Are You Covered for That Commercial Building You Just Purchased?

By Clint Scott | July 29, 2016

Are You Covered for That Commercial Building You Just Purchased?Commercial property is, by and large, pretty expensive. For many small business owners, buying a piece of property that hasn’t budged on the market for a while can look like a good bargain, since you are more likely to negotiate a better selling price. All of that is well and good, until a pipe springs a leak or the ceiling caves, or you find some other damage that leaves you at a loss.

When you purchase a building that has been unoccupied for an extended period of time, you must purchase an insurance policy that fits your needs, and understand what is and is not covered in that policy.

We have discussed exclusions before, but the average exclusions for a policy may differ when it comes to commercial property. This is also true for buildings that have been abandoned or vacant for more than 60 days. Your policy may not cover you for:

  • Previously damaged areas. While no insurance policy is going to cover you for damage that already exists, your policy may have a clause that allows it to deny claims if the damaged property, once fixed, becomes damaged again. For example, let us say there is a leak in one pipe in the building. You fix the pipe and the damage to the supports and dry wall, and then find that another leak springs up in the same exact place. Your policy may not cover that claim, since the damage occurred again.
  • Animal damage. It is unlikely that an insurance policy covers the mice that chew your wires, or any other examples of damage done by critters who have taken up residence in or around your building.
  • Electronic data. If you are the victim of a security breach, any data that is lost or stolen is may not be covered. You can purchase additional coverage for cyber security, and if you run any part of your business online, you absolutely should make that purchase.
  • Damage to the land. This is a tricky one for a lot of commercial property owners, but it works like this: when you buy a property, the land upon which your building sits might not be covered.

It is possible to purchase additional coverage for your property, and your agent should explain clearly and carefully what types of coverage you need. For example, if you buy a building in a flood zone and your agent fails to disclose that you need flood insurance, you may be able to make a case for an agent negligence claim. Before you buy any property, though, you should sit down with your agent to talk about your needs, and to ensure that your policy is sound.

McWherter Scott & Bobbitt upholds the rights of policyholders throughout the state. If you believe your insurance agent acted negligently, or if your claim has been denied under what appears to be suspicious or unfair reasons, you’ll need a skilled Tennessee bad faith attorney to help you. Please call 731-664-1340, contact Clint Scott or Brandon McWherter, or use our contact form to schedule your consultation at one of our offices in Nashville, Chattanooga, Memphis, Jackson or Knoxville to find out more.

Posted in Insurance Disputes