How To Protect Your Commercial Property
Owning a commercial property adds value to your portfolio and provides you with a steady income stream. However, while you're in line to enjoy a large return on your investment, you must take into account certain risks involved. Here are some ways to minimize those risks.
1. Choosing Reliable Tenants
While it's important to market to potential tenants, it is recommended that you establish a tenant screening system. A good tenant screening process includes a thorough background check and a litigation search. By implementing a comprehensive tenant screening system, you'll be able to identify potential issues early on and avoid costly problems down the road.
In addition to running a complete criminal record check and credit report, it's recommended that landlords perform a landlord/tenant lawsuit search. This helps ensure that you aren't unknowingly signing up for a lease agreement with a potentially risky tenant.
By establishing a tenant screening system, you can reduce the risk of having a problem tenant. If you do find yourself dealing with a problematic tenant, it's recommended that your attorney conduct a damage assessment. This allows you to determine how much money you're entitled to receive and what steps you should take next.
Protecting Your Investment
When you invest in real estate, you want to make sure that your investment is protected. For example, if you don't know where your building stands legally, you could lose out on a lot of money. There are several things that you can do to protect your investment.
Whether your commercial property serves as a multi-tenant office building or operates as the storefront for your business, protecting this valuable asset is crucial to your livelihood. Unfortunately, neglecting this aspect of commercial property management can quickly snowball into costly liabilities that could have been mitigated with a comprehensive risk management strategy.
If you haven't created a formal plan to protect your real estate from everyday threats of weather, wear and tear, hazardous conditions, and other issues, the following six areas can get you started.
2. Carry a Comprehensive Commercial Property Insurance Policy
If you currently have a general liability policy, it's important to understand it doesn't protect your property but that of third parties outside your company. For example, if one of your employees accidentally backs into a client's mailbox.
On the other hand, commercial property insurance protects your real estate, inventory, furniture, and other building and workspace contents. In addition, should a storm cause a tree to fall into your roof, this policy will handle the repair and replacement cost.
Adequately protecting your business assets is essential to prevent interruptions and costly losses. Unsure if having both general liability and commercial coverage? Below is a short list of company characteristics that warrant purchasing this insurance:
- You work out of an owned or rented space, building, store, etc.
- Your business relies on equipment and tools, whether owned or leased
- Your building has inventory stored in it
- Other business-related assets are on site
Speak with a knowledgeable insurance agent to determine the level of coverage that is right for you. They can answer questions you might have and point out industry risks you didn't realize posed a threat to your business. Make sure you have the right legal protection for your building. Insure your business against loss of business equipment, and ensure you have a solid business structure.
3. Keep Your Building Dry
Water damage is one of the most expensive losses a business can experience besides a fire. All it takes is one leaky or burst pipe to do thousands in damage if undiscovered for a few days. Worse, if damage occurs to the main structure or its foundation or leaks into areas you can't reach to clean up, additional complications could arise, including mold.
So, how to prevent or at least deal with this issue effectively?
- Know where the primary valve shut-off is and use it to reduce how much water soaks your workspace
- Consider commercial properties that have a water leak detection feature installed, or consider getting an automated shutoff sensor
- Protect your pipes by properly insulating them against extreme cold
- If you own your building, prioritize regular maintenance of the gutter system, including cleaning it out and replacing weakened sections
- For properties with outdoor sprinkler systems, ensure water doesn't pool where they spray and that they are a good distance from your building
4. Prepare Against Strong Wind Events
Protect Against Storms and Blizzards
Storms, blizzards, and hurricanes can wreak havoc on your home or business. They can knock out power, flood your basement or even blow away your roof. But there are ways to protect yourself against the potential costs associated with such weather disasters. Here are some tips for keeping your property safe during extreme conditions.
Protect Your Windows
Windows are often the first thing to break when a storm hits. If you don’t have window protection, you could pay thousands of dollars for repairs. To prevent expensive damage, make sure to install storm shutters. These sturdy panels are designed to withstand high winds and heavy rains. You can choose from different styles, colors, and sizes to fit your needs.
Install Waterproofing Materials
Waterproofing materials like caulking can help keep water from seeping into your walls and damaging your house. Even though it might seem obvious, many people forget about waterproofing around doors and windows. Make sure to seal cracks and gaps around exterior door frames and windowsills. This will ensure that water doesn’t enter your home.
