Commercial Property Owner Insurance
Commercial Property Insurance (or Commercial Building Insurance) provides you as a property owner coverage for loss or damage to your property and can include loss of rent due to damage and liability coverage.
There are a multitude of events that can be covered by a commercial property policy including fire, storm, water damage, malicious damage, impact damage, accidental damage, cyclone and earthquake. Flood coverage is typically an additional peril that will need to be added separately to a commercial policy.
All Star Brokers as an expert broker can assist in ensuring that appropriate coverage is taken for your commercial property.
Insurance cover can be provided under this type of policy to landlords who rent the property to third parties and those who rent the property to their own business operations, including their own self-managed superannuation funds. In order to fully protect your assets, regardless of the type or size of the building, a Commercial Property Insurance policy is required. If the property is financed, it is often a requirement of the financier that appropriate insurance is held.
A vast range of different property types can be insured.
- Retail
- Offices
- Manufacturing
- Education
- Health
- Transport
- Industrial
- Warehouses
- Multi or Single Tenanted
Policy coverage for an owner’s building and contents includes various additional benefits in order to minimize loss that can occur to a commercial property owner such as debris removal, fire extinguishment costs, mitigation expenses, loss of land value, extra cost of reinstatement, sign damages and coverage for minor construction work activities.
When determining the level of coverage for loss of rent, it is crucial to understand the period of time it will take for a new construction to be completed and when tenants will commence leasing the property again.
It is important to be aware that certain policy exclusions apply also.
What are standard Commercial Property insurance exclusions?
Common exclusions include wear and tear and gradual deterioration, mould, defective design or defects and the resultant rectification of these defects. Damage arising from the sea or storm surges can be problematic unless the damage is caused by a seismological event, such as earthquake. Erosion and subsidence damage is also another common exclusion.
Liability exposures such as injury or damage, such as issues relating to asbestos or gradual pollution, are also standard exclusions.
Underwriting criteria for Commercial Property Owners?
The types of tenants and their activities and the age and type of construction a premises are important factors in determining property owner insurance. In recent times, cladding and EPS are of major concern for insurers, so full disclosure of a property’s construction is important.
Other issues which should be addressed include, not updating coverage regularly (preferably on an annual basis) and in some instances not having sufficient business interruption cover.
How are Commercial Property claims settled?
A Commercial Property policy is normally insured for on a replacement value basis. This means you are insured “New-for-Old”. Thus, an old building will be replaced by a new building of the same type of construction if there was a major fire.
If a Loss of Rent claim occurs, proof of loss of rental income will normally be required.
How is a Commercial Property sum insured determined?
It is important to ensure that the sum insured under the policy includes not only the new construction costs but also incorporates all additional costs such as surveying and architect Fees. The value to be insured is not the market Value or depreciated value of the property, but the replacement cost.
To assist property owners in setting this value, we can provide clients a Cordell Building valuation following full receipt of property details. For clients requiring more exact details, a professional survey engineer valuation should be arranged.
Does a Property Owner require Liability cover?
A property owner requires liability insurance in order to protect themselves for personal injury or property damage to third parties or even tenants where the landlord is deemed liable. As an example, if a tenant was electrocuted, it is possible that in addition to the electrician being sued, the landlord is also sued because the landlord is expected to provide a safe place for the tenancy.
Slip and fall exposure to third parties inside or outside a tenancy is also another major issue for landlords.
All Star Brokers is a provider of insurance solutions to Commercial Property landlords
