As a commercial property owner, you will need an insurance policy to cover your commercial buildings. If you own shops, offices, a surgery, hotel, leisure complex or run a registered business from home you will need commercial property insurance.
Benefits are:
Insurance for different commercial buildings such as shops, restaurants, factories, hotels etc
Tailored insurance products
Competitively priced
Option to combine residential and commercial properties
The Alan Boswell Group Difference
Investment in commercial property is a serious business – protecting your investment is equally as important and requires an insurance broker who understands your needs and knows what issues you may face.
Whether you require cover for commercial, mixed-use or unoccupied property our property experts are on hand to discuss your insurance needs. With more than 25 years’ experience in the Commercial Property Sector, our dedicated team are perfectly placed to swiftly deliver your commercial property insurance needs.
Friendly efficient service easy to do business with.
Mr & Mrs Ireland - Property Owners Insurance
Commercial Property Owners Insurance in detail
What is commercial property insurance?
Commercial property insurance provides protection against a range of risks to safeguard a property owner’s investment.
Standard cover typically includes perils such as fire, storm, flood, escape of water, malicious damage, and subsidence. Insurers also offer extended cover for risks like accidental damage, terrorism, and legal expenses.
Commercial landlord insurance is intended for property owners who lease premises to third parties for commercial use, whether it’s a shop, restaurant, office, or industrial site.
It’s not compulsory, but yes, you ought to have commercial property insurance to protect the investment you have made.
If you’re renting the property to a business, you are handing over the day-to-day responsibility of your building to a third party, which increases the risk of something outside of your control going wrong.
On the surface, both policies provide cover to protect a property owner’s buildings, but there are two key differences between commercial and domestic landlord insurance – the nature of the building, and the type of tenant.
Building types: Whereas many domestic properties are of standard brick and tile construction, commercial premises can vary widely in their construction.
This means premiums can also vary significantly to reflect the nature of the risk of covering buildings that could be constructed from timber, brick, or steel, or feature large flat-roofed areas, asbestos, or cladding. This will be reflected in the sum insured, which represents the full rebuild cost of the property.
Commercial buildings can also have a greater variety and complexity of heating and electrical systems which, again, affect premium rates.
Tenant types: Other than working from a home office, domestic tenants do not, generally, undertake business from their property.
But the risks to insurers increase for commercial premises, where all sorts of industrial equipment could be used, including potentially hazardous activities like welding, or the use of flammable chemicals.
Insurers need to provide the right cover at the right premium to cater to the individual needs of the property owner, depending on the type of building and the nature of the work undertaken.
What is covered under commercial property insurance?
Commercial property insurance cover can vary between insurers, but the standard cover usually includes the following sections.
Property insurance
A wide definition of buildings that can extend to include common areas, landscaping, solar panels, wind turbines, and domestic white goods. Numerous extensions included as standard and tailored to the property industries.
Business interruption
Cover for loss of rent following property damage, as well as for the cost of alternative accommodation for residential units within your portfolio. There is a variety of extensions to supplement core covers.
Engineering damage
This policy can provide cover to surrounding property if any machinery or plant causes damage. We can also offer specific policy enhancements, such as working or repair investigation costs, to ensure you're well insured.
Property owners' liability up to £10million
Protects your legal liabilities towards third parties e.g. slip, trip, or fall or other injury whilst on the property.
Optional extras
Legal expenses including commercial property disputes
Protection in the event of a legal dispute with your tenant. This includes a dispute over maintenance of your property, repossessing your property, and recovering outstanding rent due to you.
Contents and fixtures and fittings
If you have provided contents to your tenant or have fitted the building yourself to suit their specific trade.
Subsidence
Fees and costs in relation to subsidence, ground heave, or landslip.
Terrorism insurance
Protection against the potential exposure of a terrorist attack.
Employers' liability
If you employ someone to carry out work at your property you will need protection in the event of injury.
If you are a property owner and you have a change of tenant or processes undertaken within the property you will need to inform your insurance provider. Failure to do this could invalidate any claim.
It is important to make your insurance provider aware if there will be any periods of unoccupancy to ensure the property is covered correctly whilst unoccupied. Again, failure to inform your insurance provider could invalidate your insurance.
Do I need to inform my insurer if my commercial premises are unoccupied?
