Do I need property insurance?
Whether you own the premises from which you are running your business or have bought property as an investment, to be let to tenants or leaseholders, there is no legal obligation for you to hold commercial property insurance.
If you are buying the property with the help of a mortgage, however, your lender is almost sure to insist that adequate buildings insurance – at least equivalent to the value of the outstanding loan – remains in place at all times.
What does it cover?
At the heart of any property insurance is the protection of the structure and fabric of the building against such potentially severe risks as fire, storm damage, flooding, impacts (from vehicles and falling objects), vandalism and theft.
In addition to cover for the building, commercial property insurance may also safeguard any contents you own (those owned by your tenants, of course, are subject to any insurance they arrange).
Landlord liability insurance is also typically included so that you are indemnified against successful claims from any tenants alleging that injuries they may have suffered or property that has been damaged is your liability and that you must compensate them for their losses.
If you are the owner of a large building or multiple investment properties, you may be employing others to help run your business. In that event, the law says that you must have a minimum of £5 million employers’ liability insurance– to ensure that you are able to meet successful claims from any employee who has been injured or contracted a longer-term illness because of their work for you.
What does it cost?
The cost of your commercial property insurance needs to be seen in the light of what you stand to lose if you do not have it.
If the entire building suffers a major incident and is a total loss, you risk losing the whole of a very significant investment, without the financial where withal to clear the site and reconstruct the property from scratch.
A keyfactor in calculating the cost of the insurance, therefore, is the estimated reconstruction cost in the event of such a total loss. This estimate is frequently reviewed and updated with reference to the construction prices indices published by the Office for National Statistics (ONS).
The cost of contents insurance may vary according to whether it extends to all the plant, equipment, furnishings and fixtures used in running your own business or simply to items you continue to own in premises currently let to tenants.
Public liability insurance may also vary according to the nature and size of the risks concerned, but rarely provides less than £1 million indemnity, might sometimes provide£5 million of cover, and £10 million or more of public liability insurance is not uncommon for especially large developments.
For all those wide-ranging risks, however, it is still possible to save money on commercial property insurance.
Where can I buy it?
Commercial property insurance is offered by any number of insurance providers. Given the sums at stake and your need for cover that meets your particular needs and requirements, however, you might want to draw on the experience and knowledge of a specialist insurance broker – such as us here at Aston Scott.
Not only are we able to look to tailor the necessary cover to meet your particular requirements, but we are also here to help you potentially save money on commercial property insurance.