Types of Commercial Property Insurance

In addition to worries and worries about the success of their chosen business activities, owners of commercial premises are worried, and not without reason, about whether they will be able to cope with all sorts of unforeseen events – fire, robbery, property damage, and more financially.

Service cost

It is necessary to multiply the sum insured by the insurance rate to determine the cost of insurance services.

Each specific subject of insurance has its rate. For example, insurance of goods in a store, decoration, equipment, and the premises in a modern shopping center involves a tariff rate of 0.06-0.1%. On average, insurers use a rate of 0.1-1%.

The following factors also affect the amount of the insurance premium:

  • Fire hazard of the premises.
  • Warning systems.
  • Engineering condition of the object.
  • Service staff.
  • Insurance history of the thing.
  • Transaction parameters, franchise.
  • List of insured events and much more.

Insurance services can be paid for at a time or in installments (several payments).

Title Insurance

The product will protect you from the loss of ownership of the acquired property if, when selling commercial real estate, the seller deliberately hides or does not consider the interests of minors, heirs, or relatives, and the buyer does not know about it. It is not uncommon for a transaction to be made by an incompetent citizen. If the interested person goes to court, the buyer will be left without premises since the court will recognize the transaction as invalid, and it will take a very long time to return his money.

In an insured event (a court decision to recognize the transaction as invalid), the insurance company pays compensation to the bank that issued the loan or to the buyer who insured the property for the total value.

Property insurance against loss (partial or complete destruction of the building)

If an emergency or a natural disaster damages the house, insurance will protect against financial losses. Such a policy is required by banks when lending is secured by real estate.

Repair insurance

This type of insurance will cover the costs associated with damage to the interior decoration of the premises. Damage can result from strangers’ actions or phenomena of a domestic, natural nature.

The tariff depends on the location of the premises and ranges from 0.1 to 6% of the sum insured per year. For example, if the office on the first floor of an old house has not been renovated for a long time, the cost of the policy will be 20-30% more than for an office in a new building.

Liability insurance for the operation of real estate

If a neighboring building is damaged because of your building, the insurance company compensates for financial losses. For example, there was a burst of pipes, and water flooded the lower floors. The insurance company pays compensation if there is an actual fault of the insured person in the event recognized by the court.

Liability insurance is justified if your neighbors in the building have spent money on expensive repairs and you are unsure of your communications.

Mortgage insurance

A mortgage is designed for several decades and is associated with various risks, so when lending, banks require to ensure the subject of the mortgage and the life and health of the borrower. In addition, insurance protects both the lender and the borrower financially – in the event of an insured event (loss of property, death of the debtor, or disability), the insurance company will send compensation to repay the mortgage loan.

The insurance price depends on the loan amount – as the principal and interest are paid, the amount of the insurance premium decreases. The contract is concluded for the entire loan repayment term until the full repayment of the mortgage debt.

This entry was posted in Board Management & More. Bookmark the permalink.