Top 7 Commercial Real Estate Insurance Misconceptions

Commercial insurance is becoming an increasingly relevant topic of conversation with individuals and organizations involved in the real estate industry. Gone are the days of insurance being a last-minute, easy task to accomplish before a closing transpires. Gone, too, are the days of insurance companies being in a bidding war and driving down one another’s offerings in an attempt to win the business via the lowest premium. The insurance market is in a hardened state, particularly around property coverage. And the evidence suggests this isn’t necessarily a quick trend, but rather our new reality.

What made the list?

Our suggestion to clients with real estate holdings is to focus on controlling what they can control (the insurance market not being one of those things). Among a list of areas they have leverage, one of particular focus is tenant insurance verification. While this process can prove significant in securing the best offering for yourself as a real estate owner, we know it comes with challenges, complexities and misconceptions in determining if your tenant is properly assuming the risk you transfer to them.

In today’s blog, we discuss the top seven commercial real estate insurance misconceptions. If you’d prefer to watch our video about this topic, please click here. Let’s dive in!

Misconception #1: All commercial insurance is the same.

The reality is insurance policies are legal contracts. While the Insurance Services Office (ISO) does provide forms that are utilized among different carriers, it is almost certain that one insurance policy to another will read differently in some (if not many) capacities. They have different forms, additions, endorsements, and terms. In reviewing your specific policy, it is best to understand a few of the most common definitions.

Common Definitions

  • Insured: The Individual, organization, or entity that is covered by the insurance policy.
  • Additional Insured: An entity or person added to the policy who also has benefits from coverage under the policy.
  • Waiver of Subrogation: The legal waiver of an insurer’s right to recover from damages paid in the insurance contract.
  • Primary and Non-Contributory: Clauses in insurance contracts that specify the order of which insurance policy will respond first, and what level of contribution each is obligated to.
  • Certificate of Insurance: A document provided to requesting parties that outlines key policy details and proof of insurance at the time of issuance.
  • General Liability: Coverage for an entity’s liability arising from its premise, operations, products and completed operations.

While these are just a handful of the definitions you may see in a commercial insurance policy, it’s always best practice to speak with your insurance provider to ensure the policies in place are in your best interest.

Misconception #2: You don’t need to read and understand your policy

Insurance policies can be hundreds of pages long. They’re lengthy. They’re technical. They’re dry. Of course, as a commercial real estate owner you just don’t have enough hours in the day to achieve all the things that are of relevance and importance to you, including reading your insurance policies from cover to cover. For this reason, it is important to understand the general structure of policies to give you the best opportunity to review all sections you deem as important to understand at the time they are issued.


An easy way to read and understand a commercial insurance policy structure is through the acronym DICE, which stands for “Declarations, Insuring Agreements, Conditions and Exclusions.” 

  • Declarations: Typically the high-level overview of what exists within the policy. This will typically show the locations, assets, limits, etc. This is also the place where the premium outlays are shown.
  • Insuring Agreements: This is the legal language that states how coverage is triggered and what the insurer is agreeing to insure. This is essentially where the insurance company states, “You pay us a premium, this is what we’re covering.”
  • Conditions: This outlines the obligations of parties in the agreement. This section breaks down the things that owners are required to do or comply with in order to make sure that the insurance coverage is applicable. It also states the things that the insurance company is going to do on the owner’s behalf.
  • Exclusions: These are the things that the insurance company is stating outwardly that they are not covering.

Joe Vens, Risk Advisor at First MainStreet Insurance, tells his customers to read their policy back to front.

“I think it is beneficial to start with what the insurance company is outwardly telling you they are not covering, and then work your way back into the insuring agreements to see what still exists after the exclusions.”

Joe Vens, Risk Advisor at First MainStreet Insurance

People buy insurance because they want it to respond properly. Doing some of that work on the front end and understanding the policy often alleviates anxiety around whether you will be covered in the event of an insurance-related event.

Misconception #3: Every Certificate of Insurance is the same

It’s important to first understand what a Certificate of Insurance is. Often known as a COI, a certificate of insurance is a summary of coverage at the moment in time it is issued. An important note is that the COI is not an insurance policy itself. You can learn more about COIs here.

