Why Commercial Landlord Insurance Matters for Property Owners
Owning a commercial property comes with responsibilities that go beyond collecting rent. Buildings can be affected by weather, accidental damage, structural problems, burst pipes and other unexpected events. Commercial landlord insurance can help protect property owners from the financial impact of building damage.
Understanding commercial landlord insurance matters whether you let an office, retail unit, or other business premises to a commercial tenant. The right commercial landlord insurance policy can provide cover that reflects the property, its use and the risks associated with it.
What Is Commercial Landlord Insurance?
Commercial landlord insurance is designed for owners of buildings used for commercial purposes. It is also commonly called commercial property insurance. The cover is intended to protect the building against specified risks and the costs of repairing or rebuilding after insured damage.
The insurance is relevant whether the owner operates their own business from the property or lets the premises to another business. Owners of offices, retail premises and commercial property portfolios may therefore need suitable buildings cover.
Why Do Commercial Landlords Need Insurance?
Commercial property represents a significant financial investment, so unexpected building damage can create substantial costs. A suitable insurance policy can help reduce the financial burden when an insured event affects the property.
Commercial property insurance may also matter if you have arranged finance for the property. A mortgage provider or lender may require buildings insurance as part of its lending conditions.
Is Commercial Landlord Insurance Legally Required?
Commercial landlord insurance is generally not legally required simply because you own a commercial property. However, that doesn’t mean you should overlook insurance.
The terms of a commercial mortgage or other finance agreement may require suitable buildings insurance. Property owners should also consider the potential financial consequences of having to pay for significant repairs or rebuilding themselves.
Standard residential buildings insurance is not necessarily suitable for a property being used commercially, so landlords should check that their policy reflects the actual use of the premises.
What Can Commercial Property Insurance Cover?
The exact protection depends on the policy and its terms. Falcon Insurance states that its commercial property insurance can cover a range of building-related risks, including repairs, rebuilding following structural damage, burst pipes, damaged windows and access points, accidental damage and roof damage.
Depending on the policy, cover may also relate to stock damaged as a result of building damage. Landlords should always review the policy wording, exclusions, conditions and limits to understand exactly what is insured.
What Types of Commercial Property Can Be Insured?
Commercial landlord insurance can be relevant to a wide range of business premises. The type of property and how it is occupied matter when arranging suitable cover.
Common commercial properties can include:
- Offices and office blocks
- Retail premises
- Business premises
- Commercial buildings let to other businesses
- Properties forming part of a commercial property portfolio
Different tenants and business activities can present different risks. Providing accurate information about the property and its use can therefore help an insurer assess the appropriate policy requirements.
How Are Commercial Insurance Premiums Calculated?
Insurance providers consider several factors when assessing the cost of commercial landlord insurance. The building’s value and the risks associated with its location can influence the premium.
They also consider local property information and potential risks. For instance, properties in areas with a higher flood risk may present a greater insurance risk, which can affect premiums. Other details about the building, occupation and required level of cover can also influence the cost.
Why Is Accurate Property Valuation Important?
Making sure the property is adequately insured is an important part of managing commercial property risk. Underinsurance can affect the amount paid after a claim, particularly where the cost of repairing or rebuilding the property exceeds the insured amount.
Falcon Insurance highlights the importance of avoiding underinsurance and refers to the Average Clause, which can affect claims when a property is not adequately insured. Property owners should therefore consider the appropriate level of buildings cover rather than focusing only on the premium.
What Other Business Insurance May Be Needed?
Buildings insurance protects the commercial property itself, but landlords and businesses may need other insurance. The appropriate cover depends on the circumstances, business activities and risks involved.
Falcon Insurance also provides access to other forms of business insurance, including business interruption insurance, employers’ liability insurance, management liability insurance, public liability, goods in transit and professional indemnity insurance. These policies address different areas of business risk and should not be assumed to be included within commercial property insurance.
How Can Landlords Choose Suitable Cover?
Choosing suitable commercial landlord insurance starts with understanding the property and how it is used. Landlords should provide accurate information about the building, its occupation and the risks that may need to be covered.
It is also sensible to review the policy conditions, exclusions, excesses and insured values before purchasing cover. A specialist insurance provider can help identify suitable options and explain the differences between available policies.
Falcon Insurance states that its commercial property specialists assess a customer’s requirements before arranging suitable commercial insurance. It also provides an online claims process for policyholders who need to make a claim.
Protecting Your Commercial Property
Commercial property can be a valuable investment, making appropriate insurance an important part of responsible property management. Commercial landlord insurance can help protect against financial losses arising from insured damage to buildings and related property risks.
Falcon Insurance offers commercial property insurance for offices, retail and other business premises, alongside a wider range of business insurance options. Reviewing your property, understanding the risks, and checking the level of cover can help you make an informed decision about the protection you need.