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Business Insurance Specialists Pty Ltd

Business Insurance Specialists Pty Ltd is a business insurance broker providing insurance and risk advice to individuals, families, small business and corporate.

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Commercial Property Insurance for Businesses

Commercial Property Owner Quote

Commercial Property Owner Insurance

Owning commercial property is a significant investment, whether you're a landlord leasing to tenants, a business owner operating from your premises, or a developer managing large-scale projects. However, with ownership comes various risks, including property damage coverage for accidental incidents, natural disasters, and liability claims.

Commercial property owner insurance provides essential protection, safeguarding your property, rental income, and legal liabilities. This insurance offers peace of mind by covering unexpected events, allowing you to focus on managing your assets and growing your business.

At Business Insurance Specialists, we specialise in solutions to protect your property and financial stability.

What Is Commercial Property Owner Insurance?

Commercial property insurance, or commercial building insurance, is a specialised form of coverage designed to protect property owners from financial losses caused by unexpected events such as natural disasters, fires, or accidents. This policy also covers property damage, safeguarding buildings from structural damage and financial setbacks.

Commercial Property coverage also provides liability protection for claims arising from injuries or property damage sustained by third parties on the premises. This coverage is essential for risk management for office, commercial or industrial property owners, leasing properties, business owners operating from their owner/occupied premises or a full range of private or institutional property investors.

A comprehensive policy ensures that property owners are covered against various risks, including building damage, lost rental income during repairs, and legal liabilities. With the right commercial property owner insurance, owners can protect their investments, maintain financial stability, and effectively manage risks associated with owning and managing commercial properties.

How Does Commercial Property Insurance Work?

Commercial property owner insurance protects property owners against damages, legal claims, and income loss due to unforeseen events. Whether you're a landlord, business owner, or property investor, having the right coverage ensures your assets remain protected from various risks.

  • Property damage coverage – Protects against losses from fire, storms, burst pipes, vandalism, and other unexpected incidents that could require costly repairs or rebuilding. 
  • Flood protection – Available as an optional add-on where insurers, at their discretion, may provide coverage depending on meeting their underwriting criteria. We strongly suggest obtaining a Council flood map of where your premises is located prior to purchase, as there can be difficulties in obtaining Flood coverage when you are in a Flood prone area. 
  • Rental income replacement – Compensates property owners for lost rental income if the property becomes uninhabitable due to covered damages, ensuring steady cash flow. 
  • Landlord liability insurance – Covers legal expenses, medical bills, and settlements if a tenant, visitor, or third party is injured on the premises or experiences property damage. 
  • Business continuity support – Helps property owners avoid financial strain by covering ongoing expenses, ensuring stability during downtime caused by property damage. 
  • Comprehensive risk management – Reduces exposure to financial risks, allowing property owners to focus on growing their business and maintaining their investments. 

You can  secure the right office, commercial and industrial property coverage today with Business Insurance Specialists. Property owners can confidently manage unexpected challenges while protecting their financial future!

Standard Commercial Property Insurance Exclusions

While commercial property insurance provides valuable protection, there are specific exclusions to be aware of. These exclusions typically include:

  • Wear and tear – Damage from regular use or gradual deterioration is not covered. 
  • Mould and mildew – Mould growth-related issues are excluded unless specifically included in your policy. 
  • Defective design or defects – Damage resulting from design flaws, construction defects, or the rectification of such issues is excluded. 
  • Storm surges or sea damage – Damage caused by storm surges or sea-related events is generally excluded, unless caused by a seismological event (e.g., an earthquake). 
  • Erosion and subsidence – Damage from erosion or subsidence is typically excluded from coverage. 
  • Asbestos-related issues – Liability for injury or damage due to asbestos is excluded. 
  • Gradual pollution – Environmental damage caused by gradual pollution is a standard exclusion. 

Understanding these exclusions is essential for your commercial landlord property and landlord and liability insurance to ensure the right coverage for your needs.

Key Underwriting Criteria for Commercial Property Owners

Several factors are crucial in the underwriting process when determining commercial property coverage. These include the type of tenants, their activities, and the construction and age of the premises. Full disclosure of a property’s construction details is essential, particularly regarding cladding and EPS (expanded polystyrene), which have become a primary concern for insurers.

Other considerations include:

  • Property damage coverage – Ensuring that coverage is updated annually to reflect the current replacement value of the property. 
  • Tenant-related insurance protection – The type of tenants and their activities can impact the risk profile, affecting the cost and availability of coverage. 
  • Business interruption cover – Property owners sometimes fail to include business interruption coverage, leaving them vulnerable to income loss during damage or repairs. 

