Key Takeaways
- General liability insurance protects against claims from tenant injuries on rented properties
- Commercial property insurance covers damages to buildings and structures from covered perils
- Commercial auto insurance provides liability protection for business vehicles
- Workers compensation covers medical expenses and lost wages if employees are injured on the job
- Umbrella liability insurance increases protection above primary insurance limits
- Professional liability protects against errors and omissions lawsuits from tenants
Introduction
As a business that leases or rents real estate to tenants, it is important to have the proper insurance protections in place. This article discusses the top business insurance options lessors of real estate with NAICS code 5311 should consider including general liability, commercial property, commercial auto, workers compensation and other coverage types.
General Liability Insurance
General liability insurance provides crucial coverage for businesses that lease or rent real estate to tenants. It protects property owners from costly claims and lawsuits if a tenant or visitor is injured on the rental property or causes property damage. General liability insurance for lessors of real estate covers a variety of risks including injuries to tenants, slip and fall accidents, property damage to rental units, and liability from conditions like mold or asbestos. It also protects against legal fees if the property owner is sued.
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Based on industry data, the average annual cost for general liability insurance for businesses in the lessors of real estate industry (NAICS 5311) is around $1,500. This pricing is derived from considering factors like average revenue size of companies in this industry, number of employees, litigation risk profile, loss history data, and compliance with safety standards.
Estimated Pricing: $1,500
Commercial Property Insurance
Commercial property insurance provides essential financial protection for owners and operators of rental properties. It covers damages to buildings and structures, liability claims, loss of income, and other expenses to keep the business running smoothly after an insured loss event. This type of commercial insurance protects the investment of lessors of real estate through coverage of physical property, additional structures, vacant buildings, replacement costs, losses of business income, and liability risks to tenants.
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Based on industry data, the average annual cost for commercial property insurance for businesses in the lessors of real estate industry (NAICS 5311) is around $1.50 per square foot. This price is calculated based on factors such as the size and location of the properties, level of coverage required, property values, loss history, security features, and hazards. The minimum deductible is usually $1,000-$2,500.
Estimated Pricing: $1.50/sqft
Commercial Auto Insurance
This reference provides useful information on the top benefits, use cases, and estimated pricing of commercial auto insurance for businesses in the lessors of real estate industry with NAICS code 5311.
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Based on industry analysis, the average price for commercial auto insurance for businesses in the lessors of real estate industry with NAICS code 5311 is around $1,200 per vehicle per year. This price assumes the vehicles are sedans or small SUVs used for basic transportation purposes by employees and are not transporting goods. The price is calculated based on typical insurance rates in most states, average vehicle values and liabilities for this industry.
Estimated Pricing: $1,200
Workers Compensation Insurance
Workers compensation insurance provides vital protections and benefits for businesses in the real estate leasing industry. It ensures employees are cared for if injured on the job while also shielding the business from costly lawsuits. Estimates indicate businesses in this industry can expect to pay around $1.25 per $100 of payroll for workers compensation coverage, which offers protection for a range of workplace injury scenarios at a rate lower than potential costs of an accident.
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Based on industry data and averages, the estimated pricing for workers compensation insurance for businesses in the Lessors of Real Estate with NAICS Code 5311 industry would be around $1.25 per $100 of payroll. This rate is derived from analyzing workers compensation insurance rates for lessors and operators of nonresidential buildings across different states, with adjustments made based on factors like employee job roles, safety programs, and claims history. Businesses in this industry generally have office and administrative staff whose job roles carry lower risks of injury compared to other industries like manufacturing or construction.
Estimated Pricing: $1.25/100 of payroll
Directors And Officers Liability Insurance
Directors and officers liability insurance, also known as D&O insurance, is an important protection for real estate leasing companies. It protects the directors and officers from personal financial loss if they are sued for decisions made in their roles with the company. Common lawsuits faced by real estate companies include disputes over property management, rent collection, and tenant issues which may allege negligence, regulatory non-compliance, or misrepresentation by company directors and officers. D&O insurance helps cover legal defense costs and any settlements or judgments if the company or its leaders are named in a lawsuit. A reasonable estimate for annual D&O insurance premiums for real estate lessor companies is $5,000 – $10,000, with smaller companies paying closer to $5,000 and larger companies paying upwards of $10,000.
