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Common Claims and Coverage Issues in Commercial Building Insurance

Commercial office building with glass exterior next to pathway

Commercial building insurance protects businesses, landlords, and property managers against various risks affecting a building’s physical structure and the businesses within.

While these policies offer broad coverage, some specific claims are more commonly filed than others.

This blog will explore the most frequent claims under commercial building insurance policies, providing valuable insights into their causes and impact.

1. Fire Damage

Many sources can spark fires, including electrical faults, heating systems, or simple human error. The resulting damage to a building’s structure and contents can be catastrophic, making fire damage claims among the most costly and frequent types of claims for insurance for commercial property. According to the National Fire Protection Agency, fire departments responded to 1.5 million fires in 2022 alone.

2. Wind and Hail Damage

Severe weather events, like heavy winds and hailstorms, pose significant threats to commercial buildings. The roof is among the most vulnerable areas and often sustains damage during such disasters. This damage can result in structural compromises, leading to costly repairs and potential business interruptions. Office property insurance coverage can help with the cost of repairs due to damage.

3. Vandalism

Commercial properties are often targets for vandalism and other malicious acts due to their high visibility and potential for disruption. The resulting damage can range from broken windows and graffiti to more severe structural damage, leading to significant financial losses for property owners. Commercial premises insurance should cover the cost of repairs or replacing broken items.

4. Theft and Burglary

Commercial properties, especially retail spaces, are constantly vulnerable to the persistent risk of theft and burglary. Based on data from the National Retail Federation, retail crime resulted in losses exceeding $112 billion in 2022. These unfortunate incidents not only jeopardize the safety and security of the premises but also lead to significant financial losses stemming from stolen merchandise and potential property damage that may occur during such criminal activities.

5. Water Damage

Water damage from various sources is another leading cause of commercial building insurance claims. Plumbing Issues can include burst pipes, leaking fixtures, and blocked drains, which can lead to significant water damage, often going unnoticed for extended periods, exacerbating the problem.

Faulty roofing can allow water to enter the building, damaging ceilings, walls, and electrical systems. Natural floods are another prevalent cause of water-related damage in commercial properties. Water damage from flooding isn’t typically covered in commercial property coverage. Businesses in flood-prone regions should consider obtaining additional flood insurance to protect against potential financial losses.

6. Slips, Trips, and Falling Objects

Slip and fall accidents are one of the most common liability claims faced by property owners. These incidents often occur due to hazards like wet floors, uneven surfaces, or poorly maintained properties.

Another common safety hazard in any workplace is the risk posed by falling objects. These items, whether from shelves or the building structure itself, can pose a severe threat to visitors and employees. In addition to causing injuries, falling objects can also result in damage to visitors’ property. General liability in your commercial building insurance usually offers protection against this.

Protect Your Commercial Property

Understanding the common claims associated with commercial building insurance is essential for property owners and managers. Being well-informed about the types of claims typically filed can help them make informed decisions when selecting insurance coverage, effectively manage risks, and protect valuable assets. The experts at the Colby Group can help you find the ideal policy for your needs.

This post is for informational purposes. The details and conditions of insurance policies vary. We always recommend speaking with an agent to understand the terms of your existing policies and the policies you plan to purchase.

To consult with an insurance advisor, call 800-392-6532 or email insure@colby-group.com.