Commercial Property Owner Insurance
Commercial Property Insurance also known as Commercial Building insurance, provides coverage for loss or damage to Building, Loss of Rent following damage and Property Owner Liabilities.
The types of insured events that are covered by a Commercial Property policy include Fire, Storm, Water, Malicious Damage, Impact Damage, Accidental Damage, Cyclone, Earthquake. Flood is typically an additional peril that will need to be added onto a commercial policy.
Business Insurance Specialists as an expert broker can assist in ensuring that appropriate coverage is taken for your Commercial Property.
Insurance cover can be provided under this type of policy to Landlords who rent the property externally to others, or who rent the property to their own business operations. Irrespective of the actual size or type of your building, in order to fully protect your assets, a Commercial Property Insurance policy is required. If the property is financed, it is also in the best interest of the both the landlord and financier that Commercial Property insurance is arranged.
A vast range of different property types can be insured.
- Multi or Single Tenanted
Policy coverage for an owner's building and contents includes various additional benefits in order to minimize loss that can occur to a Commercial Property Owner such as Removal of debris, Fire Extinguishment Costs, Mitigation Expenses, Loss of Land Value, Extra Cost of Reinstatement, Sign Damages and coverage for minor construction work activities.
Normally with Commercial Property, a tailored Business Package policy can be provided. Where a property’s value exceeds $ 20 million an ISR Policy plus Liability policy is the preferred method of cover. Both of these types of policies should include coverage for Loss of Rent following damage to a property.
When determining the level of coverage for Loss of Rent, it is important to understand the period of time it will take for a new construction to be completed from start to finish, and when tenants will commence leasing the property again. If the period of time, in order to accomplish this is 18 months, the sum insured for Rent should be calculated on an 18-month basis. With large properties, it will invariably take more than 12 months from a major loss before the property is repaired or rebuilt.
It is important to be aware that certain policy exclusions apply also.
What are standard Commercial Property insurance exclusions?
Common exclusions include wear and tear and gradual deterioration, mould, defective design or defects and the resultant rectification of these defects. Damage arising from the sea or storm surges can be an issue unless caused by a seismological event eg Earthquake. Erosion and Subsidence damage to commercial properties is another exclusion.
Liability exposures such as injury or damage, from issues relating to Asbestos or Gradual Pollution are standard exclusions also.
Underwriting criteria for Commercial Property Owners?
The types of tenants and their activities, and the construction and age of a premises are important factors in determining Property Owner insurance. In recent times, Cladding and EPS are of major concern for insurers, so full disclosure of a property's construction is important.
Other issues which should be addressed include not update coverage on an annual basis, and in some instances not have business interruption cover
How are Commercial Property claims settled?
A Commercial Property policy is normally insured for on a Replacement Value basis. This means you are insured "New-for-Old". Thus, an old building will be replaced by a new building of the same type of construction if there was a major fire.
If a Loss of Rent claim occurs, proof of rental income will normally be required.
How is a Commercial Property sum insured determined?
It is important to ensure that the sum insureds set for the policy take this into account and must be the new construction value and incorporate all additional costs such as Surveying and Architect Fees. The value to be insured is not the Market Value or depreciated value of the property, but the replacement cost.
To assist property owners in setting this value, we can provide clients a Cordell Building valuation following full receipt of property details. For clients requiring more exact details, a professional valuation should be arranged.
Does a Property Owner require Liability cover?
A property owner requires liability insurance in order to protect themselves for personal injury or property damage to Third Parties or even Tenants the landlord is liable for. As an example, if a tenant was electrocuted, it is possible that in addition to the Electrician being sued, the Landlord is also sued because the Landlord is expected to provide a safe place for the tenancy.
Slip and Fall exposure to Third Parties inside or outside a tenancy is also another major issue for Landlords.
Business Insurance Specialists is a provider of insurance solutions to Commercial Property landlords.