Commercial property insurance is widely regarded as a ‘must-have’ for most businesses. It might also, in some situations, be a legal requirement.
What is commercial property?
There may be various legal and insurance industry definitions covering this.
As the name suggests though, it is usually a property or premises used for commercial as opposed to residential purposes.
It would usually include:
It’s worth noting that there may be some grey areas at times in some of these definitions. Some people may operate an office from their home property or have a small manufacturing or crafts operation in a garden outbuilding.
If you’re in any doubt, speak to your insurance provider in order to avoid accidentally putting your residential property cover at risk, as well as to be certain your risks are covered.
Types of commercial property cover
The risks you face as a business will be unique to you.
Much will depend upon the nature of the activities you’re engaged in, the property concerned, whether or not the public have access to it and so on. No brief article of this nature can tell you what cover may be suitable or even necessary in your case.
A full discussion of your requirements with your insurance provider is required but even so, the generic forms of cover included under commercial property insurance might typically include the following (though they might also be covered by individual policies too):
- Employers’ liability insurance. This is a legal requirement if you employ staff with just a few special case exceptions. It’s important to note that a court might interpret family members or friends who are doing you a favour and simply helping out without payment or a contract, to be employees if they’re injured while doing so;
- Public liability cover. A typically essential ingredient if you have members of the public (or any third party) that enter your premises for business purposes. Cover levels of £1m plus are typically recommended;
- Interruption of business. A disaster that puts your premises out of action might also rob you of your income until the property is repaired and you’re back up-and-running. It might be important to have a survival income until that’s the case;
- Buildings insurance. This is important and particularly so if you own the property (any mortgage on it will probably demand that you keep insurance in place covering the structure at all times). Even if you don’t and rent or lease it, some cover here will be required to make sure that you’re protected, should you or your customers damage the landlord’s building;
- Contents cover. This is self-explanatory and includes your equipment and furniture. Note that stock cover, may be a separate form of protection required;
- Professional liability cover. This is often less directly related to the notion of commercial property insurance but it’s worth thinking about if you provide professional services from a commercial premises. It covers the risks of a client suing you for damages they’ve incurred as a result of professional negligence on your part. One possible example might be a veterinary practice or perhaps an accounting, IT or legal services business.
- Unoccupied property insurance. If you own an office which currently doesn’t have a tenant, then it would be considered an unoccupied commercial property. Similarly, the same would apply to a factory, warehouse, garage or indeed any building that is usually used for a commercial purpose.
In all the above instances, it’s worth thinking carefully about your overall position and where risks may be arising as you conduct your business. These risks are very real. For example, every day in 2015, UK insurers paid out £8.9m in public liability claims.
Most insurance providers will be only too happy to discuss your business positioning and help you to understand where insurance may be highly advisable.