When exploring the insurance market, it is easy to get confused by the variety of different products available. How do you know which insurance cover you need? It is always good advice to do your homework and to speak to an expert if you have any questions.
If you are considering buildings insurance, the first question to ask is whether your property is a commercial or residential space. Essentially, a commercial property houses a business, whilst a residential property houses people. Commercial properties are not used as a residence, so they include office spaces, retail spaces, warehouses, and hotels, as well as larger commercial premises such as shopping centres and industrial estates. Buildings insurance is not a requirement by law, but you may be unable to qualify for a mortgage without it.
Just like residential buildings insurance will cover the cost of repairing or rebuilding your home if it is damaged or destroyed, commercial buildings insurance will protect your business premises in the event of the unimaginable happening. Whether you run your own business from the property or let it out to another business owner, you as the property owner are expected to insure the building. There are specific insurance policies suitable for commercial landlords that can be taken out to protect the building in the event of fire, theft or damage.
Buildings insurance covers the bricks and mortar, i.e. the rebuild cost, as well as fixtures and fittings, protecting you from flood damage, storm damage, burst pipes and riot damage, for example. If something is not included in your policy as standard, you can opt to pay for add-ons such as cover for subsidence and business interruption. Public liability is another extra you might choose to add – it protects you and your business if your premises or activities cause injury to a client or member of the public.
The price of the cover will depend on a number of factors including the type of business, the size of your business, its location, and the building rebuild costs. In essence, the greater the risk of damage, the higher your insurance costs will be. You can work towards lowering the risk and reducing your insurance payments by enhancing your building’s security, installing smoke detectors and fire extinguishers, and insulating your pipework.
So, what are the main differences between commercial and residential buildings insurance?
- Specialised coverage – a business is more likely to experience liability claims, therefore requiring more insurance in place to protect its interests.
- Level of risk – business premises face more risk than residential properties, so additional policy endorsements may be necessary.
- Named party – a number of parties can be listed on commercial policies depending on the ownership of the business or property.
- Multiple properties – residential policies cover one property, but business owners may have multiple locations for one company.
Commercial buildings insurance is therefore more complex than residential buildings insurance. Tailored to the needs of every individual business, an NIS commercial buildings insurance expert will ask you all the relevant questions key to understanding exactly what you need from your cover.