Commercial real estate (CRE) insurance coverage is a way for investors to mitigate the risk that comes along with owning a property.
Commercial real estate encompasses office, retail, multifamily, and industrial properties. There are many types of commercial real estate insurance to purchase to safeguard these assets. Each type of insurance protects owners for different occurrences, such as fire, explosion, natural disaster, vandalism, and debris removal.
Most real estate investors typically carry at least commercial property insurance and liability insurance. Owners can choose from various policies. Prices vary according to criteria such as the type of property, location and business conducted there.
Commercial property insurance protects a business from losing assets to issues such as fire, burst pipes, theft, and vandalism. It typically does not automatically cover loss due to a natural disaster including earthquakes, tornadoes, and floods. Coverage can be added for damage due to those circumstances.
With commercial property insurance, real estate investors can protect their property plus all of its contents and exterior furnishings, such as signage. Policies can be customized to include varying items and circumstances attached to the claim, such as theft.
Items covered in your insurance policy could include furniture, equipment, computers, and documents. It also will protect outdoor signs, fencing, and landscaping.
Liability insurance covers potential lawsuits from a third party who is injured on or does property damage to your property. The policy can help pay for legal defense and settlements. Liability coverage might be more expensive for property such as apartment buildings or retail space where many people visit. Lower-trafficked properties such as warehouses likely carry more affordable policies. Coverage could include slip and fall incidents to claims of wrongful eviction.
Insurance is available for landlords who lose income due to circumstances such as property repair. It typically does not cover damage due to owner negligence — a repair that was not made that is now causing a larger issue, for example.
Some business income insurance will help pay for the need to temporarily relocate an office property that is being repaired due to damage such as a fire.
Protecting your investment is important. Investors also should consider having risk management procedures in place. This includes keeping accurate records of your property, such as improvements made.
Properly maintaining your property also is key. It should be safe and secure with all fire safety equipment, including sprinklers, fire and carbon monoxide detectors. Doors and windows should be sturdy and lockable.
With many types of commercial real estate insurance available, investors should choose which coverage best suits their needs to help protect their assets. Learn more about landlord insurance.