The law does not require commercial property owners to purchase insurance. Still, certain types of coverage are required to protect the property and the public and reduce the property owner’s exposure to costly claims. Additionally, local authorities or other organisations may demand that certain coverage is in place and specify required limits (e.g., public liability).
According to NimbleFins, one commercial building insurance claim can easily outweigh the premiums paid for the policy, making it well worth the cost.
The core component of cover is commercial buildings insurance. This covers damage due to covered events like a fire, flood, theft or vandalism. In addition, it covers the structure of the building, such as windows, doors, walls, floors, electrics and pipes. But it doesn’t cover the contents of the building.
Building insurance may be required if the property is owned through a mortgage. Typically lenders require building insurance to be provided as part of the contract terms.
Commercial building contents insurance is also a common coverage. This protects the items you’d take with you if you moved, such as furniture, furnishings and equipment. Businesses can also protect their stock, although this is usually an add-on component of commercial contents insurance and will come with an extra premium based on the type and value of the stock.
Public liability is also a key feature for commercial building owners to include in their insurance packages. This protects against claims made by the public that the building owner is responsible for an accident that led to personal injury or property damage. For example, loose tiles falling from a neglected roof and landing on a car, or worse, a person.
Here is a list of commercial buildings that you might need insurance to protect:
- Block of Flats
- Business Premises
- Café Insurance
- Caravan Park and Campsite
- Care home
- Church and Religious Building Insurance
- Distribution centre
- DSS Landlord
- Fish and Chip Shop
- Home Business
- Hotel and Guesthouse
- Industrial property
- Medical centre
- Shopping centre
- Sports bars and wine bars
- Sports facility
How do I buy a commercial buildings policy?
There are many options for buying commercial buildings insurance. The big-name comparison sites offer online comparisons for some commercial buildings. For example, NimbleFins provides a quote tool to enable readers to get commercial building insurance quotes from potential providers.
However, they won’t be able to price cover for certain commercial buildings, such as high value or complicated situations. For that, you may need a specialist broker. A good broker can not only guide you through the process, but they will have relationships with insurance underwriters that you might not otherwise have access to.
It’s important to get multiple quotes for comparison purposes because policy premiums can fluctuate between different insurance companies, and included coverage can vary. So it can be useful to check with a number of different providers, especially if you go direct. This can keep you from overpaying, which can happen if you only get one quote from a direct insurer that you take without comparing the market first.
Do I need vacant commercial building insurance?
Suppose a commercial building (including any self-contained areas of the building) is left unoccupied or will not be used for a period of time (usually 30 consecutive days or more). In that case, you may need vacant commercial building insurance, also known as unoccupied commercial building insurance.
First, contact your existing commercial building insurance provider. They might be able to offer cover for a vacant building. However, they might change the terms and conditions of the policy or impose additional requirements regarding building security.
Failing to notify your insurer would mean that the insurer will not cover any damage occurring while the building is unoccupied.
Similarly, you must notify your insurer if you intend to carry out any building works, whether or not these works lead to the building being unoccupied. Again, check the policy wording to find out the terms you’ve signed up for. Hiscox, for example, requires notification if work to extend, renovate, build or demolish any part of the buildings is estimated to cost more than £75,000. In that case, you must notify them at least 30 days before the work starts and before you sign a contract for the building work.