Guide
Claims strategy for commercial property owners
How you handle a claim this year decides what you pay for the next five. Here's how to handle it well.
The short answer
Report liability claims and large losses right away, and call your broker before filing a small property claim. A claim stays on your loss runs for five years, so a small one that barely clears your deductible can cost more at renewal than it pays. Make emergency repairs at once, and wait for the adjuster before permanent ones.
General information, not legal, tax, or coverage advice. What's covered depends on your specific policy wording, and the policy controls. Current as of September 2026.
Why your claims set your price
Every renewal starts with your loss runs: five years of claims, from every carrier. The underwriter compares what you've paid in premium to what the carriers have paid in claims. That's your loss ratio.
Say you've paid $200,000 a year for five years. That's $1 million in premium. If your claims over those five years add up to $300,000, your loss ratio is 30%. You're a good account, and carriers will compete for you.
If those claims add up to $700,000, your loss ratio is 70%. Now the conversation is about how much your rate goes up, not how much it comes down.
A claim stays on your loss runs for five years. So a claim isn't a one-time event. It's a line item in the next five renewals.
Frequency vs. size
Six small claims can hurt more than one big one
Underwriters look at two things: how often you have claims (frequency) and how big they are (severity). Take two owners with the same $90,000 in losses.
Owner A
1 claim
$90,000 · hail
One storm, one roof. Underwriters see weather, not management. They'll ask about the new roof and move on.
Owner B
6 claims
$15,000 each · water
Six water losses in five years looks like a maintenance problem. Problems repeat. The underwriter prices in the next six.
Severity is often bad luck. Frequency looks like a pattern, and patterns predict future losses. That's why a run of small claims can cost you more at renewal than a single large one, even when the dollars are the same.
It's also why the next section matters.
Which claims should you file?
Insurance works best for the losses you can't absorb: the fire, the hurricane, the lawsuit. It works worst as a maintenance budget.
A $12,000 water loss on a policy with a $10,000 deductible pays you $2,000. It also puts a claim on your loss runs for five years and counts toward your frequency. That trade rarely makes sense.
So before you file a small property claim, call your broker. Look at what it will pay after the deductible, and weigh it against what it will cost at the next five renewals. If small losses keep landing just above your deductible, that's a sign your deductible is too low. A higher one lowers your premium and keeps the small stuff off your record.
One exception: liability. Deciding not to file only applies to your own property damage. If someone is hurt on your property, or says they were, call us and call the carrier immediately. Liability claims can surface months later, and a carrier can deny coverage for late notice. On liability, not reporting isn't a strategy. It's a gap. For crime-on-premises claims against apartment owners, see negligent security lawsuits and your GL policy.
Timing
When to notify your carrier
Most policies require notice “as soon as practicable.” Some set a hard number of days. Read the conditions section of your policy, or ask us to.
Anyone hurt
Call us, and report to the carrier immediately. Don't wait on one to do the other, and don't wait because nobody has said the word lawyer. Get the incident report, names, photos, and any video before it's overwritten.
Large property loss
Call your broker the same day, then report to the carrier. Fire, major storm damage, anything that shuts down units or rooms.
Small property loss
Call your broker before you file. Talk through whether it belongs on your insurance or in your maintenance budget.
Damage that can grow
Report early. A small leak that turns into mold six months later is a much harder claim if the carrier first hears about it then.
A demand letter or lawsuit
Send it to us and to your carrier the day it arrives. Deadlines to respond to a lawsuit are short, and your carrier needs time to assign defense counsel.
Can you start repairs before the adjuster inspects?
Emergency repairs, yes. In fact, your policy requires them. You're expected to protect the property from further damage, and the carrier can refuse to pay for damage you could have prevented.
Permanent repairs, not yet. Once the drywall is replaced, the adjuster has nothing to look at but your word. Wait for the inspection, or get written approval to proceed.
Do
- Stop the damage from getting worse: tarp the roof, shut off the water, extract standing water, board up openings
- Photograph and video everything before you touch it, then again as work progresses
- Keep samples of damaged materials, like a section of roofing, flooring, or drywall
- Keep every receipt and invoice for emergency work
Don't
- Start permanent repairs before the adjuster has seen the damage or agreed in writing
- Throw away damaged materials the adjuster hasn't inspected
- Sign a restoration contract that takes over your claim (an assignment of benefits) without reading it first
After a large storm, adjusters can take weeks to arrive. If waiting would put tenants at risk or let damage spread, document everything thoroughly, tell the carrier in writing what you're doing and why, and do the work.
Open vs. closed
What an open claim tells an underwriter
A closed claim is a known number. It happened, it was paid, it's done. An underwriter can price that.
An open claim is a question. While it's open, the carrier holds a reserve: its estimate of what the claim will cost when it's finished. Your loss runs show the claim as incurred, which is what's been paid plus the reserve.
Say a slip-and-fall claim has paid $20,000 so far, with a $250,000 reserve. On your loss runs, that's a $270,000 claim, even if it eventually settles for $40,000. And underwriters know open liability claims tend to grow, so many will price it as if it gets worse, not better.
That's why closing claims matters, and why reserves are worth watching. If a reserve is much higher than the claim justifies, your broker can ask the carrier to review it before your renewal goes to market.
What to do right after a claim
Once the property is safe and the carrier is notified, these steps decide how the claim reads at your next five renewals.
01
Get the claim number, the adjuster, and the reserve
Ask your adjuster what reserve they've set. That number shows up on your loss runs long before the claim closes, so you want to know it and push back if it's out of line with the actual damage.
02
Build the claim file
Photos, estimates, invoices, and every email with the carrier, in one place, in date order. Our document checklist shows how to set it up.
Document checklist →03
Find out whether someone else should pay
If a contractor, vendor, or tenant caused the loss, your carrier can go after their insurer. That's subrogation. Money recovered comes off your claim, and a smaller claim is a better renewal.
04
Fix the cause, and prove it
A burst pipe claim followed by a new freeze protection program is a story underwriters like. Keep the invoices and dates. You'll need them at renewal.
05
Write the one-paragraph explanation now
What happened, what it cost, what you changed. Write it while the facts are fresh, and send it to your broker. It goes into every renewal submission for the next five years.
06
Push the claim to close
Respond to adjuster requests quickly. Submit final invoices. Ask for the file to be closed once payment is made. An open claim costs you at renewal even after the work is done.
Working with us
Call us when it happens
We help you decide what to file, report it the right way, and keep the claim moving until it closes. Then we write it into your renewal story so underwriters read it as what it was, not as a guess.
If you're carrying open claims or a rough loss history into your next renewal, talk to us early. There's a lot more you can do about it 120 days out than 30.
Loss history also decides whether real estate captive insurance is an option at all. Group captives usually admit only owners with a good record, and a captive actuary prices off your loss runs.
This article is for general educational purposes only. It isn't legal, tax, accounting, or lending advice and doesn't create a producer–client relationship. Policy terms, exclusions, and availability vary by carrier, state, and property. Only the policy actually issued determines coverage. Regulatory and lender requirements change; confirm current rules with your attorney, lender, or servicer before relying on anything here.
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