Real Estate Insurance

In the context of commercial property, real estate insurance covers risks accompanying the ownership, maintenance or management of real estate, including both primary and excess coverage. More broadly, it refers to a suite of risk management and loss mitigation tools that a real estate owner, manager, lienholder, or investor uses to manage risk, including self-insurance and types of legal ownership and contractual relationships that manage risk. Risks include those to property itself, liability to business and personal invitees, defaults to lienholders, losses to or caused by commercial property tenants, and errors and omissions of real estate professionals.

Real estate insurance covers risks of real estate ownership. The major risks are from water damage, claims due to slips and falls and fire. It also covers risks from the following:

• Property management 
• Actions toward employees
• Injuries to employees and others working on premises
• Cyber risks

Some property owners may elect Employer-Practices Liability insurance (EPLI), Worker’s Compensation insurance, General Liability insurance and Cyber insurance.

Different types of real estate insurance include:

• Vacant Land insurance
• New Construction insurance
• Renovation Property insurance
• Commercial General Liability insurance
• Business Owner’s insurance
• Worker’s Compensation insurance
• Flood insurance
• Windstorm insurance
• Terrorism insurance
• Earthquake insurance
• Tenant insurance
• Condominium and Co-operative insurance
• Homeowner’s Association insurance
• Lender-placed insurance
• Liability-only insurance coverage
• Ordinance or Law insurance
• Equipment Breakdown insurance
• Cyber Liability insurance
• E&O insurance for real estate professionals

People and entities that need real estate insurance include property investors, property owners, realty buyers and sellers, licensed real estate agents, real estate brokers, dual agents, buyer’s agents and seller’s agents. Real estate owners, managers, lessors and lessees also need real estate insurance, as do those who perform administrative functions involving the property, such as collecting and accounting for rents. Persons and institutions that lend or invest money based on the real estate’s value and the borrowers of that money also need real estate insurance, as well as people and entities that build or renovate structures on the property.

Real estate insurance cost factors include the property's market value, location, type of construction, commercial or residential status and loss history. Additional factors include the purposes for which property is used, its condition and the presence of risk-mitigating features, such as fire, water intrusion, or protection against cybercrime. Other factors that affect cost include:

• The structure of the insured’s risk-management program (including primary coverage policy limits
• The claims history of the properties involved
• The physical location of the properties involved
• The deductible or self-insured retention that must be met before the insurance attaches
• The existence of excess or umbrella insurance policies 
• The existence of self-insured retentions to be met before excess or umbrella policies are triggered