Commercial property insurance : Are you covered ?
As a small business or commercial property owner you know you need to protect your place of work or investment.
This article highlights some of the important cover aspects to consider when insuring your commercial property.
What many commercial property owners and business owners want to know is how much cover do they need so that they are adequately covered, and at the same time, how to go about sourcing an insurance program that is affordable.
They will often ask their insurance broker, ” how much cover do we need so we are covered properly?”
And ask themselves, “how much cover can we afford to pay? or “how much cover do we want to pay for”
Human nature being what it is , means that some commercial priority owners are seeking maximum cover for minimum price.
With lengthy policy documents and a lot of fine print it can be tempting to look closest at the bottom line.
This may result in a nasty surprise at the time of a claim. When comparing look beyond just the cost of commercial property insurance and check what you are actually covered for.
Below is a checklist of some key elements to look out for.
What are some of the insurable risks for commercial property insurance?
- Loss of Rent
- Public liability
- Business Interruption
- Fire & Perils
- Machinery Breakdown
- Accidental Damage
- General Property
- Removal of Debris
Some of the above elements are core in almost any commercial property insurance policy. For example, Public liability , Fire and Perils are some of the key risks insured by commercial property owners. Other insurable risks above, while recommended for most commercial property owners, are subject to individual circumstances, budget ,location, size and industry.
When considering commercial property quotes its important to know which elements are included and the sums insured for each.
What are some of the types of commercial buildings that can be insured?
- small professional office buildings
- large skyscrapers
- small factories
- commercial strata buildings
- large warehouse/office buildings
- very large industrial buildings
- single tenant retail buildings,(clothing, shoes)
- small neighbourhood shopping centres,(3 or 4 little shops)
- large shopping centres
- “big box ” retail shopping centres (whitegoods, electrical )
Bars, Café ,Restaurants
- Take away food shops
- Apartment buildings
- High‐rise apartment buildings
Other commercial buildings
- Medical practices
- Self‐storage facilities
Commercial property insurance for small and medium businesses
Small and medium business will generally insure their commercial property under a “business insurance package” that are designed to make taking out multiple cover elements cost effective and manageable.
In the one policy you can select to take out any or all of covers you feel you need.
Business insurance packages are typically defined events policies.
What does this mean?
According to David Porteous of Brooklyn Underwriting, “Section 1 of the Business Package Policy normally covers the building and common property of the business itself. It is the main operating section of cover under the policy. An example is: If your schedule indicates that You have taken out insurance under Section 1 (Property Damage), and if the Property at the Situation and/or premises is damaged by one or more of the defined events listed below occurring during the period of insurance.
In order for cover to be in place, the loss must occur from a defined event. This will be included in the policy itself and generally include such things as:
- Malicious Damage
- Accidental Damage
Commercial Property Insurance for Larger Businesses
The Industrial Special Risks(ISR) Mark IV policy is an institution of the Australian commercial and industrial insurance landscape. It is an open perils policy which means that it covers all the elements of physical loss, destruction or damage unless excluded by the policy.
As you can see, the policy seeks to cover “any” physical loss or damage “not otherwise excluded” by the policy. This is the main point of difference between the named perils counterpart.
The sums insured for ISR policies vary from insurer to insurer. In most instances and ISR will not be used unless the sum insured is at least several millions dollars.
Commercial property insurance tips :
Underinsurance – Generally 80%* or more of value needs to be insured or claims may be scaled back (even if claim less than sum insured)
*For general information purposes only. May vary significantly between different insurance policies. Important: Call 1300 542 573 and check your policy wording for more information.
New oh & s legislation – your building may cost more to rebuild than you think to comply with new regulations
Business interruption – allow enough time …it often takes more time than you think for the business to return to trading pre accident
Vacant property: Risks increase. If period will be longer than 90 days you need to advise your broker. Insurer needs to know.
Changes in tenant occupation: Risks change. advise your broker. Insurer needs to know.
More online tools for commercial property owners considering insurance
To assist small business and commercial property owners in considering important cover aspects in a way that is easy to understand for non-insurance experts to understand the team at SMART Business Insurance Brokers have prepared an animated video, https://vimeo.com/153216438, and an infographic, http://www.smartbusinessinsurance.com.au/commercial-property-insurance
For a suitable solution to your commercial & business property insurance needs TALK to a SMART Business Insurance broker on 1300 542 573Google+