What are the most common challenges when managing insurance claims in commercial real estate?

1 Claim documentation

One of the first and most important steps when managing insurance claims in commercial real estate is to document the damage and the cause of the loss. This involves taking photos, videos, notes, and statements from witnesses, tenants, contractors, and other parties involved. The documentation should be detailed, accurate, and consistent, as it will serve as the basis for the claim evaluation and negotiation. Poor or incomplete documentation can lead to delays, disputes, or denials of the claim, which can affect the recovery and restoration of the property.

2 Claim communication

Another challenge when managing insurance claims in commercial real estate is to maintain clear and frequent communication with the insurance company, the adjuster, the broker, and the legal counsel. Communication is essential to ensure that the claim is handled properly, efficiently, and fairly, and that all the parties are on the same page regarding the scope, timeline, and cost of the claim. Communication can also help to prevent or resolve any misunderstandings, conflicts, or errors that may occur during the claim process. Therefore, it is advisable to have a designated person or team to communicate with the insurance company and to keep a record of all the correspondence, meetings, and decisions.

3 Claim valuation

A third challenge when managing insurance claims in commercial real estate is to determine the correct and fair value of the claim. This can be difficult, as there may be different methods, formulas, and factors to calculate the value of the property, the contents, the business interruption, and the liability. Moreover, there may be disagreements or discrepancies between the insured and the insurer regarding the valuation of the claim, which can lead to disputes or litigation. To avoid or minimize this challenge, it is important to have a thorough and updated appraisal of the property and its components, to understand the terms and conditions of the insurance policy, and to consult with experts and professionals who can provide an independent and objective opinion on the value of the claim.

4 Claim settlement

A final challenge when managing insurance claims in commercial real estate is to achieve a satisfactory and timely settlement of the claim. This can be challenging, as the insurance company may have different interests, incentives, and strategies than the insured, and may try to reduce, delay, or deny the claim payment. Furthermore, the claim settlement may involve complex and lengthy negotiations, reviews, audits, and legal procedures, which can add to the stress and frustration of the claim process. To overcome this challenge, it is essential to have a clear and realistic expectation of the claim outcome, to be proactive and cooperative with the insurance company, to document and justify the claim amount and expenses, and to seek professional advice and representation if necessary.