In the same way as your home, there is a risk for businesses that some sort of damage could happen to their commercial premises. To help to protect them from the costs that can arise from this damage, it is recommended that businesses take out commercial property insurance. Whether you are running an office, retail unit, warehouse, or workshop, there are potential damage risks to your commercial property, such as fire, flood, or potential damage from a break-in.
What is Commercial Property Insurance?
Commercial property insurance is a type of insurance that will protect you should there be some sort of incident that damages your commercial property. When you own or rent a commercial property, there is a wide range of risks that you could face. Commercial property insurance is there to protect you if something does happen.
The insurance is usually taken out by the property owner, but it can also be relevant to commercial property tenants as well.
Commercial properties typically differ from domestic properties in both their structure and their tenants. Commercial property structures are often different from those of houses as well as often made from different construction materials. This presents different risks. Additionally, the type of tenants that occupy the commercial property carry out different actions to those within a home, which, again can present different risks – and for potentially higher numbers of people.
It is important, therefore, that commercial properties are covered by a more specific insurance policy, and this is what commercial property insurance is for.
Commercial Property Insurance for Businesses
There is a range of different property insurance policies available to businesses and commercial property landlords. Although they will differ from policy to policy, some parts are very similar. Some of the areas that are covered in commercial property insurance include:
Commercial Building Insurance
Commercial building insurance or commercial property insurance as it is often known usually applies to business owners who also own their commercial premises. It covers the cost of damage to the building such as storm damage, flooding, or fire damage. There may be several clauses in this policy, so it is important that you understand what is covered when you take the policy out.
Contents insurance covers damage to objects within the property that are not attached to the building itself. Objects such as windows and doors are generally covered by commercial building insurance, but objects such as tables, desks, chairs, and machines would be insured under the contents insurance.
If you are a tenant, anything that you have bought in would be covered by your own contents insurance or business insurance policy.
Property Owners’ Liability Insurance
Property owners’ liability insurance is similar to public liability insurance. It covers the property owner should something happen to someone when they are on the premises. This means that if a third party has an accident that is a result of negligence on the property owner’s part, the landlord is covered for the cost of any legal action that might occur.
It is down to the landlord or property owner to ensure that the property is not dangerous to tenants or third parties whilst they are on the commercial property.
Loss of Rent
Sometimes an incident can occur that makes the commercial property uninhabitable and not able to be used by a tenant. In this case, loss of rent insurance will cover the cost of any rental payments that cannot be collected during this time.
There are also often other options for cover that are available for businesses and landlords. These can include:
Malicious damage by tenants – this protects landlords from the cost of any damage that has been caused maliciously by tenants.
Legal cover add-on – this policy helps landlords to pay legal fees should the occasion arise that you need to take someone to court for failing to pay.
Accidental damage – as the name suggests, this would cover any accidental damage that can occur to the property – for example, someone drilling through a water pipe. This is sometimes included in the standard policy, but in other cases, it is recommended that you take this out as an added extra.
As a commercial property landlord, there might be times when your property is left unoccupied. This can put it at higher risk from issues such as vandalism or squatting. Unoccupied property insurance can help to protect you from this. It can often be possible to switch your commercial building insurance policy to an unoccupied property policy.
Is Commercial Property Insurance a Legal Requirement
Taking out commercial property insurance is not strictly a legal requirement for landlords. However, it is recommended that commercial property owners take out commercial property insurance – especially if you are going to rent the property out to a business. This is because you can be liable for some things that might happen within the commercial property – and, potentially, have to pay to relocate the business if they are unable to stay in the property whilst any repairs are going on.
Factors Affecting the Price of Insurance
As with any other insurance policy, many different factors can affect the price of a commercial property insurance policy. Some of these factors include:
- The type of building
- The building’s location
- The kind of business that is being run on the property
- The security that you have such as burglar alarms and fire alarms
- Other precautions that you can put in place to limit the level of risk that you have
Although not strictly a legal requirement, it is advised that landlords and business tenants take out buildings and contents insurance to ensure that you are covered should the worst happen. This not only gives you peace of mind, but also helps to protect your business, customers, and staff.
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