Why Commercial Property Management Services Need Property Insurance

Commercial property insurance is one of the best ways to minimize risk and potential losses on commercial real estate. Commercial properties might run into a lot of potential problems such as theft, fire damage, various types of natural disasters and even liability due to third party damage. Insuring the property against such perils is definitely a wise thing to do. Insurance not only protects the solvency of the commercial property but also considerably increases its value in the market.

Purchasing a sound insurance policy must be considered a primary duty of commercial real estate property management firms. Here’s why.

1. Financial security

Insurance allows property owners to be relieved of the fear of bankruptcy due to financial loss. The security offered by an insurance policy upholds the confidence of running the property /business without any apprehension of losing the capital. An insurance policy usually covers all loss incurred due to unpredictable circumstances. Another form of insurance— liability insurance also reimburses the losses incurred by a third party due to the commercial property, securing the management from further financial constraints.

2. Tax benefits

An insurance policy demands regular payment of premiums, the amount being dependent on the type of policy a commercial real estate management firm has opted for. The good thing is that the payment of the premium can be included in the category of annual expenses in the property accounts. This results in deductions in the annual income tax for the property owner. Although the payment of premiums for insurance is adds to your assets in the long run, you are not bound to pay any recurring tax on that.

3. Goodwill

commercial property management services always advise investing in a sound insurance policy offered by any reputed insurance company so that the relationship can be used to enhance the property’s reputation. Tenants usually inquire whether the property is insured or not, and if it is, they might demand to know more about the policy. A good insurance policy definitely helps attracting good tenants.It is noteworthy that different types of insurance are also available for all the different items and appliances operational within the commercial property. The risk management team needs to ascertain risky areas within the property and make appropriate provisions for insuring them separately in order to maximize risk cover.

I am John Daniel, A US based Real Estate Professional and Blogger. With experience in real estate of more than 10 years, the above mentioned article is solely based on my experiences with madison management .