What Does Building Owner's Property Insurance Cover?

As a owner of revenue generating real estate, chances are that you have significant assets tied up in property. It is not only important that you have property insurance but also have the right insurance for your individual building portfolio.

What does it cover?

Building Owners property insurance covers the buildings, structures, and contents that you own from direct physical damage.

Common claim examples:

1) A tenant starts a fire that spreads to multiple units

2) A hail storm damages part or the entirety of a building’s roof

3) A pipe bursts and floods a building

How much does it cost?

Property insurance is most often the largest portion of a building owner’s insurance program accounting for 80-90% of the total premium. Not only are the buildings large and worth a significant amount, they are exposed to much more risk than a traditional building or home depending on the tenants utilizing your property.

Common problems and exclusions

Undervaluation of property – Although it is tempting to lower the property limit to lower the premium, there are severe penalties associated with undervaluing a building called a coinsurance penalty. It is also common to undervalue property because of a failure to consider the cost of extra fixtures, plumbing, electric, and materials associated with commercial real estate.

Protective Safeguards – Protective safeguards are warranties that the property owner will maintain a specific protective measure for the insurance company to pay a claim. For example, many apartment property insurance policies have an agreement that the apartment owner will own and regularly maintain both a sprinkler system and a central station fire alarm before the insurance carrier will pay for a fire loss. These are often unavoidable, but it is something to be aware of.

About The Author: Austin Landes, CIC

Experienced Commercial Risk Advisor specializing in Oklahoma property, technology, and hard-to-place liability coverage.

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