Conventional wisdom suggests the three biggest factors in choosing real estate are location, location, and location. But when it comes to actually building and protecting your real estate business, the three keys are really coverage, coverage, and coverage. Whether you’re a commercial property manager or an office park developer, you face a variety of risks that can negatively affect your property, tenants, finances, and reputation. This insurance checklist will make sure you have your bases covered.
Your building is your bread and butter, so commercial property insurance is a good starting point. Offered as a stand-alone policy or through a business owner’s policy (BOP) or commercial package solution, this insurance can help cover damage to your buildings and their contents as a result of fire, storms, and other causes of loss. Coverage can also include the loss of important documents and damage to signage and other structures. Policy limits and exclusions vary, so talk to your independent insurance agent to make sure all aspects of your property — from your building to furniture and other business personal property — are covered.
- Business interruption
Fires, storms, and other unexpected events can damage your property and prevent your business from opening its doors. Business interruption coverage can help replace lost income and cover business expenses, such as payroll or the cost to temporarily relocate, until you can resume operations at your location.
- Equipment breakdown
You rely on a variety of equipment to keep your property heated, cooled, and more. If your boiler, air conditioner, or other piece of critical equipment fails, this insurance can cover the cost to repair or replace it, lost income if you need to temporarily shut down, and the extra expenses to continue running your business while equipment is being fixed.
- Ordinance or law
If a building ordinance or law requires your business to demolish and rebuild some or all of its location after a covered loss, this insurance can provide coverage for the loss of the undamaged part of the building, demolition and debris removal costs, and any additional construction costs to comply with the ordinance or law.
- Tenants move-back
Your tenants may need to temporarily relocate after a fire or other covered loss damages or destroys your real estate property. This insurance can cover costs to move tenants back once your location is repaired or rebuilt so that you can quickly start earning rental income again.
- Lost lease
If tenants cancel lease contracts because of damage or destruction to your premises as a result of a covered loss, insurance can help cover lost income your business sustains as a result.
- General liability
Managing a property takes money, manpower, and diplomacy — especially as you work to manage client and tenant expectations. You also have a lot of square footage to cover; an icy sidewalk or a poorly lit hallway could result in a slip and fall and a costly injury. Having general liability (GL) coverage, either as a stand-alone policy or as part of a BOP or package policy, can help safeguard your business and protect your reputation in the event of a lawsuit. In addition to covering legal fees and court costs, your policy can also help cover any judgments or out-of-court settlements.
If your real estate business stores sensitive tenant and client information, such as bank account details or Social Security numbers, you could be liable if this data is lost or exposed. Cyber insurance can cover expenses to notify affected individuals, provide credit monitoring or identity theft restoration services, hire computer forensic experts, or manage public relations. Insurance can also cover legal expenses, regulatory fines, or court judgments.
Lawsuits can be expensive, and a significant judgment may not be fully covered by your primary GL or commercial auto policies. Umbrella coverage provides additional protection and can help protect your business in the event of a large loss.
Rounding Out Your Coverage
Whatever the size of your staff, employee injuries happen — even in relatively “safe” office environments. Workers compensation coverage can help cover an injured worker’s lost income and medical expenses and also provide return-to-work support. If you or your employees drive as part of their responsibilities, having commercial auto coverage can help protect your business behind the wheel.
Real estate ventures are subject to state and local ordinances for construction and laws surrounding accessibility. When choosing an insurance provider, make sure they have experience navigating your industry. If you’re unsure about your needs, start a conversation with an independent agent today — or check out Liberty Mutual Insurance’s real estate coverage.
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