their contents, exterior signs and other unattached fixtures such as fences or small storage sheds. Whether you’re dealing with a burst pipe causing water damage or theft or vandalism, the type of insurance you buy and the insurer you choose can mean the difference between fast claim service and claim denial.
Choosing the best property insurance for your real estate investment is not always an obvious decision. To help you get the most protective coverage at the best price, ask these eight questions when you buy your insurance. This applies whether you buy property insurance when you buy an investment or when your property insurance renewal approaches.
Commercial Property Insurance For Landlords
The four main aspects of underwriting and pricing commercial office buildings are construction, occupancy, protection and exposure. Construction includes the construction process used in your building. Obviously, frame is less fire-resistant than masonry so the rate will be higher for a frame building. For occupancy, underwriters want to know the primary use of the building. Is it a restaurant or a computer repair shop? What you do in a building creates lower or higher levels of risk. Protection describes how well a building is protected against fire. The location of the nearest fire department, for example, is an important safety factor. Exposure includes what is around your commercial property. Are you in an urban-wildland interface with high fire potential or in a high-crime area? These factors include the exposure of your building.
What Influences The Cost Of Your Commercial Property Insurance Premium?
Your insurance coverage will vary depending on the insurance form you choose. Special forms provide wider coverage but cost more than basic forms or broad forms. Your agent should review the coverage options available with you. Flood and earthquake coverage are not included in standard commercial property insurance policies. Variance in endorsements expand your coverage and may provide additional coverage that is typically excluded on commercial property forms.
While most business owners consider price when purchasing their commercial insurance, price should not be the only consideration when choosing insurance. It’s a very important decision because “going cheap” can mean inadequate or no coverage. Check an insurer’s financial reputation by checking its Excellent or Standard and Poor’s ratings. Most insurance brokers recommend that you choose an “A” rated insurance company, which means they are financially sound and creditworthy. If you have a claim you should choose a company that has been in business for years, as some claims take a long time to settle.
Insurance companies have designed coinsurance clauses in commercial property insurance to help ensure that policyholders purchase enough insurance to rebuild their structures after a loss. For example, if you have an 80% coinsurance clause in your policy and you only insure your building for $300,000 worth $500,000, you have failed to meet the coinsurance clause. Failing to meet that threshold means the insurer will reduce your loss payout by a percentage of what you’re underinsured for. The formula, the actual sum insured divided by the required sum insured, calculates the loss amount, which is the formula that the carrier applies to reduce your loss payout. If you face a coinsurance penalty of 40%, for example, you’ll pay $40,000 out of pocket after a $100,000 loss, plus your deductible. That is why it is important that you purchase adequate insurance when choosing your property limit.
After an injury, people often think of business owners as the “target defendant.” Despite your balance sheet, others see you as a wealthy business owner and assume you may have significant assets and loads of insurance coverage. In today’s world, $1 million may not be enough to settle a serious injury claim. You must consider the legal structure of your business and the protections afforded by incorporation or other legal strategies you have in place. A frank discussion with your agent or broker about the industry you are in can help you determine the extent of liability insurance you need. That decision is sure of your “sleep at night”. A single claim can blow through high limits of coverage, so an umbrella liability policy can be money well spent.
Forces Driving Commercial Property Insurance Costs
Most landlords will not enter into a lease agreement with you unless you provide proof of insurance. This protects the landlord if someone walks into the building you rent and falls, or if you start a fire or flood the building. Depending on your landlord, you may need to show proof that you have purchased liability insurance as well as property insurance that will protect the landlord’s investment in case of damage to your place. If you have significant auto traffic from a fleet of owned vehicles, for example you run a service business from your location, the landlord may also insist on proof of your commercial auto insurance. The building owner can also request status as an additional insured under your policy. Not an unusual request, commercial insurance underwriters usually have no problem adding this confirmation.
Of course, you should compare prices for commercial property insurance. However, when comparing carriers and prices, make sure your broker provides a breakdown of coverage differences between carriers. Don’t compare apples to oranges in price because lower prices often come with less coverage. When valuing your commercial property, don’t use market value. Use the cost to rebuild your building after a total loss. Increasing your deductible is another way to lower costs. A high deductible is also worth it if you don’t want to make claims for small losses and don’t want to risk carrier non-renewal. In today’s insurance market as underwriters closely scrutinize losses before renewal, a run of empty losses beats one with recurring losses any day.
If you have a claim, you can proceed in two ways. You can notify your agent or broker first, but most carriers provide a toll-free number you can call to report a claim. Within 24 hours you should hear from an adjuster who will walk you through the claims process. Your policy contains certain “conditions” that you must meet in order for the coverage to apply. This includes prompt reporting of the claim, protecting the property from further damage, for example boarding after the loss, and cooperating with the insurer to terminate the loss. Your claim process should go smoothly if you provide the adjuster with the information they need to handle your loss. Your adjuster will receive your statement, but do not provide the statement to anyone other than your insurer unless your adjuster approves contact.
Your commercial property insurance and liability insurance are critical to the effective operation of your business. Feel free to contact us with any questions or if you would like a quote on your commercial real estate. Next offers customized commercial property insurance that fits your line of work. It can cost as little as $17 or $205 a year, but the exact price you pay depends on your specific circumstances.
Rental Property Insurance
56% of our customers pay less than $25 to $45 per month on commercial property insurance**. Here’s a breakdown of what our customers pay for this type of coverage.
How much is commercial property insurance? The price you pay for commercial property insurance is determined by many factors, including:
If you are a florist, your insurance will be less than a restaurant owner because the equipment you use to do your job is less likely to be damaged or have accidents.
Costs for retail stores with inventory, equipment and physical buildings face more risks on a daily basis than many other businesses.
Landlord Commercial Property Insurance Policy By Cib By Consolidatedau
In general, jobs that rely on business property and suffer serious shocks if their property is damaged or destroyed often have higher insurance costs.
If your building is in downtown Los Angeles, you will probably pay more than if your building is in rural Pennsylvania. This is partly due to the increased risk of natural disasters such as hurricanes along the Gulf Coast. It is also partly due to higher property prices and higher crime in more populated areas.
For example, if you own a bakery that caught fire and needed major repairs, you may see your premiums increase at renewal time.
If you want to be covered for more incidents, you can opt for a higher coverage limit on your insurance policy. Higher coverage limits will almost always increase the cost of your policy.
Common Commercial Property Insurance Exclusions
For example, if you’ve been a nail technician for six years without a claim, you can expect to be paid less than a manicurist who’s been in business for two years because you have a proven history in your field.
Note: It is important to provide the most accurate information about your business when you get a quote for insurance to ensure you get the right coverage for you, so your claims are not denied and your coverage helps protect you from this risk.
An insurance premium is the amount you pay monthly or annually for your coverage. The insurance company calculates your premium by considering all the factors listed above, such as the likelihood that you will make a claim, your