Property owners can secure the best investment protection by addressing these criteria and ensuring proper coverage.

How Are Commercial Property Claims Settled?

In the event of a claim, commercial property insurance is typically settled on a Replacement Value basis. This means that in the case of significant damage, such as from a major fire, your policy will cover the cost of replacing the old property with a new one of the same type and construction. This "New-for-Old" approach ensures that you are not financially disadvantaged by the age or depreciation of the property.

Proof of rental income is usually required to validate loss of rent claims. This ensures that property owners can recover the rental income lost during the repair or rebuilding process, keeping cash flow intact during recovery.

With respect to Liability matters, they are settled on an indemnity basis, and will consist of the actual medical cost for the injury, and can also extend to potential economic loss suffered by the Third Party.

By understanding how claims are settled under commercial real estate insurance, property owners can ensure they are fully prepared to manage potential losses and protect their investments.

How is a Commercial Property Sum insured determined?

When setting the sum insured for a commercial property insurance policy, it’s essential to focus on the replacement cost, not the property's market value or depreciated value. The sum insured must reflect the full cost to rebuild the property in the event of a loss, ensuring it accounts for new construction and all additional costs like surveying and architect fees.

To assist property owners in accurately determining this value, we can provide to you a formal replacement building valuation once we receive all property details. For valuation relating to properties of significant size, generally greater than $50M in value, we recommend arranging a professional valuation to ensure the property is fully covered.

Property owners can avoid underinsurance by accurately setting the commercial property coverage and ensuring their investment is protected against unforeseen events.

Does a Property Owner Require Liability Cover?

Yes, property owners require liability insurance to protect themselves against personal injury or property damage claims made by third parties or even tenants. Property owners are also responsible for maintaining a safe environment on their premises, which includes both the building and common areas.

For example, if a tenant were electrocuted due to faulty wiring, the landlord could be held liable in addition to the electrician. Similarly, if a third party were to slip and fall inside or outside the premises, the landlord could face legal action. These are common scenarios where landlord liability insurance comes into play.

Liability insurance is a crucial component of tenant-related insurance protection as it ensures property owners are financially covered against such claims. Without proper coverage, landlords could face significant legal and financial risks.

At Business Insurance Specialists, we provide comprehensive property insurance for landlords, helping to safeguard your investment and liability exposure.

Customised Commercial Property Coverage for Every Property Type

Whether you own a single office or a portfolio of properties, commercial property insurance offers customisable solutions to meet your specific needs. Discussing your property’s unique risks and coverage options with Business Insurance Specialists can ensure you're fully protected.

Contact us today for expert advice and a tailored commercial building insurance quote to manage your property risks effectively.

Frequently Asked Questions (FAQ)

1. What does commercial property owner insurance typically cover? Expand

Commercial property owner insurance typically includes property damage coverage, protection against theft or vandalism, loss of rental income, and liability insurance for injury or property damage affecting tenants or third parties. Optional add-ons such as flood or machinery breakdown coverage may also be available depending on your needs.

2. Is commercial property insurance mandatory for landlords? Expand

While not legally required, having property insurance for landlords is highly recommended. It provides essential financial protection in the event of unexpected property loss and damage, tenant-related incidents, or third-party claims.

3. How do I determine the correct sum insured for my commercial property? Expand

The insured sum should reflect the replacement cost, including construction, architectural fees, and related expenses—not the market or resale value. A professional valuation either requested from our in-house valuation tool or an external valuer can help ensure you're not underinsured.

4. Do I need additional protection if I have tenants? Expand

Yes. Having tenants introduces new risks. Tenant-related insurance protection addresses liabilities related to their activities, as well as loss of rent coverage if the property becomes uninhabitable. This is a key part of comprehensive risk management for property owners.

5. Are claims settled at the market value or replacement value? Expand

Claims under commercial building insurance are settled on a replacement value (new-for-old) basis. This ensures your damaged property is replaced with a similar, newly built structure, without factoring in depreciation.

6. Can I get cover for income loss due to property damage? Expand

Yes. Rental income replacement is available as an optional extra. It helps maintain your cash flow if your property cannot be leased due to a covered event, such as a fire, storm, water, impact, malicious, cyclone or accidental damage.

7. Are flood or storm surges covered under property damage policies? Expand

Standard property damage coverages do not automatically include flood or storm surge protection. This can be considered as an optional add-on. Make sure to assess your property's location and risk profile when deciding on this coverage.

8. How can I customise coverage for different property types? Expand

Whether you own a retail shop, warehouse, office, or multi-tenant building, your policy can be tailored to suit specific occupancy risks, tenant types, and construction materials. Speak with Business Insurance Specialists to structure the right commercial building insurance for your situation.

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