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What is commercial property insurance?
Also referred to as landlord business insurance - commercial property insurance is a specific insurance type that is taken out against a property that you use to operate a business from. Much like regular home insurance, this covers bricks and mortar, and the contents within, keeping your business' income and assets safe in the event of an accident.
Do I need commercial property insurance?
You are legally required to have commercial property insurance against your business’ premises if you have a mortgage against it, just like you are required to have domestic home insurance for the same reason.
However, if you own the building outright, then you are not legally required to have buildings insurance. It is worth having though, as it is a small price to pay should something happen out of your control which would require major repairs or even rebuilding the property. To do this outright can be very expensive.
Types of cover
Similar to domestic home insurance, there are three types of cover you can take out against your commercial properties, too. These include the following:
Buildings insurance
This protects the bricks and mortar of the property. Should something happen outside of your control, due to natural disaster or damage to internal systems such as a gas leak, then buildings insurance will cover any expenses.
Contents insurance
Contents insurance protects everything that can be physically picked up and taken out of the property. If you operate from the premises and don’t rent it out, you should consider contents insurance to cover your assets in the event of a natural disaster or theft.
Buildings and contents insurance
This cover is most recommended as it protects your buildings and contents due to damage, theft or natural disaster.
What does it cover?
It is important to fully understand your policy when applying for commercial property insurance. As this is used every day by your staff and colleagues, or perhaps it’s rented out to a third party, you are required to make sure it is safe for use. Having the right insurance policy will help protect your buildings and content.
Cover your property portfolio in one policy
If you’re a landlord with several buy-to-let properties, then you can combine your portfolio under the same insurance policy to save money and hassle. It is worth checking with your insurer when putting together a quote.
Property owners' liability insurance
This cover protects you for any claims made against you in respect of damage to third party property or injury to third party persons, as a result of negligence relating to the property you are responsible for.
Loss of rent
If something happens out of your control which deems the property to be uninhabitable for a period of time, then this covers you for any loss of rent incurred during that period.
Commercial fire and theft insurance
This is an important type of cover to have, as some business premises are likely to be unoccupied for extended periods of time (evenings and possibly weekends). This cover provides protection against fire, electrical fire, arson and break-ins.
How much does commercial landlord insurance cost?
There are several factors that affect the price of an insurance quote for a commercial property, being aware of the exact cover you need is paramount for saving money. So it’s best to shop around to understand what you are paying for.
Location
If you are located in an area with a higher crime rate, then you are likely to pay a little more for your insurance premiums. Properties located in bigger cities like London or Manchester will too experience higher premiums.
Construction materials
Properties built with non-combustible materials will usually get a lower quote for insurance because there’s less risk of fire damage. Be aware that contents can affect the premium, for example, furniture without fire-resistant coating.
Business use
An office building will probably cost a lot less than that of a restaurant or bar due to the public liability add-on.
Occupancy
If you have a shared business space then you’ll most likely pay more for your premiums if one of them poses higher-risk. For example, if a restaurant space is shared within offices, then you’ll likely be paying more.
Security measures
Added security on site will lower premiums. So consider having additional fire safety protection and security alarms.
Types of properties that are considered commercial
There are several types of commercial property, which include:
- Buy-to-let property
- Shops
- Offices
- Cafes and restaurants
- Pubs and bars
- Takeaways
- Industrial
- Storage and distribution
How can I save money on my quote?
Only get the cover you need
If you’re a small business with an office in the countryside, it is unlikely you will need public liability insurance, however, you should double check before committing to a claim.
Provide the correct details
It is critical to be open and honest with your insurance provider; otherwise, if you have not declared something about your business, your claim may be rejected.
Pay annually
By paying annually for your cover, you will most likely pay less for your overall premiums.
Compare quotes with Quidco
When you compare at Quidco, you’ll not only see a range of policies and quotes, you can receive up to £28 in cashback, too!
What do I need to get a quote?
There are a number of factors that determine the price of the your policy, insurers will want to know the following information to gather a quote together:
- What type of trade or business is the commercial property used for.
- If you have any employees, or if you use any temporary or contract labour.
- The amount of protection you require for property owners' liability.
- Any additional coverage you require, such as rental income protection (business interruption) or commercial vehicle insurance.
- Your claim history, as well as whether or not you are involved in any ongoing disputes.
Some insurers will require some personal information too, so be sure to have this ready when putting in your details for a new quote.
Commercial property insurance FAQs
What does a commercial property insurance policy cover?
Commercial property insurance covers your business and its assets against damage, theft or natural disaster, and is an important policy to have in place in order to run operations seamlessly.
What type of insurance do I need for a commercial building?
Typically, there are two types of cover which are buildings and contents, or the combined option. It is entirely up to the landlord what policy they choose to go with but it is recommended to get buildings as a minimum. As the cost of rebuilding a property can be extortionate with insurance.
How is commercial property insurance calculated?
Insurance premiums for commercial buildings are typically calculated by multiplying the value of the building and its contents by a value that corresponds to the level of risk. Property insurance prices are often higher for high-risk properties, whereas lower-risk properties are less expensive to cover.
What is not covered by commercial property insurance?
Damage from termites and insects, birds or rodents, rust, rot, mould, and regular wear and tear are not covered. Smog or smoke from industrial or agricultural operations is likewise not covered. If something is poorly constructed or has a hidden flaw, it is often excluded and will not be covered.
Do businesses have to have property insurance?
If you own a commercial property, you must protect it just as you would your house. At its most basic, this involves purchasing a business buildings insurance policy that will cover any damage to your premises in the case of a fire, flood, or other disaster.
However, it is not a legal requirement if you own the property outright - if you have a mortgage against the property, then your mortgage provider will require you to take out buildings insurance as a minimum before completion of sale.
Can you get cover for unoccupied properties?
On a standard policy for fire, lightning, earthquake, and aircraft, some insurers can cover unoccupied premises for up to 30 days. Longer terms can be negotiated with specialised insurers. See unoccupied property insurance for more details.
Can you get cover for listed commercial buildings?
Yes, some insurers will provide cover for listed buildings, whilst it might be more expensive it is worth having in place in case of an incident.
What constitutes ‘accidental damage’ to a commercial property?
Accidental damage occurs as a result of an unintentional activity. It usually refers to one-time accidents that cause irreversible damage to flooring, walls, and windows. Normal 'wear and tear' damage, such as scratches on walls and floors, may not be covered.
Useful information
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Please note:
- Cashback is only available for genuine quotes.
- Cashback is limited to 3 quotes per person for each product per year. Abuse of this may lead to the termination of your Quidco account.
- Any user found giving false details will have their Quidco account terminated.
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*Cashback rates - £8 per valid commercial property insurance purchase.