Looking for Commercial Property Insurance?
If you own a property that you hire out to a third party for commercial use, you may want to consider taking out commercial property insurance for protection.
If you own a commercial property and want to let it out to a third party business then you’ll need a different type of policy than just standard residential letting insurance. Often these buildings will have a less standardised format than housing and could be barns, steel structures and could be much larger or have different electrical and plumbing set ups. This all means that if something were to go wrong repairs could work out to be much more expensive than for a domestic property.
What can commercial property insurance help with?
Unlike domestic properties, commercial ones will have tenants that can pose a risk to your property depending on what they’re going to be using it for. It’s wise to find out as much as possible about your prospective tenants and how they intend to use the building. For example, they may want to do things such as:
This type of activity can pose great risk to your building, and if something like a fire or explosion were to happen then you could be facing hefty rebuilding charges.
Facing an expensive rebuild
Arguably one of the most important aspects of commercial property insurance, rebuild cost cover helps you financially if you need to complete repairs or an entire rebuild of your property if it’s destroyed. If your property is going to be used for something that’s potentially higher risk such as industrial manufacturing, cooking or the use of chemicals, you will want to ensure that you have the right level of protection in place.
Some insurers will penalise under valuing your property at the time of policy purchase, and it could affect how much you can claim should you need to rebuild.
What damage is covered in commercial property insurance?
Although each insurer will have their own exclusions, commercial property insurance policies usually cover damage from things like:
- Water or oil leaks
- Impact damage
- Fire or smoke
When you’re taking out a policy, don’t forget to thoroughly read the fine print and always question something if you’re unsure or believe you need extra cover as you may be able to take out a policy extension.
Malicious damage by tenants
As tenants are considered legally as having permission to be on your property, malicious damage isn’t always included in commercial property insurance policies. It is usually an optional extra so if it’s something you’re interested in then you may need to ask your insurer to include it.
Commercial Property Insurance – Useful FAQs
Although you aren’t legally obliged to take out commercial property insurance, some mortgage providers will require it as a condition of the loan. Some banks or lenders also like to be jointly named on the policy as a reassurance that the protection is in place.
As flat roofs pose a higher leak risk which could damage the property, stock and equipment, some insurers may include a flat roof warranty clause in the policy documents which means that the landlord is required to undertake a minimum amount of servicing and professional checks to make sure it’s in a good state.
Some insurers will allow you to create a bundle policy that includes both commercial AND domestic property insurance.
Although it may come as standard for some insurers, it’s likely that you will need to look at a specific business interruption insurance policy or policy extension.