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Q&A: Expert Tips On How to Insure Your Commercial Real Estate Business

Posted by Parker Beauchamp on Feb 21, 2017


Property management and investment is one of the hardest games in town, but the rewards are great. For example, on the commercial side, major real estate services firm CBRE predicts a rise in rents across office, industry and retail properties.

Unfortunately, the risks can be just as great. Tenants break leases or bad tenants overstay their welcome. Vacancies occur. And property markets don’t always cooperate with financial projections.

What does this mean if you’re a real estate professional looking to thrive? It means it’s time to provide your business with proper protection. To help give you the answers you’ve been looking for, we interviewed INGUARD’s very own Vice President, Emerson Poort. Poort specializes in property/casualty risk management and insurance consulting for real estate, rental and leasing.

1. What are the most common risks and liabilities that commercial real estate insurance owners need to insure against?

Real estate owners deal with a variety of individuals coming and going on-site, causing increased risk for incidents, such as:

  • Injuries and lawsuits
  • Internal theft
  • Data breach and cyberliability
  • Damage to buildings or business personal property from fire, water and other perils
  • Loss of rental income arising out of damage to buildings

While these are some common risks commercial real estate owners face, each business has its own unique exposures to loss. Always ask your advisor questions and consider taking notes of occurrences, incidents and “near misses” which happen throughout the months. This can help better determine how to insure your property and take proactive steps to minimize exposure.

2. What are the first 3 - 5 questions you ask someone when they begin the insurance consultation process?

Prior to the consultation process, it’s critical to have fundamental questions prepared to receive a better understanding of potential clients. Going into your consultation, be prepared to answer questions such as the following:

  • What can I do to earn your business?
  • What are your specific plans to protect your business?
  • How much coverage do you currently have?
  • Have you experienced any recent events where you have filed a claim? If so, was the claim handled properly?

3. How can managers at commercial real estate firms or organizations properly assess their risks and coverage options?

Determine how financially secure your business is to establish how much of your exposure should be self-insured through deductibles or by not purchasing certain coverages. Some coverages you may want to consider are:

  • Property coverage for structures (e.g. apartment, home, duplex, garages, pools, other structures)
  • General liability
  • Loss of income
  • Workers compensation
  • Automobile insurance
  • Data breach coverage

4. How should commercial real estate owners prepare for their insurance consultation?

Preparation is key to getting the most out of your insurance consultation. Prior to your meeting, make sure you know:

  • What your business entails (e.g. how many units, buildings, etc.).
  • Various ownership entities involved.
  • Details of each building or property (address, units per building, age of roof, electrical, plumbing, HVAC, annual rental cost, year built, square footage, number of stories, etc.).
  • Where your business has been and where you want to go in the future.

Additionally, have questions ready for your advisor so you feel comfortable and well-informed after the consultation. When compiling questions, think of areas such as:

  • What coverage options are available?
  • What is the history and background of your company?
  • Have you worked with businesses such as ours before?
  • Can you provide feedback on potential self-insured exposures?
  • Are there any other coverage options I may be overlooking?
  • How does replacement cost coverage compare to actual cash value coverage?

Go into your consultation with an open and honest mentality and make sure you are telling your entire story. This will help your insurance provider ensure you are receiving the most adequate coverage for your business now and for the future.

Is your real estate business interested in evaluating its insurance and risk management program? If so, contact INGUARD for a free consultation with one of our experts.

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You can also download our free guide to learn more about how you can help your organization navigate the insurance process.

Image Source: mweyl

Topics: Business Insurance