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 warehouse centres, clinics to clothes shops, commercial property insurance is for you.
If you own the building but rent it out to a small business, you’ll need to buy commercial property buildings insurance. In contrast, your tenants will need to purchase commercial property contents insurance.
What does commercial property insurance cover?
The full details of different policies for commercial property insurance varies from case to case. 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 damage caused to 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 property damage like:
- Burst pipes
- Flooding
- Fire
- Riots
- Storm damage
- Subsidence
- Theft or malicious damage
Commercial contents insurance
Whereas buildings insurance covers bricks and mortar, commercial contents insurance covers what’s inside the buildings from fire, flood or theft.
It typically covers damage caused to things like:
- Flooring and lighting
- Kitchen equipment
- Furniture
- Office equipment (including computers)
- Manufacturing equipment and tools
- Fixtures and fittings like solar panels
- You can also specify for contents insurance to cover loss of stock or cash kept on-site
If you’re looking for commercial landlord insurance, 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 this case, you’ll need to add cover for contents insurance as well as commercial 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 just one policy to suit your business insurance needs. Have a look at some of optional extras before you compare commercial property insurance costs.
- Property owner’s liability: Property owners’ liability insurance offers protection if a tenant or visitor is injured or their property is damaged on your property, and they seek compensation.
- Accidental damage: If accidental damage occurs to the property or contents, such as if you break a window.
- Employer’s liability insurance: Employer’s liability insurance protects you and your employees if they are injured, or accidental damage occurs to their property on site. A legal requirement if you employ anyone who isn’t close family.
- Business rental income protection: Business insurance for commercial landlords can help 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: If you’re designing and looking after beautiful gardens or just installed shiny new signage, you can add on cover to your commercial insurance plan for those too.
- Theft by employees: Protection in the event of an employee stealing from the business premises.
What doesn’t commercial property insurance cover?
There are a few specific elements that commercial property insurance doesn’t cover in the UK. It’s important to be aware of these before you buy. These can include, but aren’t limited to:
- Wear and tear: Damage caused by normal use over time or poor maintenance is not an allowable expense covered by buildings insurance. For example, a printer wears out after a few years of semi-regular usage.
- Poor craftsmanship: Your buildings insurance policy won’t cover any rebuild costs for 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 by commercial landlord insurance. 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: Damage caused by rats, vermin, insects and even domestic pets aren’t covered. So whether it’s an infestation of cockroaches causing business interruption or a new carpet spoiled by an office dog, you won’t be covered. Instead, you’ll have to pay any professional fees to exterminators out of pocket.
Every commercial property insurance policy will vary based on the lender and your specifications. Make sure to read through all policy documents either before you buy or within the cooling-off period. This will ensure you have adequate cover, especially if you have mixed commercial premises.
How to find a good deal on your 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 commercial property insurance quotes are looking a bit steep, here are a few things that can alter the price.
1. Increase your security
Upgrading your door and window locks and installing new CCTV, alarms, and other security measures should help to lower the total cost of your premium. It shows the commercial building insurance provider that the building/business premises of your commercial properties are as secure as possible, and therefore less risky to insure.
2. Choose an appropriate 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. This ensures that you’re buying just the right amount of cover for what you need, without unnecessary extras.
3. Business operations
The type or types of businesses running from your premises can also alter the price of the premium based on its risk profile. For example, businesses 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 buildings cover could be factored into the rent you charge to your tenants.
4. Consider the location of the property
There’s not much you can do about this one, but the location of your commercial properties will have an impact on your premium too. If it’s near water or in an area with high crime rates, the price is likely to increase.
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 is not legally required. However, it’s a good idea as it will help protect you from costly repairs in the event of damage.
Could you afford to replace the roof if damage is caused during 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 combine business building insurance with residential insurance. 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.
If you use your properties for residential tenancies, you should also consider residential landlord insurance. This becomes useful if your tenants cause any damage to your listed building and you need cover for rebuild or repair costs like surveyors fees.
I run my business from home. Do I need business property insurance?
This depends on how you run your business or shop. 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 business insurance provider know so you’re not invalidating your domestic policy.
