What insurance is needed for commercial property?
As a commercial property landlord, your insurance requirements will differ considerably from those of a residential property landlord. As standard, commercial landlord insurance should include cover for:
- Property owners’ public liability
- Loss of rent
- Buildings and terrorism
- Commercial legal expenses
If the property combines both residential and commercial areas – such as a flat above a shop, or an office with a flat above it – bespoke insurance cover will be required to protect both areas of the mixed use property.
What is classified as a commercial property?
The types of building used as commercial property typically differ from standard residential buildings and, as such, they often have a differing construction.
Buildings used for commercial purposes may include:
- Flat roofed buildings
- Steel structures
- Barn or warehouse conversions
Properties may have specialist heating and air conditioning systems and complex electronics.
What insurance do I need for mixed use property?
To adequately cover a mixed use property which combines residential and commercial elements, you need:
- Buildings insurance cover
- Public liability insurance
- Employers’ liability cover
- Rental protection (business interruption cover)
- Accidental damage cover
- Malicious damage cover
- Legal cost cover
- Re-housing cover (for both commercial and residential tenants)
What insurance do I need for solely commercial use property?
A property that is used solely for commercial purposes, such as a shop, restaurant or office, requires specialist commercial insurance cover.
You need to cover yourself against risks associated with renting your commercial property to tenants.
As standard, you need:
- Buildings insurance cover – to pay for any repairs or rebuilding costs
- Landlord liability insurance – to cover any claims made by third parties
- Rental protection (business interruption cover) – covers your loss of earnings if you have to cease trading due to a fire, flood or theft
- Legal cover – to cover the costs of claims and disputes
Contents insurance and employers’ liability cover is the responsibility of the commercial tenant, rather than the landlord.
Depending on the nature of your business, you can tailor your commercial insurance policy to suit your needs.
Tenants can also add cover such as:
- Goods in transit
- Frozen goods
- Theft by employees
- Signs and shop fronts
You can also add specialist cover to your commercial property policy for:
- Unoccupied property – if a property is empty, it is at a higher risk of a break in. If a property is due to be unoccupied for 30 days or more, you should add unoccupied property cover to your policy.
- Flat roof properties – a leak or water damage from a flat roof can be costly, so it is worth adding flat roof cover to your policy if your commercial property has a flat roof. The roof must be maintained to a good level of repair for the cover to be valid.
If you are purchasing a commercial property using a mortgage, you will also be required to provide evidence to your mortgage lender that you have sufficient insurance in place to cover the asset.
Am I liable to cover commercial tenants’ contents?
Any tenants in your commercial property are liable for their own contents, so they must ensure they have adequate business insurance cover for loss, damage or theft for any property they own which they bring into the commercial premises.
If you require any advice or assistance regarding commercial property insurance or any other aspect of commercial property management, sales or purchases, get in touch and our expert team will be happy to help you.