Insuring Business Property

Insuring the Business Premises

If you have business premises, taking out a suitable buildings insurance policy will ensure you are covered for damage from a variety of causes. While you should check the policy details carefully, most standard contracts will insure your buildings and premises for a range of risks, including:

1. fire and lightning
2. explosion
3. riot
4. malicious damage
5. storms
6. floods
7. damage caused by vehicles

If you are a tenant, ask your landlord who is responsible for insuring the premises. Normally this is the landlord. The tenant, however, is usually responsible for shop fronts.

If your lease complies with the 2007 Code for Leasing Business Premises, and your landlord insures the property, the insurance should be fair and reasonable, and represent value for money. Your landlord must disclose details of any commission they receive and provide insurance details on request. You can download a copy of the code from the Leasing Business Premises website (PDF).

If you are responsible for insuring the property, you could opt for "All Risks" insurance. This provides coverage against any other damage or loss specified in the policy, including accidental damage caused by accident .

Insurance policies do not cover:

1. wear and tear
2. electrical or mechanical breakdown
3. any gradual deterioration specified in the policy

You should notify your insurer if your premises are left unoccupied for any length of time. Cover is likely to be reduced to Fire only and may not include malicious damage caused by vandalism.

You need to insure your business premises for the full rebuilding cost, known as the reinstatement cost, rather than just the market value. You will only be able to claim the cost of what you have insured, regardless of the amount of damage.

A chartered surveyor will be able to help to calculate the reinstatement value. You can select a qualified chartered surveyor through the Royal Institution of Chartered Surveyors (RICS) website.

Need more information about Landlord Insurance? Visit our dedicated page on Landlord Insurance for more details about this product.