Yes, unoccupied properties present a greater risk to insurers than those which are occupied by a business.
They are more likely to be targeted for break-ins, and are more susceptible to malicious damage, including arson.
As a result, many insurers are reluctant to cover vacant properties – other than for brief periods such as a change of tenant – and cover can be restricted and be subject to certain conditions being met.
For longer periods of unoccupancy, such as where the property may be undergoing renovations, property owners will need to arrange a dedicated unoccupied property insurance policy.
How much commercial property insurance do I need?
The level of cover you need depends on several factors. We’ve highlighted the most common areas in this section.
Commercial building insurance: rebuild costs
You need to insure your building for the full cost of rebuilding it should it be totally destroyed.
If you insure it for less than its true rebuild cost, you would be liable to suffer the consequences of underinsurance – the ‘condition of average clause’.
Under this clause, insurers can reduce the amount they pay out by the same percentage that you’re underinsured. For example, if you insure a building that costs £300,000 to rebuild for £150,000, and then claim for £50,000 of damages, your insurer could only pay out £25,000 as you’re underinsured by 50%.
The Royal Institute of Chartered Surveyors has an online rebuild calculator tool to help you calculate the rebuild cost.
How long should my loss of rent indemnity period be?
You can choose how long you receive payments for loss of rent following an insured event destroying your building.
Typically, you can choose between 12, 24, and 36 months. Your decision will depend on how quickly you think your building can be back up and running in the event of a total loss, which will vary depending on the size of the property, its location, complexity, and it if has, for example, listed building status.
Property owners’ liability indemnity limit
Insurers offer limits of liability ranging from £1million up to £10million.
Your tenant should have their own public liability insurance to cover any damages caused by their commercial activities.
There is no legal requirement to do so, but any companies providing finance for you may have this as a condition of the finance.
Yes if your business owns the property and you operate from there. If you are solely a landlord then you will require property owners insurance. If you are the tenant you would not have an insurable interest and would not usually be able to insure the building unless you have been made responsible to do so under conditions of the lease.
Yes, we can provide this service.
Yes this is no problem, our experts will understand your risk and advise on suitable products for your needs.
Yes, although the applicable excesses will vary from policy to policy. In some instances it is possible to increase your excess to obtain a premium discount.
Improvements made by the tenant should be reflected in the lease, which will also set out who is responsible for insuring them. In general, if there is a full repairing lease in place then the tenant is responsible for both the cost of the improvement and the insurance of it.
For more guidance and advice about insurance, and being a commercial landlord, visit our landlord insurance hub.
Who pays for refurbishments will depend on the terms of the lease. A full repairing lease would make the tenant responsible for the properties’ maintenance and upkeep.
A list of building updates should be kept, and the insurer informed of any work you are carrying out, especially if the work means the property will be unoccupied.
Insurers may provide discounts if you have taken extra precautions to prevent a claim, such as fitting a high level of fire protection.
You may be able to secure additional discounts by committing to a more rigorous risk management regime, but these will always be at the discretion of the insurer.
The cost of your commercial landlord insurance will depend on a number of factors, including:
the cost of rebuilding your property;
the nature of the business carried out;
the construction of the building;
the location of the building.
Interested parties can be noted on your commercial property insurance policy, but only those with an ‘insurable interest’ in the property, such as a mortgage provider.
Many commercial properties comprise multiple uses, for example, shops with flats above them.
Most insurers will be able to provide cover for such an eventuality, combining both uses.
If you employ somebody in relation to the property, such as to maintain it, you are required by law to take out employers liability insurance.
If you own the freehold, then you will be responsible for insuring the building. If, however, you only own the leasehold, then the building is likely to already be insured by the freeholder, so you won’t need to take out buildings insurance yourself.
If you are the leaseholder you should check the terms of your contract.
Yes, and you need to inform them of the exact nature of the business undertaken in the property, as this has a bearing on the risk rating, and therefore the premium charged.
When you obtain a commercial property insurance quote from an insurer, you will need to provide full details of the construction of the property, including details of how much of the property has a flat roof.
Over time, flat roofs are more prone to leaking than standard slate or tile roofs, and so there is more potential for water damage.
Many insurers include a ‘flat roof warranty’ clause, which requires a minimum level of maintenance be carried out on any flat-roofed areas.
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