Commercial Real Estate and Insurance

You know the importance of insuring your vehicle. You also know the importance of insuring your home. However, are you aware of the importance of commercial real estate insurance? It is a well known fact that while insurance of your commercial real estate investment is one of the most important factors to becoming a successful investor, it is also the number one factor that is the least considered above all else.


For the most part, you would not second guess your need to insure your personal assets, such as vehicle, home, boat, or other valuable possessions. However, most people forget or simply do not understand that it is equally important to purchase insurance for your investments too. Think about it, when you make an investment, you want to see it flourish; you want to gain a return on the asset. Therefore, one of the very first steps you must take is to purchase commercial real estate insurance.

Commercial Real Estate Insurance Coverage

The best way to understand what type of coverage you need for your investment, you should understand what is available. One of the most important type of insurance you will need is property insurance. Property insurance offers protection against any damage to the commercial property. If your investment becomes destroyed or damaged, the insurance will reimburse you for your loss.

There are a variety of things included in this coverage. The land is generally covered, as well as any buildings or other attachments upon the land. What this means is that every aspect of your investment, from the ground up, is generally covered by the commercial real estate insurance policy. That is, unless of course there are exclusions. In general, structures and buildings are almost always included in the coverage. This means equipment, material, machinery, fixtures indoor or outdoor, additions, and completed additions.

Another aspect of commercial real estate insurance that is particularly important is the protection provided to other people's personal property, while on the premises. This coverage allows for protection against the cars or property of another person, while they are on the property.

Coverage is usually provided only if the cause of the damage is covered under the policy. For the most part, causes from volcanic action, sinkhole collapse, sprinkler leakage, vandalism, civil commotion, or riot, damage from vehicle or aircraft, smoke, hail, windstorm, explosion, lightning, and fire, are all covered by the policy.

There are other forms of insurance coverage that may be available for your commercial real estate investment as well. Most providers offer additional coverage for flooding, earthquakes, and even terrorism. These are typically additions to the general coverage you purchase and available at an additional cost. Before opting to purchase the additional coverage for floods, earthquakes, or terrorism, it is important to analyze your risks.

If your commercial real estate investment is located within a flood prone area, you may be better off purchasing the extra flood insurance, just in case. However, if the property is located within a dry area or desert like setting, you will likely not need flood insurance. Earthquakes are common in specific areas as well, it is important to weigh the risks of earthquakes before opting for earthquake insurance.

Terrorism insurance on the other hand is something you need to consider for yourself. You need to learn what you can, weigh the risk, and decide if terrorism insurance is something you need to protect your investment. Since September 11th, terrorism insurance has been a real presence in our society. The act of terrorism can occur at anytime and anywhere. It is important to weight those risks and make the appropriate decision.

Analyzing

Understanding what type of insurance will work best for your commercial real estate investment is your best defense. In order to ensure that your investment is adequately covered, you need to speak with a commercial insurance broker. However, do not simply rely on them to tell you what you need. Remember, they are sales people; they are in the business to make money. They will promote policies that may not be useful to you or a wise monetary investment for you as well.

Therefore, take a little time to analyze your risks as well. Understand what type of things could go wrong and lead to damage to the property. This means analyzing the weather within the area, the occurrences of storms, and what types of storms occur. While the weather cannot be predicted, you can analyze the past weather. Is the area prone to hurricanes? Does the area get a large amount of tornados each year?

You should also look at the land itself. How does it sit? Are there any major problem areas? Is it next to a busy road, in which car damage is a likelihood? Knowing the type of commercial real estate insurance you need to protect your investment, will help in eliminating any losses as a result of damage.

Article Source: http://www.superfeature.com