Commercial property insurance is sometimes an afterthought for business owners. Most business don’t even own the property from which they operate. However, it is still important to get cover. What’s also important is knowing what kind of insurance you should get, in case anything goes wrong.
Commercial property insurance is necessary if you have a business that operates from a physical building. These days of course, it is possible to have a business which doesn’t have a physical location. Freelancers who work primarily from home (or wherever their laptop happens to be) are a prime example.
But there are still many companies that operate from brick-and-mortar buildings. And like with anything, those buildings are at risk. Which naturally means…
…commercial property insurance is a necessity for most business owners.
In many ways, some policies function in the same manner as standard buildings insurance. The difference here is that the focus is on a business, and not a private home.
Commercial Property Insurance: The building and the contents
Commercial buildings insurance is only half the story. As a business owner, you’ll also need to get business contents insurance. In essence, you need to make sure that you have something to safeguard both the building and the contents.
With buildings insurance, you’ll cover the cost of any repairs you may need to carry out on the building. This can include falling trees, fire, burst pipes etc. With contents insurance, you cover the following…
- Any business equipment you have (cash tills, computers, desks, chairs).
- Any valuables/merchandise: if you own a shop, you’ll want to cover the products you sell.
Renting vs. Owning: What’s the difference?
For the most part, those who own their own business may not necessarily own the actual building they operate from. This is pretty standard – even big companies tend to rent their premises. However, if you own the building you operate from – make sure you get cover. Like with buildings insurance for a house, mortgage lenders will require you to take out a policy.
In addition, commercial property insurance won’t cover:
- Wear and tear: Carpets wearing thin, scraped walls etc. These general, everyday things don’t get cover.
- War and terrorism: Damage caused by terrorist actions are normally excluded from policies. However, it is sometimes possible to get this type of cover from a special insurer. In fact, some of them even have government-backed funding.
Commercial property insurance is landlord’s responsibility if you only rent out the property.
Commercial property insurance and taking care of your contents
Essentially, a contents insurance policy allows you to easily replace your stock should something happen to it. REMEMBER: You are able to replace the stock against cost price, not sale price! In the case of contents, there are two types of policy that you need to look out for:
- Replacement as new is for items that have been damaged beyond repair or stolen.
- With an indemnity policy, wear and tear is more carefully taken into account. Your items will then be replaced in accordance with their current value.
Is there any addition cover I can get?
For businesses, business interruption insurance is also a useful policy to consider. This is where you receive cover in the event of being unable to carry out business as normal. While it may seem like a separate policy, it is sometimes sold as an add-on to standard commercial property insurance. With this kind of policy, you’re covered for…
- …shortfalls in pre-tax provides which come about as a result of the event.
- …should the costs of running your business increase due to the event (extra accountants’ fees is an example), you’ll also be covered.
As a business owner, it is important to consider all of the risks that your property faces. By ensuring that you have the right amount of cover, you can minimise the losses you experience due to any of these events.