Commercial Buildings Insurance

Commercial Building Insurance is designed to cover buildings that are used for commercial purposes. There is a broad spectrum of risks that fall in to this class such as shops; offices, factories, salons, warehouses, surgeries, restaurants, takeaways, fish & chip shops etc. As well as these types of business, insurance for commercial property that is used for leisure purposes or education or religion also tends to be insured under a commercial policy wording. Purchasers of commercial building insurance tend to fall in to two separate groups. Firstly, you have the owner occupiers, these are people that have bought a building and are going to use it for their own business. These are owner occupied risks but are still classed as commercial insurance because business is carried out at the premises. Secondly, you have landlords, these are people that have acquired buildings and let them to commercial tenants in return for a rental income.  If you are the landlord of a commercial building it must be made clear to the tenant where responsibility for insurance rests. You may arrange the buildings insurance and charge the tenant the premium but they will be responsible for insuring their own contents and equipment if applicable. 

The premiums for commercial building insurance will depend on a variety of rating factors. 

  • The postcode will play a major part in governing the premium charged. As with home insurance, insurers are able to tell from the postcode, the buildings susceptibility to a loss from subsidence or flooding. 
  • The construction the premises, what materials have been used and what is is on the roof.
  • The security at the premises, is it protected by an intruder alarm or in the case of lock up shops etc, is it protected by shutters or grills.
  • Any other risk prevention mechanisms in usage such as a sprinkler leakage system
  • The usage of the building, premises that are solely occupied as  offices, tend to attract the lowest premiums for office insurance. At the other end of the scale, property that is used for industrial purposes, manufacturing or property that is used for catering such as fish & chip shops tend to attract the highest rates.
  • Nowadays, the perils provided by a commercial building insurance policy are fairly similar to those you would expect to find under a domestic contract. Fire, Lightning, Explosion, Earthquake, Storm, Flood etc. As mentioned above, it the commercial usage of the building that can effect the premium and in some cases the type of contact offered. If you are a landlord, then whatever the usage, the property will usually be insured under a landlords commercial building insurance, these are fairly standard wordings, the insurance company will note the occupation and charge an insurance premium accordingly. However if you are the owner of the business and wish to insure the building, you can usually include it under your business combined insurance policy. Your trade will govern the type of policy you receive. If you are operating a catering establishment such as a restaurant or a takeaway or a fish and chip shop, then you should receive a bespoke catering insurance policy wording. If you run a shop, then a retailers wording would be more pertinent, if it is a factory then a commercial combined wording. Whilst the core wordings of all these polices are the same, they each contain subtle differences. These differences take in to account the different needs of the trade groups  and you will find each policy has been tailored to match the needs required.

    When obtaining your quotation for commercial building insurance, most people want to know how they can obtain a cheaper quotation. Certainly, its not by lowering the sums insured, this is a very foolhardy thing to do and you may find that if you have not insured on the correct basis, your insurers may make deductions from you claim. There are however a number of ways in which you can obtain discounts and still receive the correct form of cover.

  • Shopping around, despite all the advertisements, the really only effective way of ensuring you have received a competitive quotation is to shop around. Even with insurance brokers, they rarely cover all of the market, someone always seems to have a commercial building insurance scheme, or be able to obtain lower rates.
  • Accept a bigger excess. Most commercial building insurance policies will come with a compulsory excess. You can increase the excess in return for a discount.
  • Some insurance companies now offer a no claims bonus. Even if they don't, point out that you have been trading for a number of years without a claim and if may help to bring the premium down.
  • Improving the security at the premises by fitting an alarm or shutters may result in a cheaper premium.
  • If you are a landlord requesting a quotation for commercial building insurance, it is vital that you tell the insurance company exactly what the building is being used  for. Whilst, for example, you may have let the premises to a tenant who are going to use the building s a shop, closer inspection may reveal that they are intending to manufacture certain s of their goods on the premises and this can affect the premium. If there is a flat above the premises and this is also being let out on a commercial basis, you will need to disclose this to the insures. They may want to know the occupation of the tenant.

    If you property is used for catering, in particular fast food catering, you will probably find that any quotation received contains certain conditions regarding the installation and up keep of extraction equipment. Most policies state that, cooking fume extraction equipment, canopies ductwork and the like are  washed/wiped daily and must be cleaned at least once a year by an independent contractor. As well as this, all  filter, traps and other grease removal devices must be thoroughly cleaned at least once a month. This is of the utmost importance, tasks are outside of your control, anyone renting your building for commercial catering usage will have to carry out these requirements

    Another fairly typical condition is to a building  used as a  fish and chip, this will usually contain a  Deep Fat Frying Warranty, It  states that  a chip shop must ensure that  all ranges and  equipment used for the purpose of Deep Fat Frying are to be cleaned weekly  and at least once a year by an independent contractor.