5 Expert Reasons Why Commercial Property Insurance is an Absolute Must!

Commercial property purchases are still among the top Australian investments. That being said, it’s important to manage and maintain your investment to ensure you retain a positive ROI.

One of the best ways to protect your commercial assets is to ensure you have exceptional commercial property insurance in place. This is one type of insurance policy that needs to be in place immediately once you take possession of the property.

What Exactly is Commercial Property Insurance?

As the name implies, commercial property insurance is the policy that covers and protects your commercial property. This cover extends to the buildings, fixtures, loss of rent and public liabilities.

Whose Responsibility is Commercial Property Insurance – Owner Or Tenant?

In many instances, property owners leave extensive insurance coverage to the tenants who are signing the lease agreement. While there isn’t anything legally wrong with this, it’s important to understand that a tenant’s interests differ from yours as the property owner.

For the most part, tenants signing long term agreements are essentially only interested in two things – making money and saving on expenses. This means they might not always opt for an insurance option that offers quality coverage and great claims service. 

To safeguard your investment, it’s crucial that you, as the property owner, source the top insurance options. It’s vital to find coverage offered by experts with specialist knowledge in the commercial insurance field. 

What Does Commercial Property Insurance Cover?

When you’re searching for the best commercial property insurance cover, it’s important to compare different options. While different insurances have varying coverage and solutions, the general points of cover are listed below. 

1. Loss of

Rental Income

Often, loss of rental is referred to as Business Interruption and refers to the income the owner would be receiving from a tenant. This type of insurance will cover any potential mortgage costs. Several instances can cause a tenant to stop paying for a particular period, but the most common is damage to the building.

2. Water Damage to the Property or Building

Water damage can result from the severity of unexpected weather conditions such as increased rain patterns in a particular area. Another common reason for water damage is leaking plumbing systems that are not repaired on time.

Once a building has experienced water damage, the repairs can run into millions of dollars to repair or replace. It’s always wise to opt for a policy that has extensive water damage cover. 

3. Damage Due to Natural Disasters

This type of cover is crucial in areas where there’s a history of excessive weather phenomena. Examples of this would include hurricanes, tornados or even tsunamis. While there may be no extensive damage to the general building, severe winds may cause roof damage.

It’s important to ensure that the cover you’re opting for includes this type if insurance as roof repairs can be very costly if you’re paying out of pocket. 

4. Malicious Damage

Generally, malicious damage refers to vandalism, broken windows and any other instances where a third party willfully causes damage to the building or property. Depending on where your building is located, it could be more susceptible to external damage such as graffiti. 

5. Public Liability

Whether your commercial property is open to the public or functions as a closed warehouse, there’s always the risk of personal injury claims. The most common of these are “slip and fall” type injuries where employees, customers or other visitors can fall anywhere on the premises.

Factors that Determine Commercial Property Insurance Cost

It’s important to note that not all commercial property insurance premiums cost the same. A few factors would influence the cost of your premiums, including:

• Location: It’s no secret that some locations are safer than others. If your commercial building is in an industrial area prone to property vandalism, your premiums may be higher than those of a property in a quiet residential suburb. Some insurance policies might also consider the history of natural weather catastrophes in the area. If the area experiences tornados or hurricanes regularly, then it may affect the premium.
• Industry-type: Insurance premiums have a lot to do with the type of industry you’re in as some industries have a higher risk level than others. For instance, an administration firm will have less risk than a coffee café with a kitchen and exposure to gas appliances. 
• Previous claims history: If you have an extensive claims history, the insurer may charge higher premiums in anticipation of future claims. Ensure you keep your building well maintained to prevent unnecessary claims.

Final Thought

If you’ve recently acquired a commercial property, it’s imperative to get the right type of property insurance as soon as possible. If you already have an insurance broker, speak to them for a full appraisal to advise on the type of insurance needed. 

If you’re searching for quotes on your own, it’s important to set adequate time aside to find the right policy for your property. Doing this will ensure that you’re covered before your tenants move in resulting in protection for everyone involved.

Rather safe than sorry!