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The Five Coverages You Need in Commercial Real Estate for 2024

February 8, 2024 / Carley Skidmore

The commercial real estate market experienced a very challenging 2023. Office vacancies were at a 30-year high and the demand for multifamily properties couldn’t keep pace with the supply.

The market is still feeling the effects of the 2020 pandemic as high interest rates continue to push potential homebuyers into multifamily properties. And despite that trend, high-end and luxury apartments are struggling to fill units. The shopping/retail market is still on the rise proving that brick-and-mortar stores are still desirable. Industrial and office space continue to face the biggest decline as companies struggle to entice employees back to the office after years of remote work.

According to Deloitte’s 2024 Global Insurance Outlook Report, commercial property premiums rose by an average of 20.4%—the first time that rates rose greater than 20% since 2001. Inflation continues to impact the costs of construction materials and labor as the rise in severe storms, climate changes and natural disasters continue. These increased risks in the commercial real estate market are pushing insurance premiums even higher – with no immediate end in sight.

Aside from proactive loss prevention and security with an A- or better insurance company, today’s real estate owners, management companies, HOAs and lenders must protect themselves from losses with the right risk amount – and right type – of insurance coverage. From fires and weather damage to crime and general property damage most commercial real estate properties will remain a tough market to insure. Unique risks may vary, but these five coverages should be part of your 2024 risk management plan: 

  1. Commercial Property From fires and acts of nature to theft and vandalism, this is the standard coverage needed to protect the physical property and what it contains.
  2. General Liability Insurance. Big events bring big risk. Be sure to protect against losses related to events that happen on the property.
  3. Business interruption Insurance. This coverage became essential following the worldwide pandemic of 2020, but it also protects against increasing acts of nature and income related to potential business shutdowns.
  4. Umbrella Insurance. This supplemental coverage protects above and beyond the coverages above particularly regarding lawsuit and personal injury claims.
  5. Builder’s Risk Insurance. The construction process is full of risk, which is why it’s critical to secure builder’s risk insurance during the development phase of a project.

From small multi-family units to multi-billion-dollar high-rise properties in 50 states, CREIS understands the unique challenges and risks faced by property owners, developers, and managers. It’s our mission to provide the specialty products you need to safeguard your assets, enhance your peace of mind, and support your business growth.

Let’s talk about your risk and coverage needs today.

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