Commercial Property Insurance

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Whether you own the building that you run your business out of, or you’re a landlord to a business premises, you’ll need commercial property insurance. Although it’s not a legal requirement, many mortgage lenders will require proof of commercial property insurance. Plus, it’s a good idea to make sure you’re covered financially in case anything goes awry.

Comparing quotes for commercial property insurance is easy with Quote Goat. Simply enter a few details and we’ll arrange quotes from up to 5 insurance providers .

What is commercial property insurance

Commercial property insurance covers a building you own, from which a business is run. It might be your business that you run, or you might rent your building to a business, as their commercial landlord. Either way, you’ll need to protect the building with specialist commercial property insurance, to make sure you’re covered financially in case the property needs unexpected repairs or rebuild.

There are two main types of commercial property insurance, just like domestic home insurance – buildings and contents. The buildings side of this insurance protects the bricks and mortar, windows and fittings, while contents protection covers everything inside the building, such as furniture, tools and files.

Who needs commercial property insurance?

Anyone who owns a building where a business operates will need commercial property insurance. From bakeries to restaurants, offices to showrooms, clinics to clothes shops, commercial property insurance is for you.

If you own the building but rent it out to a business, you’ll need to buy buildings commercial property insurance. In contrast, your tenants will need to purchase commercial property contents insurance.

What does commercial property insurance cover?

Like domestic home insurance, commercial property insurance breaks down into buildings and contents, alongside some additional extras you can add to tailor your policy.

Commercial buildings insurance

Commercial buildings insurance covers the building itself, from windows and walls to roofs and stairs. It also covers fixtures and fittings, such as carpets, blinds and curtains, built-in units, plumbed-in items, and car parks.

Your policy will cover the building against things like:

  • Burst pipes
  • Flooding
  • Fire
  • Riots
  • Storms
  • Subsidence
  • Theft

Commercial contents insurance

Whereas buildings insurance covers bricks and mortar, commercial contents insurance covers what’s inside the building from fire, flood or theft.

It typically covers things like:

  • Flooring and lighting
  • Kitchen equipment
  • Furniture
  • Office equipment (including computers)
  • Manufacturing equipment and tools
  • You can also specify for contents insurance to cover stock or cash kept on site

If you’re a commercial landlord, then contents will be your tenants’ responsibility unless you’ve supplied furniture or appliances within the building as part of a part- or fully-furnished building, in which case you’ll need contents insurance as well as buildings cover.

What else can commercial property insurance cover?

Just like with most insurance policies, there are lots of options available to allow you to tailor the policy to your business needs. Have a look at some of the common add-ons for commercial property insurance.

  • Property owner’s liability: Protection if a tenant or visitor is injured or their property damaged on your property, and they seek compensation.
  • Accidental damage: If damage occurs to the property or contents by accident, such as if you break a window.
  • Employer’s liability insurance: protects you and your employees if they are injured, or damage occurs to their property on site. A legal requirement if you employ anyone who isn’t close family.
  • Business rental income protection: Cover to protect your rental income if your tenants can’t rent the premises because of an insured event (e.g. a fire makes the property unusable during repairs).
  • Landscaped gardens & signage: Designed and looking after beautiful gardens, or just installed shiny new signage? You can add on cover for those too.
  • Theft by employees: Protection in the event of an employee stealing from the premises.

What doesn’t commercial property insurance cover?

There are a few specific elements that commercial property insurance doesn’t cover. It’s important to be aware of these before you buy. These can include, but aren’t limited to:

  • Wear and tear: damage due to normal use over time won’t be covered, or poor maintenance, for example, a printer wears out after a few years of semi-regular usage.
  • Poor craftsmanship: looking at doing DIY repairs or opting to hire a cheap handyperson for maintenance in the building? Your policy won’t cover bad repairs or low-quality workmanship. For example, a pipe bursts and floods the building, but is found to have been previously repaired with duct tape.
  • Unoccupied properties: Empty buildings generally aren’t covered. This tends to start at 30 days or more, so if you have a month where you or your tenants aren’t in the building, you’ll need to buy unoccupied property insurance instead.
  • Pests or animals: Rats, vermin, insects, and even domestic pets aren’t covered. So whether it’s an infestation of cockroaches or a new carpet spoiled by an office dog, you won’t be covered.

Every commercial property insurance policy will vary based on the lender and your specifications, so do have a read through all policy documents either before you buy, or within the cooling off period to make sure you have adequate cover.

How to get cheap commercial property insurance

Whether you’re looking for your very first commercial property insurance policy, or you’re an old hand, everyone wants to find the best deal. If your quotes are looking a bit steep, here are a few things that can alter the price.

Check Mark 1. Increase your security

Upgrading your door and window locks, and installing new CCTV and alarms should help to lower the cost of your premium, as it shows the provider that the building is as secure as possible, and therefore less risky.

Check Mark 2. What level of cover?

As commercial property insurance policies are so customisable, it’s really important to make sure you check through all documents and details to ensure you’re buying just the right amount of cover for what you need, without unnecessary extras.

Check Mark 3. Business operations

The type or types of business running from your premises can also alter the price of the premium, based on its risk profile. For example, a business using lots of flammable chemicals or fuel might push up the risk profile for fire damage, while a jewellery shop could have a higher premium for theft cover. If you’re a landlord, this could be factored into the rent you charge to your tenants.

Check Mark 4. Where is the property?

There’s not much you can do about this one, but the location of the property will have an impact on your premium too. If it’s near water, or in an area of high crime rates, the price is likely to increase.

Check Mark 5. Claims history

Have you made any claims in the past 5 years? If so, unfortunately, just as with domestic insurance, this will increase your premium.

Commercial property insurance FAQs

Is commercial property insurance a legal requirement?

No, buying a commercial property insurance policy isn’t a legal requirement. However, it’s a good idea as it will protect you from costly repairs in the event of damage. Could you afford to replace the roof if it’s damaged in a storm, or to rewire and redecorate if it floods? If you own the property with a mortgage, however, most lenders will require you to buy insurance as part of your agreement with them.

Also, if you have any employees, you must buy employers liability insurance. This is a legal requirement and can result in big fines for every day you don’t have it.

Can I buy both commercial and residential premises insurance?

Yes, you can. You can either buy them separately or together, as a joint premium. Joint commercial and residential premises insurance is handy for properties with a flat above a shop, or private rooms above a pub, for example.

I run my business from home – do I need commercial property insurance?

This depends on how you run your business. If it’s mainly office work and admin you do, most domestic home insurance policies will let you add business and working from home cover for an additional fee. However, if you store stock, specialist equipment or have clients visit your home, it’s likely you’ll need commercial property insurance as well. Either way, it’s very important you let your home insurance provider know, so you’re not invalidating your domestic policy.

Author Image - Michael Foote

Written By Michael Foote, Insurance and Finance Expert

Michael Foote is the founder of Quote Goat and has over 13 years experience working in the finance, insurance and currency sectors. Since launching Quote Goat he has appeared on TV as well as many of the largest online publications including Forbes, The Telegraph and The Metro. Prior to Quote Goat, he worked in finance in the city for a number of firms including HSBC.