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Based on typical pricing models and factors such as company size, annual revenue, number of locations/properties managed, a reasonable estimate for the average annual premium would be around $5,000 – $10,000. Smaller real estate lessor companies with fewer than 10 properties and under $5M in annual revenue would likely be closer to $5,000 while larger real estate management companies with over 100 properties and over $50M in annual revenue could see pricing upwards of $10,000.
Estimated Pricing: $5,000 – $10,000
Commercial Umbrella Insurance
Commercial umbrella insurance provides an additional layer of liability protection above and beyond standard business insurance policies like general liability and auto insurance. It helps protect assets from costly legal claims and lawsuits for businesses in industries like real estate leasing that face higher risks. Some key benefits of commercial umbrella insurance for lessors of real estate include increasing liability limits, covering incidents not included in other policies, protecting against costly legal fees and damage awards, and providing coverage for pollution and environmental exposures related to properties. Common use cases where umbrella insurance provides protection include lawsuits exceeding general liability limits, injuries to tenants, transportation of equipment, negligence claims, and pollution incidents. Estimated pricing for businesses in the lessors of real estate industry is around $1,500-2,500 annually assuming at least $1M in underlying commercial general liability coverage.
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Based on typical factors used to price commercial umbrella insurance such as number of employees, annual revenue, claims history, and business operations, an estimated average pricing for businesses in the lessors of real estate NAICS code 5311 industry would be around $1,500-2,500 annually. This pricing assumes the business carries at least $1,000,000 in underlying commercial general liability insurance.
Estimated Pricing: $1,500-2,500 annually
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions insurance, provides important protection for businesses in the real estate leasing industry. It helps protect against lawsuits arising from typical operations such as tenant issues, property management mistakes, and other professional errors or omissions. Key benefits include protecting personal assets, maintaining positive cash flow to cover legal costs, and covering a variety of liability claims related to tenant interactions, property maintenance, and contractor oversight. Pricing is estimated around $1,500-$2,000 annually based on common coverage amounts and deductibles for businesses in this industry.
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After analyzing industry data and risk factors, the estimated average annual pricing for professional liability insurance for businesses in the Lessors of Real Estate with NAICS Code 5311 industry would be around $1,500-$2,000 per year. This pricing was derived based on typical coverage amounts of $1-2 million and standard deductibles of $5,000-$10,000 given the moderate litigation risk level in this industry.
Estimated Pricing: $1,500-$2,000
Cyber Liability Insurance
As a lessor of real estate, you handle sensitive tenant data like addresses, payment details, and more. Unfortunately, this information makes you a target for cyber attacks and data breaches which can be costly without proper protection and response plans in place. Your business also relies on online systems and network uptime to operate efficiently. A ransomware attack or outage could disrupt operations and cost lost revenue if not prepared. Cyber liability insurance provides essential financial protection and services to help respond in the event of such incidents, helping avoid costly lawsuits, fines, lost business, and reputational damage.
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After reviewing average cyber liability insurance pricing for businesses in the real estate leasing industry (NAICS 5311), the estimated average annual premium would be around $1,500. This price was derived based on common factors like number of employees, annual revenue, and risk level. Businesses in this industry tend to have fewer employees and less data/systems compared to other sectors, resulting in a moderate risk level and corresponding moderate pricing. Additional cybersecurity practices and controls could help lower the premium further.
Estimated Pricing: $1,500
Business Owners Policy Insurance
A business owners policy (BOP) is a versatile insurance product that provides key property, liability and business interruption coverage tailored for real estate lessors (NAICS 5311). It consolidates protections into a single policy at an affordable price point of around $1,250 annually on average. The top benefits of a BOP for this industry include protecting the property from damage risks while also covering general liability, lost income, equipment issues, and other exposures. Common use cases where it applies include property damage coverage, liability if a tenant is injured, and business interruption if the building cannot be rented due to a covered peril.
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Based on industry data, the average pricing for a Business Owners Policy (BOP) insurance for lessors of real estate (NAICS code 5311) is around $1,250 per year. This pricing was derived by looking at average policy limits of $500,000 for property coverage and $1,000,000 for liability coverage, along with typical deductibles of $1,000. The pricing also factored in national insurance rates that are moderate for this industry category.
Estimated Pricing: $1,250 per year
Conclusion
Choosing the right combination of insurance policies tailored to your business needs is crucial for lessors of real estate. Having adequate coverage protects your assets, finances and operations from unforeseen costs and lawsuits. Consult with an experienced insurance agent to evaluate your insurance portfolio and ensure you have the right protections in place.