Commercial Property Insurance

There are hundreds of thousands of commercial buy to let properties in the UK. In recent years many landlords have added this type of property to their investment portfolio. One of the most fundamental and vital associated expenses of running a commercial property, is commercial property insurance. Many residential buy to let landlords have also purchased commercial buildings to let out on a commercial basis. The commercial mortgage lender will require the landlord to have adequate buildings insurance in place before releasing the monies. They will want to see that it is a specialist commercial property insurance policy, that can cope with the fact that the building will be occupied for commercial use. In the UK most commercial property insurance is designed to cope with buildings that are being used for shops, offices, social clubs, cafes, pubs, restaurants and takeaway's. Another popular scenario is where there is a flat above a commercial building (typically a high street shop). Many policies do exist that provide insurance cover, where the usage of the flat above is just for normal residential purposes.

The list of trades that are deemed acceptable by the insurance company, varies greatly. It is generally more difficult to obtain an instant online insurance quotation, because the nature of each risk varies. This means that you will probably need to wait, while the insurance company reviews the nature of the risk, in terms of the occupation of the tenant or business owner and what commercial activity the building is being used for.

Most UK commercial property is owned by landlords. Yet it is the commercial use of the property, that dictates which type of commercial insurance contract should be purchased. Very occasionally the business user also own the freehold to the building where they operate their day to day business from. Yet in most cases the business user that operates from the premises, is simply renting the shop or office from a landlord. Regardless of ownership, any property that is used for business purposes, will need to be insured on a commercial buildings policy. This policy tends to cover the buildings aspect of insurance and occasionally also covers landlord contents. In the case of owner occupied property, the building cover can be enhanced by adding on covers in respect of contents and stock and other business risks if required.

Like conventional building insurance policies, insurance companies will require some questions to be answered before you can obtain a commercial property insurance quote. One of the first questions to ask is what the commercial property is actually made of, (in terms of its construction details and materials used in the design). Generally speaking properties with concrete floors are a better building risk. Next they'll probably want to know what security arrangements are in force. As with residential buildings insurance, postcode details, as well as details of any previous losses, flooding and subsidence, will also all be taken in to consideration.

The insurance company while also want to know how the commercial property will be occupied, (in terms of what type of business will be operating operate from within it). Occupation strongly influences the price of the quotation. For example, a fireworks factory is more likely to be given a higher insurance quote, than a conventional office (where the usage is potentially less dangerous should things go wrong). The basic principle is that the more hazardous the use of the building, the higher the premium will be. The insurance company will want to delve deeper into the nature of the occupation, (particularly if it involves commercial trade processes that may you have to occur within the building). For instance if one of the factory processes is to handle hazardous raw materials or stock (in order to construct a finished product), stored on site, or that may be toxic or flammable.

Most commercial property insurance policies have been designed to cover a broad range of perils. These will be broadly similar between different policies, yet you should always check the policy wording to identify any details related to your needs and requirements. On top of the buildings sum insured element, there are usually two other covers that are typically offered. The first is property owners liability. This insurance covers legal liability arising out of ownership of the building. Loss of rent is usually also offered for the cost of providing alternative accommodation (should the building become inhabitable during repairs). Most policies that provide loss of rent cover, are usually set at around 20 % of the 'building sum insured', and is usually capped at between 12 and 24 months.

Most commercial building insurance policy wordings exclude insurance cover for terrorism. Instead this will usually be offered to you as an additional option. Due to the nature of this type of risk, you will usually be offered the choice to buy this cover depending on your postcode -the premium will be calculated accordingly. So commercial property located in high profile, inner cities will usually pay a lot more, than commercial buildings located in rural areas. Again this cover is highly dependent upon your postcode, so the insurance company can evaluate the levels of risk.