Investment Property Insurance
Investment Property Insurance
There are different types of insurance needs for different types of investment properties. Real property used for habitational purposes such as apartment buildings has different and unique loss exposures as compared to a commercial property that is leased to businesses. Property located in the city has a different exposure to certain loss than a winery in the country or property situated along the coast. Whether you are or are not the occupant of your investment property having the wrong type of insurance can lead to financial ruin.
No matter what the use of your investment property you will always need fire insurance. Ideally this will be provided you to on what is known as a Special Form so that it includes the perils of wind damage, damage caused by civil commotion, hail, vehicle damage caused by a non- owned vehicle and explosion. Sometimes a fire can leave you with more damage caused by the smoke and the water to extinguish the fire than the actual fire caused.
The best way to insure your real property to its replacement value is with the use of a professional appraisal. The value of your business personal property contained within the building would be easier as it is tangible. A walk around can help you to ascertain the value of your business personal property and improvements and betterments. Having a video of theseitems would be extremely useful should a loss occur. This can be very important where you as the landlord do “build outs” to suit your tenant. Agree in advance who will be responsible to insure the improvements and betterments in a “build to suit” property.
Should a loss occur and you are not able to operate your business you need loss of business income coverage. Coupled with this should be extra expense coverage in the event you have to permanently or temporarily relocate to another location to resume your business operations as close to normal as possible and thereby reduce your loss of income. This holds true if your property is not occupied by you but rented to others. If your tenant has to vacate your premises you will sustain a heavy loss of income claim when the rent stops coming in.
One of the major components of a property owner’s insurance policy is the inclusion of Building Ordinance or Law insurance. From the point in time when a building is constructed to the point where a loss occurs there can be tremendous changes in the local, state, or federal laws that govern building codes. Compliance with this not only takes up extra time in getting the building and business back up and running but it can cost a tremendous amount of money that was not taken into consideration at the time the limit of coverage for the building was agreed upon. Your policy might contain some provisions for this type of coverage.
Some optional coverages you should consider are:
Earthquake Damage which may be more reasonable than you think as the commercial earthquake policy comes with many options to reduce the premium.
Flood Insurance if you are in an area that has a propensity to flooding.
As with all insurance policies review the coverage provided and the limit that applies to that particular coverage. Discuss “buy back” of higher limits with your professional insurance agent at EZ Center Insurance Services.