Understanding Commercial Property Insurance: Coverage Options and Claims Process

Understanding Commercial Property Insurance: Coverage Options and Claims Process

For the first time ever, commercial real estate investment shares in multifamily homes have overtaken office investments. No matter what you decide to invest in, it's important to understand the importance of commercial property insurance.

If you aren't sure what types of coverage you can expect or if you want to know more about the claims process, this guide can help.

Keep reading to learn what you should know.

Commercial Property Insurance Coverage

Commercial property insurance is essential to have, but what exactly does it cover? The obvious answer is that it covers your building. It can be a building that you own or cover a building you are responsible for insuring.

If you own your commercial property building, make sure you utilize tenant screening services if you plan to rent it out.

In addition to covering the building structure, commercial real estate insurance covers:

  • Completed additions
  • Indoor and outdoor fixtures
  • Permanently installed equipment and machinery

A commercial property insurance policy will also include a business personal property (BPP) section.

This section covers furniture, personal property used in the business, and tenant upgrades. Your policy may only cover personal property in or within 100 feet of the insured building.

What Does Insurance Not Cover?

Almost all property insurance policies exclude coverages for certain things. Protecting your property means understanding what isn't covered as well as what is. You'll need a separate policy if you want to cover these exclusions:

If your commercial property is located in a low-risk area, your insurance company might offer limited coverage options for certain perils. For exclusions like normal wear and tear and intentional damage, you won't find coverage.

If you aren't sure what insurance coverage you need, consider hiring a property management company that can value your property and connect you with insurance providers.

Claims Process

Protecting your investment with commercial property insurance is ideal for many real estate investors. If an accident occurs and you need to file a claim, you'll need to know the proper steps to take to receive compensation.

The claims process generally follows these steps:

  • Initial contact and review of the claim
  • Damages estimation
  • Settling your claim
  • Payment
  • Managing repairs

After reporting your claim, professionals will verify the details of the loss and explain what coverages apply. You'll be informed about potential coverage exceptions, limits, and deductibles.

To get an estimate of the damages, you can get an independent adjuster inspection or a desktop adjuster for small losses. Once these damages are reviewed, your insurance provider will prepare the amount you should receive.

For small losses, like personal belongings, you are likely to receive a check made out to the person insured on the policy. If a payment involves a lienholder, the check is made out to the mortgage company.

Once you receive the payment for damages, you can start managing and completing repairs.

How Can Property Managers Help?

Knowing what commercial property insurance coverages you need for your investment is not always easy. Luckily, professional property managers from PMI SoJay Property Management can help.

A property manager will handle everything from choosing an insurance provider to making claims when damages occur.

Want to learn more about how we help property owners like you? Contact us today to get started.