So what type of business could be classed as being a commercial property and how do you know if you should be looking for a policy? Generally any type of business that has the general public walking through the doors would be classed as being a commercial business? Well if you own one of these for example you should consider taking out insurance and of course these are just a few of the many types of commercial business and there are many more.

• Hair stylist or beautician
• Public house
• Restaurant or take away
• Office

One of the parts to protecting your business is the liability insurance that the policy would provide. Any type of commercial business relies on individuals buying whatever you are selling. When they walk through your doors if they should slip and fall on packing that has been left behind or on a wet floor then they would be able to claim from you. Any type of injury or accident means the public would be able to claim no matter how it occurred and as such it is essential that you have liability cover. If you do not then you could have to pay for solicitors and medical costs out of your own pocket and this adds up to a great deal of money.

Another essential part to insurance for your commercial business is that it covers your stock. If for example your business should burn down then usually you would be able to claim for a loss. The same would happen if stock was stolen or damaged. The majority of businesses hold a great deal of stock which could cost an enormous amount of money to replace so that you could continue trading.

Your commercial property insurance would also payout in the event that you were to order stock and it never showed up. For example you could be trying a new supplier which offers a great deal and savings when you order your usual stock. However if they should go out of business and you do not get your order then you could claim on the insurance for your loss and it would not have to come out of your own pocket.

What should commercial property insurance cover?

Standard policies should cover the following risks:

• Accidental damage – Accidental damage to the property by you or anyone in your business.
• Malicious damage – This category of damage relates to the deliberate or intentional damage to the property caused by a third person
• Fire
• Flood – Floods can be devastating to stock and business systems, and it can cost thousands to put the property back into its original state.
• Storm – Damage to roofs by falling trees in high winds would be covered here.
• Explosion – Check policies carefully for terrorism exclusions.
• Riot – Civil disobedience will be more of an issue in urban centres than rural areas, so the location of the property will affect the premium.

There may be other heads of claim included, depending on where the property is and what it is being used for.

Commercial property insurance does not cover wear and tear.

What will the insurance provider need to know?

Insurance providers will need a valuation of the property, to assess the level of cover required. The valuer, who would usually be a surveyor, will assess the market and reinstatement values of the property.

What will the policy say?

• Conditions – Commercial property cover will contain conditions about how you use and maintain the property. For example, the policy might prohibit the property from being left vacant for more than 30 days continuously. Also, the policy might insist that it is only valid as long as current fire regulations relating to that kind of property have been met. Further, the insurer may require you to seek their consent for alterations, as they may alter the cost of the premium.
• Warranties – Generally, warranties will be statements that the conditions are being complied with.
• Excesses – An excess is the level of claims the insurance provider sets, below which they will not pay out. The insured is supposed to sort out minor damage below this value himself. Excesses may vary depending on the head of claim.

Other interests
If the property is mortgaged, you need to check the requirements of your mortgagee for commercial property insurance. They may require the policy to be in joint names, or have their interest noted.

The insurance of commercial property works in very much the same way as the buildings insurance with which most owners of residential property will be familiar. In other words, it covers the “standard” perils of fire, flood, storms, explosions, earthquakes and the like. In assessing the risks to commercial property, however, insurers will naturally wish to take into account the particular business carried out from the premises insured.

Such assessment is likely to focus on the “trade processes” conducted from the commercial premises. The particular process engaged in by your business will, of course, determine the degree of risk and the premium that needs to be attached to the commercial property insurance. Offices will invariably attract the lowest premiums, whilst the more hazardous manufacturing processes will naturally enough attract the highest. Also relevant will be the location of the premises, as determined by its postcode, and of course its size and any planning restrictions attached to the redevelopment of the site following the total loss of the building.

If your business premises are rented from a landlord, there may be a temptation simply to expect the landlord to have arranged sufficient insurance cover to protect his property. As a tenant, you might have a reasonable expectation for this to be the case, but it will nevertheless be important to check with the landlord the exact terms of his commercial property insurance to ensure that it fully protects your own business interests. One notable peculiarity of commercial property insurance, for example, is that whilst the landlord may well be responsible for insuring the fabric of the building housing a shop, the shop-front, its windows and window displays are all in most cases all the responsibility of the business tenant.

Whether you own your business premises or rent them from a landlord, therefore, the commercial property insurance that covers the standard risks of fire, flooding, storms, explosions, earthquakes, and so on represents an important financial safeguard protecting the hub and main focal point of your business. Without the viable presence of well-maintained and structurally sound premises, your business is hardly likely to succeed as well as it should be doing.