Commercial Property Insurance
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What Does Commercial Property Insurance Cover?*
Commercial property insurance can help your business recover after a destructive event. Disasters can strike with little or no warning, leaving commercial buildings devastated. Within a matter of minutes, the business property you lease, or have worked so hard to call your own, could be severely damaged from heavy winds, electrical damage, storms, or fire.
Construction costs are escalating due to the global demands of materials and workforce. The cost to rebuild may be significantly higher today than just a year ago. Additionally, many commercial property owners have cutting-edge and expensive equipment and supplies at risk.
After a serious event, you may face a substantial loss of income as you rebuild. While commercial property insurance can help you repair your building, other types of business insurance can protect your income. We discuss these below.
Commercial property insurance is called business property or commercial building insurance. A sufficient policy offers coverage that protects business owners from damage or loss of essential business equipment, as well as damage to the commercial building. This coverage helps protect the business from significant loss due to a weather disaster, fire, or theft.
Many commercial property owners and tenants are UNSURE if they are COVERED PROPERLY.
We help them find affordable and SUITABLE INSURANCE so they can run their business with CONFIDENCE.*
Commercial Property Owners and Tenants can access many BIG name insurers AND
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The purpose of commercial property insurance is to cover the loss or damage to buildings, property, and contents. A commercial property insurance policy can help keep your business afloat when an unexpected loss occurs. Dollar-for-dollar, a commercial property policy is one of the best investments you can make in your business.
Here are a few of the most important reasons why business owners buy a commercial property insurance policy.
Coverage for Your Commercial Building and Contents
If a covered event damages your business property or the contents, this insurance coverage can help pay for the repair or replacement of these assets. Additionally, if you are a tradie, material theft is a significant risk as timber and other costs increase.
Peace of Mind
You have peace of mind when you know you have protected your commercial building and equipment from sudden damage, accidents, or theft. When disaster strikes, you are well prepared to withstand even a significant loss.
Specific Coverage for Business Property
For sole traders who run their enterprises from home, a commercial property insurance policy offers coverage that you will not find in your traditional home insurance policy.
While all insurance companies provide somewhat different coverage options, many providers can include the following.
- Loss or damage to your property at your business location
- Loss of or damage to contents inside the commercial building; including fixtures, tenant improvements, and fittings
- Damage arising from falling trees, falling building fragments such as disintegrating brickwork, or damage from nearby construction
- Water damage arising from unexpected leaks
- Accidental damage to the property such as a vehicle driving into your office building
- Machinery breakdown, available as an additional option, including cover for the breakdown of industrial machinery and office equipment
While standard commercial property insurance covers damage caused by fire and accidental damage to buildings, contents, and when included, stock, it does not include loss of income from business interruption.
Many business owners also purchase business interruption insurance to protect against lost income after a covered loss. They may buy protection via a tailored business insurance pack, or a “biz pack.” This comprehensive policy can bundle the following.
- Commercial property
- Theft of money or certain other money losses
- Product liability
- Public liability
It is important to understand that flood damage may or may not be covered. Please check your policy carefully. A SMART Business Insurance broker can help you obtain the specific coverage you seek.
You typically can select coverage for theft under a commercial property insurance “biz pack.” Generally, insurance companies will pay for loss or damage to the contents of the building and company inventory due to theft, attempted theft, armed hold-up, or vandalism. Many commercial property insurance policies will also allow you to cover damage to glass or signs, which often occurs during vandalism or a break-in.
Events that a commercial property policy may cover include the following*
- Goods damaged in transit
- Storm, wind, and rain which can consist of snow, sleet or hail
- Wind or water
- We may act for you – the commercial property owner or tenant – not the insurance company
- We may obtain multiple quotes for you on suitable policies from leading insurance companies and underwriters
- You receive responsive friendly service.
- You’ll receive a competitive rate on a suitable policy year after year
- You’ll have us in your court if you need to claim
- Monthly payment options
- We’ll do the leg work for you!
The Situation Address must be the address of either the physical risk being covered (like a property) or, in the case of Liability policies, the physical address for the normal place (or places) of business.
If you have multiple business locations, e.g., a number of branches, shops, factories or depots, then ALL location addresses must be shown on the schedule and advised to the insurers. And the multiple location addresses then needs to be kept up to date with the insurers at all times, in the event of any changes.
Insurers will not accept a Post Office box as a “normal place of business”, because you cannot do business from a PO Box.
A PO Box is fine for a mailing address, but cannot be used as the address of the “Situation” on any policy.
For example, Public Liability policies usually operate “at and from” an address, which should be the normal place of business for a business policy.
If the business was run from home, for example, then the home address would be shown as the normal place of business. The “at and from” nature of the cover would then cover any transitory business conducted away from the home address (or away from a real business address, as the case may be).
If the business was run from home but was selling through stands or kiosks at markets or shopping centres then that would have to be disclosed to the insurer, as it affects the risk.
When trying to determine how much coverage you need for your business location, keep in mind that insurers design this type of policy to restore your company to the same financial state as before the damage occurred. That means being able to rebuild and replace the buildings and contents at today’s prices without depreciation for wear and tear. This is known as replacement cost coverage. Businesses with highly customised or specialised property will typically mean greater replacement costs.
Insurance coverage can vary significantly from one company to the next. When purchasing a business policy for the first time, know that exclusions exist in all property policies. Exclusions carve out coverage and can create unexpected out-of-pocket expenses if not fully understood. Therefore, it is important to consult with an insurance broker before you make a final decision on your company’s new or renewal insurance policy.
