Published on January 26th, 2018 | by admin0
The Importance of Property Insurance
Running a business often involves operating from a commercial property of one sort or another.
As some 76% of businesses in the UK in 2017 employ nobody other than the business owner(s) (source: FSB Survey published 2017), it is possible that in many cases the businesses concerned might be working from home or other informal premises.
That inevitably brings risk with it and that’s why commercial property insurance exists.
What is a commercial property?
Broadly speaking, any property used for commercial activities is a commercial property, of one sort or another, in insurance terms. That definition does not necessarily correspond to the government’s definitions in terms of business rates and responsibilities but in this context, it is the insurance view that needs to be considered.
Commercial properties from an insurance viewpoint might include:
- letting out your own home and generating rental income;
- letting out perhaps just a single room of your home as a bedsit;
- running a small crafts manufacturing business from your garage or attic;
- using a room in your home as an office and making it your official business address and base of your business operations;
- running a garage business from a unit on an industrial estate;
- offices located in a block;
- a shop; etc.
Typically if you occasionally work from home and your normal place of business and employer is elsewhere, your property would not be considered as being commercial premises.
The above should not be read as a definitive list.
One thing all these situations have in common is that typically, owner-occupier type insurance cover may not be applicable in the sense of covering either the property itself or your contents within it. You might typically need property insurance specially designed for commercial properties if you’re to protect your interests.
Types of cover – rented or leased commercial premises
Typically, the building’s owner will be responsible for protecting their investment in the property through their own buildings’ insurance.
That typically covers them against damage to its structure arising from perils such as subsidence, fires, storms, floods and similar. Such cover typically also provides them with cover for their fixtures and fittings.
It’s important to note that if you’re renting or leasing such commercial properties, any cover the building’s owner might have in place should not be confused with commercial property insurance that protects your interests.
To give an illustration, if the property were to suffer storm damage, any problems relating to the structure of the building might be covered by the owner’s property insurance. However, their policy would be typically unlikely to cover you for any damage sustained to your materials, tools and stock within it.
Types of cover
The specifics of the cover you require will vary significantly depending upon the nature of your business.
So, it’s important to be sure that the policy you’re considering is a good match for your particular circumstances. As all insurance policies carry terms and conditions, these should be read carefully in order to be sure they’re sensible in your context and that you can comply with them.
Keeping the above in mind, commercial property insurance for a business might include:
- property owner’s insurance (if appropriate);
- landlords’ insurance (specifically for landlord lettings);
- third party liability cover;
- various forms of peril cover for things such as your equipment and stock;
- construction and engineering cover; etc.
There typically is no single definition of what commercial property insurance contains.
An experienced provider of such policies will typically discuss your exact business position with you and will offer their opinion on the types of cover that might be applicable in your exact situation.