Keep Trees Trimmed
Trees can provide shade, but they can also pose a threat to your home if they fall onto it. Keep trees trimmed to avoid branches falling on your property. Also, check your yard regularly to see if anything looks amiss. A tree that appears weak could be a sign that it’s ready to fall.
No matter where your business operates from, mother nature can wreak havoc in a matter of minutes that will take months to repair. From hurricanes and tornados to blizzards dumping eight feet of snow in a day, the damage caused by these events can include:
- Mold and mildew
- Water intrusion
- Fallen trees
- Power interruption
- Structural damage
So, how can you tame the impact of severe weather? First, consider using plywood to protect office windows at a bare minimum, though only good for one-time use. Ideally, storm shutters would be your best option if you live in an area prone to wind damage.
But, besides weather-proofing your building, assess the surrounding grounds for potential threats as well. For example, if your commercial property has any debris or overgrown trees, be sure to clean and trim these threats. Also, if you have an outdoor break area, ensure all furniture gets secured to the ground and have an easily accessed storage room to move chairs indoors.
Everything mentioned here might threaten your building if thrown by a high-speed gust. You may also face additional liability if these objects strike employee cars and/or neighboring buildings.
5. Heat Can Be Damaging – Control It
Businesses that operate in warmer temperatures or experience extremely high humidity would do well to take steps to not only control moisture to prevent mold but also create healthier air in their buildings.
Unchecked warmth can cause your property's floors to warp, attract pests, rot wood, cracked pavement, and damage shingles. While you can't stop the sun from heating things up, you can take the following steps to create a more regulated environment and prevent damage:
- For humid climates, an adequately sized air conditioning system with proper drainage is essential to keep moisture at bay
- If your business operates in a hot and arid zone, humidifiers can balance interior temps and save on your HVAC bills
- Always clean up spills and water leaks right away. Dry them up thoroughly, as well, since mold can develop within just a few days
- Always ventilate your property when humidity is low to bring a fresh wash of air through
- Don't keep furniture up against walls since this can obstruct airflow and develop pockets of mold-growing moisture
- Rooms with faucets, toilets, sinks, and refrigerators should be ventilated and have a fan to keep air circulating to dry out any condensation
6. Protect Against Outside Threats
Vandals, arsonists, and burglary crews are always looking for easy targets for structured criminal activity. They want quick cash and don’t care about collateral damage. Personal property and small business property can be easy targets for professional criminals, and petty thieves if they see an easy target.
If you run a small business, you probably know how devastating it can be to lose everything because someone broke into your store or office. Small but good security measures can make a lot of difference. You might think that lighting up the place would scare away thieves, but it just makes it easier for them to see what they’re doing.
Security cameras are one of the best ways to protect your property. Not only do they help deter vandals and thieves, they also serve as evidence in case something does happen. Even better, you can monitor your camera remotely via a smartphone app. Many businesses offer free monitoring, so check with your provider to see if you qualify.
Finally, consider installing motion sensors. These devices automatically turn your lights on when movement is detected. This helps prevent theft during the night hours when no one else is around. Motion sensors also work well in parking lots, where a thief could easily steal your vehicle without being seen.
Another option is to install fencing. Fencing is typically used to separate different areas within a property. However, some companies sell fence panels that can be used to completely enclose an entire building. When combined with a security system, this provides extra protection against intruders.
To reduce the chance of these crimes happening to your company, take the following steps:
- Install bright exterior lights near vulnerable areas, such as glass doors, rear entranceways, and other exposed entry points that criminals may target.
- Motion sensor lighting is also a great option if you don't want the added expense of non-stop lighting on your electric bill
- Doors should have heavy lock mechanisms, including deadbolts
- Rooms that hold valuable information or access to your data should be secured with a solid-core door
- When choosing vinyl graphics for your window, choose those with perforations. Criminals will have a hard time making out what's inside your store
- Security cameras play a crucial role in identifying and deterring some would-be thieves
- Have windows glazed with a burglar-resistant coating to make it harder for smash and grabs robberies to occur
7. Perform Regular Inspections of Your Commercial Property and Assets
To prevent problems before they happen, it’s important to keep an eye out for potential issues. Regular maintenance checks can help identify problems early, saving both money and hassle down the road.
The best way to do this is to have a licensed professional perform an annual inspection of your heating, air conditioning, plumbing, and electrical systems. They can look for signs of wear and tear, leaks, corrosion, broken parts, and missing components. These professionals can also spot potential safety hazards like cracked pipes, exposed wires, and malfunctioning appliances.
