COMMERCIAL PROPERTY INSURANCE
Outstanding Service & Professional Advice for Commercial Property Owners.
Commercial Property Insurance plays a vital role in the risk management strategy of property owners. The right insurance policy can be the difference between rebuilding your property while maintaining loan repayments or having to cash settle and walking away with a significant loss.
Commercial Property insurance doesn’t have to be complicated! However, there are a number of clauses and exclusions within policy documents that you need to be aware of as they can greatly affect claim payments.
Below is a summary of some of the specific risks you can insure against and also a few tips to keep in mind when setting up your policy. Contact one of our professional insurance brokers today for more information.
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Property Damage
The cornerstone of your business insurance policy, this section covers your Contents, Equipment, Fit Out, Stock and the Building (if you own it) against defined perils.
These perils include:
- Fire,
- Storm,
- Cyclone,
- Earthquake,
- Water Damage from burst / blocked pipes,
- Impact damage (vehicles, trees, power lines etc).
- Accidental damage
Insurance Tip #1
Insure your building for full replacement value. If a fire burnt down your whole building, how much money would you need to rebuild in today’s market? Insurance companies can and will reduce claim payments if you under insure your property.
Insurance Tip #2
Not too sure what the replacement value of your property is? We recommend obtaining an insurance valuation. Depending on the size of your property, this cost may range from $600 - $1,500.
Business Interruption
For commercial property owners, this section of the policy protects your rental income. If your building is damaged, due to an insurable event, and as a result your tenant is unable to trade and therefore pay rent, business interruption insurance covers your lost rent.
Insurable events can include:
- Fire,
- Storm,
- Cyclone,
- Earthquake,
- Water Damage from burst pipes
- Impact damage (vehicles, trees, power lines etc).
While you’re building is being re-built, if you have a mortgage, the bank will still probably want their monthly loan repayment. Can you afford to cash flow these re-payments if you’re not receiving rent?
Insurance Tip #1
Make sure you include a sum insured for claim preparation fees. You may require a solicitor to review lease agreements and work with tenants when you’re planning the rebuild.
Insurance Tip #2
If your tenant pays outgoings, you can include this in your loss of rent sum insured.
Public Liability Insurance
As a commercial property owner, you can be held liability for personal injury to tenants, their customers and visitors whilst they are on your property.
Claims can result from:
- Slips, trips and falls (cracks in pathways, loose carpet, uneven floors, faulty stair rails etc);
- Poorly maintained or faulty rental appliances and building plant and machinery;
- Poorly laid out or controlled car parking facilities;
- Fires and electrical faults caused by poor maintenance or construction,
- Inadequate cleaning or housekeeping in common areas or wet floors during cleaning operations;
- Highly polished surfaces;
- Unmarked plate glass panels (which should be marked with opaque materials or etchings to alert people who might walk into them);
- Inadequate lighting;
- Inadequate security arrangements;
- Inadequate signage and fire protection;
- Faults in lifts, elevators or escalators;
Insurance Tip #1
You can manage your liability exposure by outsourcing the management of your property to a licensed property manager or real estate agent.
Insurance Tip #2
Conduct periodic inspections and respond to any maintenance issues or complaints immediately.
Machinery Breakdown
A breakdown of an AC unit can lead to a pretty large, unexpected bill! This section of your insurance policy pays for repair or replacement of machinery that has broken down.
For commercial property owners, the most common breakdown claims we see are for air conditioners. While your lease agreement may specify that your tenant is responsible for ongoing maintenance, it’s likely that you as the property owner will be responsible for payment if the unit breaks down.
Insurance Tip #1
Other machinery may include, elevators, overhead cranes, back-up generators, electrical switch boards or any other machinery you have agreed to provide as part of the lease agreement
Insurance Tip #2
You must ensure that all maintenance / servicing agreements are upheld or insurers may decline your claim.
Need Help!
No matter what stage you’re at, If you need to discuss your insurance with a professional broker nearby, give us a call today and we’ll be happy to answer any questions.
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