Commercial Property Insurance

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 Older, outdated equipment also may be expensive to insure because it may be difficult to locate parts.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.