Property Owners’ Liability
For a commercial property this is often the most misunderstood or overlooked by commercial landlords. Liability insurance for commercial property is to compensate 3rd parties in respect to property damage and injury through negligence. You are liable, and not your tenants in these circumstances because it’s ultimately the landlord’s responsibility to oversee that their property is adequately maintained.
A 3rd party delivery person takes a fall after tripping on a loose step in the entrance to your building. You could be held liable in a compensation case.
Did you know?
Property Owners’ Liability limits usually are offered at 1m, 2m, 5m or 10m for commercial properties. Towergate Insurance can offer some policies that don’t charge extra to include Property Owners’ Liability.
Commercial Building Insurance – The Rebuild Cost
This is one of the most important features of commercial property insurance. It exists to cover the costs for repairing damage or rebuilding. You must be insured for the full cost of what it would be to rebuild your property should it be destroyed. Being under insured (meaning you state the full re-build cost as less than it really is) could be catastrophic should something happen which would mean you need to claim for the full amount.
Did you know?
Most insurers have a ‘condition of average clause’. This means if you give a sum insured for building/contents which is not enough, they can reduce the claim by the percentage that you’re underinsured. For example - insure for 100K, but should be 200k, and claim for 50k. You could end up being able to claim only for 25k (minus 50% of the difference).
Did you know?
There are various free re-build calculators online that can assist you in working out your re-build cost.
Loss of Rent - Indemnity Period
If your property should become uninhabitable from an insurable event such as a fire, the insurance will pay out for the rent you are subsequently unable to collect, meaning you aren’t losing out financially. The indemnity period is the length of time you can claim for ‘loss of rent’ expenses.
How long should my indemnity period be?
12, 24 or 36 months are also commonly available, and it should be seriously considered what is adequate for your building. This is because in the worst case demolition, debris removal, architects and finally rebuilding can take years (You might even need to find a new tenant).
One way to understand the difference between your ‘contents’ and your ‘building’ is to hypothetically turn your property upside down. Anything that is unattached would be classed as contents. This would mean tables and chairs are contents whereas the doors, cupboards and walls come under buildings insurance. Some commercial properties may be rented already equipped for a certain type of business for example a café may have a commercial kitchen already fitted. This would make the contents insurance a vital part of your protection.
Are my tenants responsible for their own contents insurance?
As a landlord you are not responsible for accidental damage to your tenant’s belongings. Anything that the tenant owns will be covered under their own business insurance policy.