3 Types of Commercial Real Estate Insurance

Imagine a scenario where flames engulf your building, and firefighters cannot manage to contain the fire. Seeing your property burning to the ground is traumatizing. Luckily, you have been smart enough to have commercial insurance. That’s why buying commercial real estate insurance is a worthwhile investment.

Investing in real estate will help you establish an extra channel of passive income and diversify your portfolio. According to a study by Real Estate Investing, approximately 55% of millennials have shown interest in real estate investment.

However, it’s not all gain, though. There are risks associated with properties like flash floods, fire, and injuries. This brings us to the importance of having commercial real estate insurance.

What is Commercial Real Estate Insurance?

This is an insurance policy purchased by real estate investors, corporations, and businesses. The policy provides coverage to the physical building against theft, natural disasters, repair costs, equipment breakdown, and lost revenue.

Who Need Property Insurance?

Property insurance is ideal for any business or corporation that has physical assets essential to the revenue stream. The insurance policy covers anything related to real estate building, fencing, equipment, and specific landscaping.

The Cost of Commercial Real Estate Insurance

When it comes to cost, there are many variables to be considered like:

  • Construction – This is in accordance with how the building was constructed. Features like upgraded HVAC systems and fire-resistant materials can lower the cost.
  • Exposure – Insurance companies or agencies often look at the location of the business to analyze the security threat in that area. If the building is located in a problematic, high-crime neighborhood, you will end up paying more.
  • Occupancy – Who are the tenants? Is the building a residential place or for commercial purpose? When a building has a high number of employees, then the rates will be higher.
  • Protection – Proximity to a fire hydrant, fire station, or a police station can significantly reduce insurance rates. Things like sprinkler systems, alarms, and security personnel also reduce the cost.

3 Types of Commercial Real Estate Insurance

Now that you’ve got a clue about real estate insurance let’s dive a bit deep and analyze the various type of this coverage.

1. Property Insurance

Commercial property insurance will always have your back and ensure your business is protected. Although it’s not legally required, most lenders will require you to have it before giving you funds. Without it, it means you’re responsible for replacing and repairing your business.

If you don’t know how to go about it, you can consult industry specialists to get the best advice. It will ensure you get a good policy that will foot your bills in case a catastrophe hits. Some of the coverages included in the policy are:

  • Floods
  • Hurricane
  • Fire
  • Wind
  • Theft
  • Hail

2. Workers’ Compensation Insurance

Workers’ compensation insurance offers protection to employees who are injured in the line of duty. Workers will sue your business for work-related injuries to get medical benefits and wage replacement. Most states require businesses to purchase this insurance coverage, with stringent measures for non-compliance.

Therefore, ensure you check with a reliable labor attorney just to ensure you have comprehensive coverage.

3. Liability Insurance

Buying a commercial real estate insurance policy means you want to protect yourself, your clients, and employees against disasters. The policy protects you against monetary loses, expenses, and fees caused by inherent risks that can happen during business operations.

To keep your employees and clients safe, and still run your business smoothly, having business insurance is imperative. The policy covers any damage or injury caused by products or machines used in business operations.

It can also cover wrongful employment practices like discriminatory and fiduciary.

Final Note

With commercial real estate insurance, you will not struggle to get back to your feet after a calamity. It offers protection to your business, employees, clients, and you. Don’t forget to seek insurance services from reliable and licensed insurers to ensure you have the right protection in place.

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