Commercial Landlord Insurance

What does commercial landlord insurance cover? *

Commercial Landlord insurance may cover a commercial property owner who is renting out their property to tenants, for business purposes. It may protect the commercial property owner/landlord against the financial burden from damage to their commercial property, claims for third party liability, and the loss of the rental payments due to an insurable event.

Polices are diverse and they may offer various degrees of protection. Generally, commercial landlord insurance may include the following types of cover:

• Property Damage Insurance – protects property owners for physical damage (for example, fire, storm, malicious damage) to the building itself and contents which the property owner is responsible for.
• Public & Products Liability – protects the property owner for claims relating to injury to third-parties or damage to third-party property. For example, poor maintenance leads to an injury on the premise, or storm damage to the roof results in damage to the tenants’ contents.
• Machinery Breakdown – Protects property owners for the repair/replacement cost if machinery at the property breakdown due to a mechanical failure. For example, breakdown of air conditioning units which the property owner is responsible for.

Why Do You Need Commercial Landlord Insurance? *

Without Commercial landlord insurance, you are leaving yourself exposed to the financial burden of incidents at your property.

Commercial Property insurance can safeguard you against events like fire, storm, vandalism, injury at the property and assisting with funding of repairs and income continuity.

Overall, commercial landlord insurance helps landlords mitigate some of the exposures of being a property owner, and renting a property to tenants for business purposes.

What are the policy requirements to insure commercial building and property for landlords? *

Is your current commercial landlord insurance policy insurance for your needs?

Here are few simple, yet important considerations and policy requirements to check if your commercial landlord insurance policy is suitable for your needs.

• Are your policy details correct?
  Sounds simple. Sometimes too simple. You may be surprised how many polices are not updated to reflect current details such as tenant businesses, building sums insured, property fire protection and security measures or rental income.
• Check for exclusions and conditions:
  Are there any exclusions in your policy that will result in a potential claim being denied? Often commercial property owner policies will have conditions relating to the tenant businesses, for example, properties with restaurants, often have deep frying and cooking conditions. Check your policy and/or contact your SMART business insurance broker.
• Are your sums insured enough?
  Building insurance policies contain an under-insurance clause. This means, if you are found to be under-insured at claim time, the insurer can decline to pay a claim or only pay a proportion of the building replacement value. Due to the cost of construction increasing significantly over recent years, it is important you review the building and contents sum insured and are satisfied this is sufficient in the event of total loss.

What Are The Risks of Not Having Commercial Landlord Insurance? *

Commercial property investments can bring long lease terms and attractive rental returns. Still, if you don’t have commercial landlord insurance, you might be exposing yourself to a wide range of risks that could have serious financial implications that may affect your investment portfolio. For example, if there is a fire at your property, without commercial property insurance, you will need to pay the total rebuild cost out of your personal funds.

Property Damage

Fires, storm, flood and malicious damage can cause extensive damage to your commercial property. Additionally, water damage from burst pipes can cause structural damage. Without property damage insurance, the costs of repairs or rebuilding may be astronomical. Cover will vary from policy to policy, so check with an insurance broker for coverage options, inclusions and exclusions. It is important to note all policies don’t automatically include flood cover, if you are in a flood zone you may need to specifically request this type of cover.

Public & Products Liability

Commercial landlords may face liability risks primarily from third party injuries and property damage that occurs on the property. For example, slips, trips and falls due to a fault in the building construction, or damage to tenants’ goods due storm damage to the roof of the property.

Business Interruption

One significant risk for commercial property landlords is the potential loss of rental income due to an insurable event. Business interruption cover provides coverage if there is an event which makes the building untenantable, and the property owner loses their rental income. For example, if there is a fire at the premise and the tenant needs to vacate or move elsewhere. In an event like this, business interruption can cover your rental income for a period of time, while you are repairing the property

It is important to note most commercial property insurers don’t cover rent default. If you specifically require rent default cover, talk to a Smart Business Insurance broker.

Machinery Breakdown

If as a landlord, you are responsible or own machinery in the premise, you can take out machinery breakdown cover to protect machinery if they breakdown due to a mechanical failure. For example, breakdown of air conditioning units which the property owner is responsible for.

Glass Replacement

Cover for broken/damaged glass such as windows in the premise is a separate to building coverage. Depending on the terms of your lease agreement, yourself or the tenant will be responsible for insuring glass. If, as the property owner, you are responsible for insuring glass, you need to take out glass coverage to protect against glass breakage/replacement.