Parts of a COI

  1. Producer: The agency that is sending out the certificate.
  2. Insured: The person or organization that is insured. For purposes of this article, this would be the tenant who is verifying coverage to their landlord.
  3. List of Insurers: This is the list of different insurance agencies that are actually providing the coverage.
  4. Coverages: List of various types of insurance, policy numbers, effective dates and limits.

In summary, certificates of insurance can be used to verify that not only are tenants carrying the appropriate coverage and have their own policies but that they’re listing their landlord as an additional insured on their policy. Why? To make sure that if the landlord is brought into a lawsuit that the tenant is responsible for, it’s the tenant’s insurance policy providing coverage to defend the landlord.

Misconception #4: You can manage COIs on your own

The process of managing certificates of insurance can be challenging and is often one of the first things that slip through the cracks. If you’re an owner with one tenant, perhaps you can keep track of it yourself on a spreadsheet. However, if you’re an owner with a portfolio of multiple assets and tenants, it becomes overwhelming.


By leveraging proprietary machine learning algorithms, tenants can upload a copy of their COI and our system will populate the owner’s required policy information. Once in our system, we compare the lease requirement against the policy information and flag discrepancies.

We send email alerts when tenant’s policies are coming up for renewal to the tenant, the owner, and the insurance broker. By taking out the guesswork, we make managing COIs a breeze.

We are excited to share we have a new opportunity to offer QuickBooks Online at a discount for USA and Canadian residents.

By using QuickBooks Online, you will save time and money! And, by using QuickBooks Online in combination with STRATAFOLIO to manage your real estate, you will save even more!


Misconception #5: Tenants can elect their own coverage

Leases are the documents that dictate who is responsible for what insurance coverage. That can be anything from stating who is responsible for insuring the interior contents of a building to what legal language needs to be required within liability policies to properly protect requesting parties with coverage that should be applicable.

Commercial property owners should invest the time and energy upfront into what insurance agreements should be in their leases. We recommend working with your commercial insurance advisor, if specialized in reviewing these agreements, to structure the correct language in those lease agreements.

Misconception #6: Securing commercial insurance can be acquired easily

We are in what is called a hard insurance market, meaning pricing is up, rates to attain insurance are up, capacity is down and there are fewer carriers that want to provide it. It can be a lengthy process to obtain commercial insurance right now. How can commercial owners combat this?

Be proactive

It takes more than a day to secure insurance for a commercial building. It all depends on the age and the characteristics of your tenant makeup. Insurance agencies like First MainStreet Insurance and their insurance company partners can require anywhere from a week to months or longer to properly underwrite and place coverage.

Consider the makeup of your tenants. Are they a fireworks dealer or a shoe store? Because there are factors you may not even consider, we recommend speaking with your insurance agent early on and providing them with full transparency so they can best support you.

Misconception #7: Property owners have no control over their insurance

Many commercial owners may think they have no control over pricing/terms/coverage. Especially given the hard market we sit in today. A total lack of control is simply not the case. If you as a commercial real estate owner prepared upfront with cash flow reports, have financial vibrancy, and know your building characteristics and tenant makeup, then you’re going to look at better rates and terms.

Again, owners should be prepared to provide insight, information and full transparency so their insurance advisor can best support them in placing coverage that is priced reasonably and provides optimal protection.

Having a solution like STRATAFOLIO where we keep track of your assets, location age, square foot, vacancy, occupancy, and so forth, helps commercial owners be prepared when the information is needed. 

STRATAFOLIO also tracks tenant information and insurance, rent rolls, cash flow and so much more. Best of all, all of the information is exportable so you can send it right to your insurance agency. A well-prepared, organized, and sophisticated owner has a greater likelihood of lower rates and better terms.


Use the seven misconceptions to educate yourself and your team so that if and when an insurance event occurs, you are properly prepared.

Reach out to STRATAFOLIO for a personalized demo to see how we can help with COIs and beyond. Be sure to contact Joe Vens at the contact information below for discussions on risk transfer, securing insurance coverage, and proper risk management within your real estate organization.

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Top 7 Commercial Real Estate Insurance Misconceptions
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Top 7 Commercial Real Estate Insurance Misconceptions
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