If a business is run from a building you own, you can use commercial property insurance to protect these premises. Whether you run an artisanal bakery or a barber shop, if something happens to your bricks and mortar, the business interruption and cost of repairs could become a financial burden you can’t overcome. Protect one of the most valuable assets in your business and enjoy the peace of mind that comes with comprehensive insurance on a commercial property.
What is a commercial property?
If you use a building to operate a business, it becomes known as a commercial property. This building could be on the high street selling clothes, jewellery, or groceries. It could offer a service such as beauty treatments, pet grooming, or IT repairs. It could be a café, bar, warehouse, office block, showroom, or even a converted cowshed on a farm selling locally grown produce. As soon as you start running a business from a building, it becomes classed as a commercial or business property and should be insured as such.
What is commercial property insurance?
Commercial property insurance (also known as commercial business insurance) protects the bricks and mortar of your business premises. If the physical structure of your commercial property is damaged, this insurance covers the cost of repairs or, if necessary, a rebuild.
Do you need property insurance for a commercial property?
There is no legal obligation to take out commercial property insurance, but failure to do so can be life-changing in the event of serious building damage. Ask yourself, could you afford to rectify building damage without insurance coverage?
A building faces a range of risks. A fire could break out, causing extensive structural damage. Whether it’s a burst pipe or a local flood, water can damage both the floor and walls of a property. Vandalism is a nuisance; broken windows can be particularly problematic and expensive.
Whether you own the building and the business run from it, or you own a commercial property and rent it to business owners, you can use this type of insurance to protect against:
- Water damage
- Fire damage
- Broken windows
If you wish to take out a mortgage against a commercial property, the lender will insist you hold an insurance policy and may specify a set level of coverage.
What is and isn’t covered?
Though you’ll certainly sleep better at night knowing that your commercial building is protected by insurance, it’s vital you understand what is and isn’t covered under the policy.
What is covered as standard:
- Fire damage
- Vandalism, including break-ins, arson, and riots
- Natural disasters, including storm damage, flooding, and subsidence
- Burst pipe water damage (including frozen pipes that burst)
- Accidental damage (for which you cannot be deemed negligent)
What may not be covered as standard:
- General wear and tear
- Buildings that have sat empty for more than 30 consecutive days
- Damage caused by negligence or poor craftsmanship
- DIY repairs
- Pest/animal damage
What other cover might I need?
Commercial building insurance cover falls under the umbrella of business insurance – a policy that helps to protect your business from the most commonly encountered (and financially pressing) risks. Alongside commercial property cover, you may like to take out:
- Public liability – to deal with claims for third-party injury or personal property damage that occur within your premises.
- Commercial contents – which covers the cost of repairing the belongings within your premises if they’re destroyed or stolen.
- Accidental damage – if you or your tenant cause accidental damage (for example, driving a nail into a water pipe when putting up a shelf), this cover deals with the cost of repairs.
- Professional indemnity – which deals with claims pertaining to advice or services given to a client that they claim led to a financial loss.
- Employers’ liability – a cover required by law if you hire employees (even on a part-time basis).
- Business interruption cover – compensates you for loss of earnings attributable to building damage. It’s also useful if you’re a landlord and rent out your building. Damage could mean your tenants are forced to leave, losing you the rental income. This type of cover is ideal for safeguarding your finances in this scenario, allowing you to maintain your income while repairs are carried out.
What is the cost of commercial property insurance?
An insurer will consider several factors when calculating your premium, including the location, size, age, and current value and rebuild value of your property. They will also consider the nature of your business, the security of the premises, the excess you’re willing to pay, and the level of cover required.
FAQs
Who is responsible for commercial property insurance?
The owner of the property is ultimately responsible for this. If you rent a commercial property, your landlord should organise the insurance but may ask you to cover the costs.
I don’t have a mortgage on my commercial property, do I need this insurance?
Though you won’t be legally obligated to hold it, you may still wish to protect your valuable asset with commercial building insurance.
Does insurance protect me if my tenants leave due to property damage?
No. If you want to protect your rental income in the event of tenants leaving, you’ll need a specialist rental income protection cover. This compensates you for part of the average rental income while you find new tenants.
I work from home – do I need commercial property insurance?
Did you know running a business from home can impact your standard home insurance? In general, the building cover of your home insurance policy will cover your bricks and mortar when you run your business from home, but make sure you discuss this with your insurer and don’t leave yourself underinsured. They may wish to change you to a home business policy, and if clients visit your property, public liability cover is also strongly recommended.
For over three decades, Park Insurance has been working alongside the nation’s hard-working small business owners. Contact our commercial insurance experts today to find out how commercial property insurance can protect your business.