Insurance policies are essential for any property owner to protect their investment and any assets kept on the premises. This is especially important for commercial property that is occupied by tenants on a leasehold basis. Here, landlords must consider the type of commercial tenants that are likely to occupy the building and the nature of their business operations. In this article you can find recommendations on the various aspects that should be covered by insurance for commercial landlords.
Comparing insurance for residential and commercial landlords
Insurance for residential and commercial properties share some similarities as they cover common property risk factors such as weather, vandalism, and other forms of unexpected damage. However, it’s the additional risks that come with business operations that aren’t addressed through a residential insurance policy. When conducting a commercial property purchase, landlords should be aware that they will face greater unpredictability. A comprehensive insurance policy ensures minimal disruption for both tenants and landlords. A thought out insurance policy could also be used as leverage when it comes time to sell the business, or entice tenants to sign the commercial property lease, as it provides reassurance that problems will be addressed quickly.
Recommended inclusions for commercial property insurance
As is the case with any insurance policy, you will likely be faced with different degrees of cover. These are the main elements a commercial landlord insurance policy should include from the moment that transfer of ownership has been completed.
Property damage
Although damage to property is a common inclusion in insurance policies, commercial landlords should ensure their coverage includes damage to business assets owned by tenants occupying the property. It should also include accidental damage to the physical structure of the property, thereby protecting owners from potential financial losses.
Liability
Certain commercial tenants, such as retail and hospitality businesses, will likely experience heavier footfall than residential ones. Liability insurance covers property owners for injuries sustained within the property boundary.
Business interruption
Most commercial leases will stipulate that the landlord has responsibility for advancing any claims under business interruption. This can include any lost revenue to the tenant due to the building becoming temporarily unusable.
Theft
Commercial properties are generally at greater risk of being targeted for theft because they contain expensive assets and materials.
Specialised coverage
As a landlord, you should consider whether any specialist coverage is required based on the property type you are renting, as well as the operations being conducted. This could include one or more of the areas already discussed here.
Builders risk insurance
If the commercial lease allows for renovations and improvements to be made to the property, this additional insurance is often advised to add further protection. Coverage and cost can vary depending on the scale of the works.
Coverage for multiple properties
Where residential policies are often designed to cover one property, commercial property insurance policies can include multiple properties across different locations. This provides a degree of flexibility and coverage that’s often required for experienced landlords and large businesses. Although it’s important to be aware that these policies specify that if multiple properties are included on the same policy, they must be used for similar activities.
Quality property conveyancing services in the North East
The team at Toomey Legal possess conveyancing expertise that is designed to not only help you complete a commercial property transaction but get the most out of it after the fact. We communicate every step of the way to keep you informed about the stage of your transaction. Being a commercial landlord comes with many responsibilities and we’re here to help you stay on top of things. Contact us today to discuss how we can help protect your investments.