A licensed restoration provider can also conduct a thorough inspection of your home. This includes looking for signs of moisture, humidity, pests, structural damage, fire damage, flood damage, and mold growth.
Prevention is your best weapon in keeping insurance claims down and lessening the risk of damage occurring. Creating a routine maintenance strategy can ensure that your company runs a tight ship.
When determining what inspections and upkeep you should perform, start with these basics:
- Regularly check the functionality of your smoke alarms. It's recommended to do so on a monthly basis.
- Appliances need to breathe in order to diffuse the heat generated by their mechanisms. Therefore, conduct regular inspections and re-evaluate your appliances' positioning to maximize airflow.
- Structural cracks can be a severe hazard for various reasons, including tripping, slipping, and fall accidents. Every year a whopping 25% of the U.S. population ends up at the ER because of these accidents. So, explore your commercial building and take notes of areas showing weakness, such as a sagging ceiling, warped paint, mold stains, and more.
8. Fix Any Leaks In Your Property
Water damage is one of the biggest headaches for businesses. Whether it’s caused by a broken appliance, a plumbing problem, or even the weather, it can wreak havoc on a business's bottom line. In fact, according to HomeAdvisor, a typical home repair costs $3,500. And while homeowners themselves can perform many repairs, others require professional help. One such example is repairing a burst pipe, which can cost anywhere from $2,000 to $10,000 depending on the size of the pipe.
In addition to being costly, a burst pipe can also do significant harm to the structure of a building. For instance, a single burst pipe can cost you thousands of dollars if left untreated. It can also lead to permanent damage to walls, floors, ceilings, and furniture. That’s why it’s important to fix those leaks immediately. Otherwise, the damage could continue to worsen over time.
The good news is that preventing water damage doesn’t have to be difficult. By following some simple guidelines, you can drastically cut down on the chances of experiencing a flood.
First and foremost, know where the main shutoff valve is located. Many homes come with multiple valves. If yours does, find out what each of them controls. Once you identify the valve responsible for turning off the water supply, turn it off. Then, check for leaks around the perimeter of the house. You might want to wear rubber gloves because pipes tend to release a lot of moisture.
Next, look for cracks in the foundation. These can often indicate serious problems like faulty drainage systems. Finally, make sure that the basement windows and drains are working properly.
If you see any signs of leakage, call a plumber immediately. They can perform minor fixes such as replacing a faucet or fixing a dripping sink. But if the issue is larger, you may need to hire a contractor.
9. Insure Against Personal Injury
Personal injury litigation is one of the most lucrative businesses in America. Every year, thousands of individuals file personal injury lawsuits against companies and individuals who have harmed them. These claims can be filed in state courts or federal court.
Ensure Your Business Is Covered for Personal Injury
Personal injury litigation is one industry where there is no shortage of lawyers willing to take on new clients. However, if you don't have insurance coverage for personal injury, you may find yourself out of luck. You'll need to hire a lawyer to represent you in a personal injury case.
You should never try to handle a personal injury claim without legal representation. A personal injury attorney will be able to negotiate a settlement with the defendant's insurer, ensuring that you receive fair compensation for your damages.
A personal injury attorney will also be able to assist you in filing a claim with your health insurance provider. Many times, health insurance providers won't cover medical expenses related to personal injury unless you've had previous experience with the same injury.
An experienced personal injury attorney will be familiar with the ins and outs of personal injury law. He or she will be able to advise you on whether or not you qualify for benefits under your health insurance policy.
Finally, a personal injury attorney will be well-versed in the process of obtaining a judgment against the responsible party. Once you have obtained a judgment, he or she will be able to collect money owed to you through garnishment, attachment, levy, execution, etc.
Your Commercial Property Is a Valuable Asset: Protect It
It doesn't matter if you own your commercial property or lease it. You have a duty to keep your workspace safe. Unfortunately, preventing every risk from occurring is impossible, but you have control over how you'll cover the damages.
Commercial property insurance is an essential component of any mitigation strategy you might have in place. It ensures your business against premises liability suits and can help you rebuild when a fire or natural disaster strikes. Getting peace of mind knowing your business and other assets are safe lets you focus on more important aspects of your career.
Keep in mind that you should regularly assess the adequacy of your insurance coverage and make changes as needed. If you're unsure about the level of protection your company needs, reach out to an experienced agent for advice.