Nevermind if you’re renting your commercial property to tenants while operating your business outside the building or your assets are your business, you would want to protect your capital and the company, should any undesirability happen.
Your tenants, although they absolutely need insurance to protect their businesses or the contents of their apartments, will appreciate that the building space they are renting would be protected in these cases and you, as an owner, knowing that your property is secured and will continue to bring revenue.
But, what is important to know before you buy any kind of insurance?
Before Purchasing
Before you buy any kind of insurance, it would be wise to get familiar with the risks of the industry, location, types of tenants and their undertaking, since it will give you a little more insight into what kind of insurance you will actually need.
This enclosure, apart from the building’s value, will also affect the price of the insurance:
- Location – is the area susceptible to storms and other natural disasters?
- Construction – checking what are the materials used, like fireproof materials, and does it have old or upgraded electrical wiring, plumbing and HVAC, can be of the utmost importance.
- Tenancy – What is the occupancy and habituation status? Some businesses are easier to maintain than others.
- Fire and theft protection – Does your property have a fire alarm and/or sprinkler system, security system and how far is the nearest fire hydrant and fire station are very important questions.
Which One?
The two most typical types of commercial building insurance are:
- Commercial property insurance covers your buildings and equipment for damage caused by extreme weather events, fire and some crimes such as vandalism.
- General liability insurance protects your commercial real estate from a lawsuit should a third party experience injury or property damage while on your premises.
Most times, the policies you need and the premiums you pay depend on the type of commercial building you own and the type of businesses that operate on the property.
For example, mixed-use commercial property insurance includes several other policies or coverages – loss of rental income, water backup protection and flood protection, equipment breakdown coverage, replacing elevators, hallways decorations, carpeting, wall coverings etc. It’s important to warn your tenants that insurance only covers your expenses and responsibilities when things happen on the property.
Added Expense < Financial Damage
Different coverages, based on the type of rentals in your commercial building are definitely an added expense on your property insurance, but they play a crucial role in protecting businesses from serious financial damage in the future.
If you choose the cheapest policies, maybe they offer limited coverage or the insurance carrier follows questionable practices. Therefore, prioritize the reputation of the insurance provider that offers reliable coverage, prompt payouts, and consistent terms.
Read & Understood
Lastly, even if you’re secured by a trustworthy realtor, well covered by an insurance plan and about to sign the contract – make sure you understand what is included – and excluded – in the policy beforehand.
Taking the time to read and ask what is not understood can help you ensure that there are no gaps in coverage and that unexpected surprises will be prevented if you ever need to file a claim.
The unexpected accidents or events can happen anytime, and it would be smart to think prior and secure that your property and all the businesses that belong to it – stay secure as well.
