If you own a commercial building, perhaps to house your own business, or you rent the building out to tenants to operate their business, you will likely need a commercial property insurance policy to cover you against all eventualities.
As well insuring you have the right cover in place for your commercial property, we can also help you save money on your business electricity and gas, see how much you could save with Utility Saving Expert.
Commercial properties tend to carry more risk than general buildings. They are larger and can house hundreds of employees at one time, meaning there will be more chances of accidents, thefts and damage to the building itself, as well as its fixtures and fittings. It is therefore important to keep the building protected, at all times.
Read our ultimate guide to commercial property insurance and all of your questions around the subject should be answered.
Commercial property insurance is an insurance that is designed for landlords of commercial properties – properties that are used to house businesses. You may be a landlord letting out the commercial building to a third party, or perhaps you’re a landlord and you operate your own business from the building.
Whatever the case, you will need a commercial property insurance policy to protect your asset.
Commercial property insurance will usually include buildings and contents insurance as a standard part of its policy.
This means a good policy should protect the bricks and mortar of the building as well as a whole list of other items, ranging from expensive equipment, furniture, computers and electronics. It can even protect items outside of the building, such as signs, fencing, shrubs and trees.
Commercial property insurance is not a legal requirement; however it could prove to be extremely useful in the event of an unexpected emergency.
Imagine a fire broke out and completely destroyed the building? Without an insurance policy, you would have to tackle the cost of this damage alone. If you run a business from your property, your business would have nowhere to operate and therefore you face the possibility of losing income. Equally if you are a landlord, you face the potential loss of rent from tenants who may be unable to continue trading from your property.
A good commercial property insurance policy will help cover the costs of repairing the building so you or your tenants can continue working with minimal disruption.
If you rent out your commercial property, and there is a problem with your building which then impacts on the business which is renting the building, you will be held accountable as it is your responsibility as the landlord to maintain the standards of the building. You will need a good insurance policy to protect you in such circumstances.
As you can see then, commercial property insurance might not be a legal requirement but it is still an important factor to consider.
You may be wondering why a typical landlord insurance policy won’t cover your commercial property. There are two main reasons:
Commercial buildings are usually more adventurous than a typical domestic property. Commercial properties can range from wooden barns, to large steel structures, to old outside sheds with asbestos in the roof. They are also typically much larger than a regular domestic home, and this is because they need to house lots of employees. They are also likely to have different heating systems and house more expensive equipment, depending on the type of business that operates from it.
The bottom line is, a commercial property is going to be much more complex than a standard residential property and therefore a typical landlord insurance policy will not be suitable.
When it comes to a standard landlord insurance policy, it is designed to cover regular domestic tenants, perhaps families or working professionals who simply live and sleep at the property. Landlord insurance is not designed to cover tenants who are perhaps using industrial equipment, housing lots of employees, or using commercial cooking appliances like chip fryers. For this reason, a standard landlord insurance policy will not cover the amount of risk that could be associated with a commercial property and a more specialised insurance policy will be needed.
As you can see, a domestic home and its tenants are likely to pose much lesser threat than that of a commercial property. This is why a more specialised commercial property insurance policy will be needed if you are to be fully protected.
There are a number of forms of cover a good commercial property insurance policy could provide. Some may be included as a standard; however, you may need to purchase additional extras depending on your requirements. So let’s explore what a commercial property insurance policy could cover in more detail.
Property owner’s liability insurance is often overlooked by landlords; however, it is one of the most important levels of cover. It will compensate third parties in respect to property damage and injury through negligence.
Let’s imagine a scenario. A third party, perhaps an employee working at the business in which the commercial property houses, falls over a lose tile and breaks their arm. You as the landlord would be held responsible for this as it is your responsibility to ensure the property is adequately maintained and hazards are fixed.
Should a claim be made against you, it could be an expensive process, which is why you will need property owner’s liability insurance to protect you.
If a commercial property is being let to tenants and it includes contents or furnishings that belong to you as the landlord, it might be a good idea to get these protected through landlord contents insurance. This should be included as a standard on a commercial property insurance policy.
You will need to provide your insurance provider with estimates on how much you think your content is worth to ensure you have the correct level of cover.
Bear in mind that it is not your responsibility to protect the tenants content, they will need to take out their own insurance policy to do so.
This is another important feature of a commercial property insurance policy. This element will cover you should your property need to be repaired due to damage or worse case scenario, completely rebuilt. Accidents unfortunately do happen. Your property could be damaged due to a flood caused by the weather for example, and in such instances, the damage could be catastrophic.
This element will require you to estimate the costs involved in rebuilding your commercial property, including the price of the building materials and labour. It is important you give an accurate estimate, as if you are under insured, you may not be able to claim the full amount and equally being over insured could mean you are paying more than necessary.
This level of cover is specifically designed for landlords that are renting their commercial property to other businesses. Should it become uninhabitable due to an event causing significant damage, such as a flood or fire, your insurance provider may pay out for the rent you could be subsequently unable to collect from your tenants. This would mean you would not lose out financially during this period.
The length of time you can claim for ‘loss of rent’ expenses is known as the indemnity period. This is dependent on the length of time it could take to repair the damage.
You should discuss your options with your insurance provider as the amount of time you can be given may be limited and your insurance premium may increase the longer time you estimate you may need.
In certain circumstances, you may have to take your tenants to court for non-payment of rent. Legal cover will therefore cover the costs involved in doing so.
It is not usually found as a standard part of commercial property insurance; however you can request it as an additional extra to your policy.
This is not an event that any landlord wants to comprehend, however, in rare scenarios your property may be damaged maliciously by your tenant for varying reasons, usually a disagreement of some sort.
It is not usually included as part of a standard policy however again, you can request it as an additional add on. If such an issue should arise, the damage caused to you property would be covered.
There are many factors that might influence your insurance premium:
The larger the building, the more costly it will be should it need repairing or rebuilding.
Insurance providers will base your premium on the amount of risk associated with the building.
If your commercial property is in an area with a high crime rate for example, it is likely that your insurance premium will be higher as the risks of damage and theft to the property may be greater.
Certain types of business will carry higher risks than others. A small office is likely to carry fewer risks than a large commercial factory with over 100 employees operating dangerous machinery for example.
The type of business operating from your commercial property will therefore have a significant effect o the price of your premium.
You should now have all the necessary information you need to help you choose the right level of cover for your commercial property. Use Utility Saving Expert’s online comparison tool to help you find cheap commercial property insurance.