Insurance and Commercial Real Estate

One of the least considered, but perhaps most important aspects of successful real estate investment is insurance against losses. Even though the market for residential real estate has begun to cool, commercial real estate investment opportunities abound. Commercial properties have additional risks that need to be mitigated and in today’s litigious society, it is important for investors to take the steps necessary to protect themselves and their investments.

As the housing market begins to cool off, the investment risk of real estate has increased somewhat. Residential and commercial real estate investors can no longer rely on a continually increasing market to bail them out of mediocre or bad purchases. The only real insurance you have here is to study investment analysis further and to really check your market before committing funds to a transaction.

There are other risks in commercial real estate that you can mitigate through third party insurance policies. The most common form is title insurance. Most real estate professionals recommend that buyers obtain title insurance on any property they purchase and if a loan is involved, the lender will make it a condition of obtaining the loan. The purpose of title insurance is to protect the buyer in the event that problems are found with the title after the close. Even though all sales of real estate include a title search, it is a good idea for the buyer to purchase separate title insurance as an extra measure of protection against mistakes in the search. This extra insurance will help protect the buyer in the event of any undiscovered liens, disputes over property lines, or other matters affecting title.

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