COMMERCIAL PROPERTY INSURANCE
WHAT IS IN A TYPICAL COMMERCIAL PROPERTY INSURANCE POLICY?
A Commercial Property can include Office, Retail or Industrial Buildings. These different property types may have slightly different insurance requirements, however the fundamentals of the policy should remain the same with Building, Rental Income and Public Liability insurance a minimum requirement.
The policy type also depends on the size, or value of the property being insured. Generally, if a property is valued under $5,000,000 (Building and Rental Income) then it will likely fall under a Business Package type policy. Anything over this value, then an Industrial Special Risk (ISR) policy can be considered which offers a more comprehensive level of insurance cover.
Below provides a summary of the main insurance cover you should expect to include on both a Business Package and ISR insurance policy.
Insures the building which includes any structural items along with any fixtures and fittings/fit out. This figure should include demolition and removal of debris costs.
Includes any loose items that do not form part of the building e.g. furniture and electrical items, not always relevant for property owners as Contents may belong to the tenants renting the Building.
Covers third party property damage and personal injury legal costs which the insured is liable for.
LOSS OF RENTAL INCOME
Ensures the owner still receives rental income whilst the premises are uninhabitable and under repair due to property damage. This figure should also include outgoings on the policy.
This cover ensures rental income plus outgoings are received during the indemnity (rebuild) period selected - recommended to be no less than 18-24 months, depending on property size as you need to consider the time for demolishing, removal of debris, rebuild (local authority processes) and releasing.
EXTRA COST OF REINSTATEMENT
Covers over the cost of any upgrade to a building that a council or statutory authority may impose on the insured following a loss e.g. an old design updated to meet modern safety standards.
CLAIMS PREPARATION COSTS
Covers the costs to prepare for a claim which can extend to engaging a claims expert to advocate on your behalf, unlocking the full policy benefits should a serious loss occur.
Insures against physical damage to electrical, hydraulic and mechanical items e.g. lifts, elevators and chiller units - cover does not extend to wear and tear/failure due to lack of maintenance.
This is often covered under the Tenants policy as per the lease agreement, but always check. It covers the replacement of any internal/external glass items e.g. shop windows or displays.
Not always relevant to property owners, this covers the theft of any items through forcible entry.