To learn more about commercial property insurance, contact our insurance brokers today. Our licensed professionals will be happy to answer your questions.
Several key factors influence commercial property insurance rates, including the following.
- Age of commercial property – When was your commercial property built? The newer the commercial space, the more affordable the insurance rates. If your commercial property is older, has it been rewired? Electrical wiring in older commercial buildings can cause fire losses. Insurers are wary of unmodernized electrical. Aging wiring can mean underwriting rejections and higher premiums for the property owner and tenants. A SMART business insurance broker may be able to help.
- Business equipment – What type of business equipment do you use? Large-scale plant machinery or specialty high-tech equipment can be expensive and difficult to replace. These types of equipment will increase your commercial property insurance premiums. Older, outdated equipment also may be expensive to insure because it may be difficult to locate parts.
- Claim severity and claim frequency – Claim severity is how much a claim costs the insurer. Claim frequency is how often claims occur. Does your commercial business use flammable or dangerous materials? Are thefts a frequent occurrence for your materials or finished products? Is your commercial property located in a high-crime area? The questions above illustrate problems that often cause increases in severity or frequency or both. Claims frequency and typical claims costs for similar properties impact the cost of your commercial property insurance.
- Location – Far North Queensland commercial properties face significant natural hazards and are relatively expensive to insure. In some cases, insurers will not extend coverage. Any locations in Australia where commercial properties have had a high number of claims are relatively expensive to insure.
- Security – What type of security measures do you use in your commercial property? Closed-circuit television, a monitored alarm, security patrols, deadlocks, and reinforced entry points improve your security profile. The higher the security measures at your commercial property, the lower your premiums.
- Size – Generally, the larger the factory, retail space, or office space, the higher the insurance premium. Conversely, if your business operates from a location with little specialised equipment, the cost of your cover may be relatively low.
- Fitout – How much would it cost and how difficult would it be to replicate your fitout? Intricate buildouts or custom rig out can increase property insurance premiums.
- Sprinklers – If your goods are flammable and your property values high, sprinklers may help you obtain suitable cover at a reasonable price.
- Stock – What is the value of your stock? If you have little or no stock, this will reduce the cost of commercial property insurance. The amount of stock the insurer covers will impact costs. Is your stock highly flammable? Also, consider seasonal stock swings. For example, a toy seller has additional products during holiday seasons.
- Total sums insured – The total values of buildings, stock, machinery, and finished goods will impact the cost of commercial property insurance.
Many factors influence the cost of commercial property insurance. Not sure how much coverage you need? Call 1300 542 573 and talk to a SMART Business Insurance broker who may be able to assist you in finding suitable cover at an affordable cost.
Whether your business property is a factory, warehouse, or office building, our team of Smart Business Insurance brokers can provide you with multiple quotes for suitable policies from leading insurance companies.
For a property insurance quote for your commercial business property needs, talk to a Smart Business Insurance broker on 1300 542 573 or enquire online.
As a commercial property owner you are aware that when your commercial property becomes vacant for an extended period your insurance could be voided? Or that a change in your tenant’s occupation can impact your premiums and in some cases even affect your insurer’s willingness to cover your property?
As all commercial property owners know, re-tenanting a commercial property that becomes vacant can take some time. Take a walk down Brunswick Street Fitzroy or Chapel Street South Yarra and even the casual observer will see the number of “for Lease” signs that signal the change in commercial fortunes.
While the financial loss of rent can be significant, property owners need to protect themselves against other unforseen risks once a property becomes vacant to avoid more potential losses.
Vandals and squatters often target empty shops, warehouses and factories because they see them as easy targets. Insurers are all too aware of this and rate unoccupied premises accordingly.
The increased risks associated with vacant property generally means an increase in premium and / or an increase in excess in the event of claim. This is a small price to pay relative to a claim being denied or your cover being significantly reduced because you did not inform your insurer if your property was untenanted for more than 90 days. If your property is untenanted for more than 90 days some insurers will not want to provide cover so it is critical you contact your broker in this event.
Property owners also need to inform their broker/ insurer if there is a change in tenant. When a property is rated for risk it is done so based on your declared tenant. From example if your tenant changes from a tile warehouse to a wood working business the risk of fire is greatly increased and hence your insurer will rerate your property with a likely increase in premium and/or changes to the insurance terms and conditions. Failure to notify your insurer of a change in tenant may void or significantly reduce your cover in the case of a claim.
In some extreme cases you may not even find an insurer who is willing to insure your property. For example Tattoo Parlours are notoriously difficult to insure due to the moral risk / associations with bikie gangs, even if your tenant has no association with any bikie gang.
Unfortunately these considerations are often overlooked leading to significant financial loss in the event of a claim for property owners who are not well advised.
If you would like to review your current commercial property insurance arrangements please call 1300 542 573 and speak to one of the SMART Business Insurance Commercial Property Specialists.
Although specific information has been prepared from sources believed to be reliable, we offer no guarantee as to its accuracy or completeness. The information stated, opinions expressed and estimates given constitute best judgement at the time of publication and are subject to change without notice to you. Consequently, although this document is provided in good faith, it is not intended to create any legal liability or advice on the part of SMART Business Insurance Pty Ltd.
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^Important : We have no power to authorise claims. However, our experience and assistance can help you when you have a claim.
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· We may act for you – not the insurance company
· We may obtain multiple quotes for you on suitable policies from leading insurance companies and underwriters
· You receive responsive friendly service.
· You’ll receive a competitive rate on a suitable policy year after year
· You’ll have us in your court if you need to claim
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