Any commercial property owner knows how essential it is to protect their investment from significant financial losses. For the most part, these losses can be caused by events such as floods, theft, or fire. These issues hamper business continuity and put your assets at risk.
The most effective way to counter the effects of an unforeseen issue is to invest in the commercial property insurance that experts recommend. This post takes a closer look at what commercial property insurance is and also highlights the cover it provides.
Defining Commercial Property Insurance
At its core, commercial property insurance can be defined as the policy that safeguards a business’s physical assets. This typically includes the property, buildings, equipment, stock, and fixtures and fittings on the premises. Under this insurance, commercial properties are protected from events such as natural disasters, fires, storms, as well as vandalism.
At a national level, commercial property insurance isn’t mandatory. Keep in mind, though, that it might be a requirement for a lease agreement or strata legislation for certain property types. Legal and business experts will always highly recommend that businesses of all sizes have this insurance to protect against any potential eventualities.
Who Should Bear the Responsibility of Commercial Property Insurance?
If you’re a new property owner, you may be wondering if the responsibility of this insurance rests with you or the future tenant. The simple answer in an Australian setting is that the responsibility for any commercial property insurance is defined by the specific lease agreement.
This means that it can be split between the owner and the tenant. In most instances, this implies that the property owner is responsible for the building’s structure, while the tenant is responsible for their own liability and content insurance. Many Australian leases typically require a tenant to have their own business insurance, which should include employer’s and public liability to protect their assets and also cover incidents involving the public on the premises.
Understanding What Commercial Property Insurance Covers
When you’re shortlisting potential insurance options, it’s essential to compare options and have a comprehensive understanding of what each policy covers. While policy covers may vary when it comes to the finer details, there are a few general points of cover to look out for. Our team have listed these.
- Covers Your Business Against Loss of Rental Income
As a property owner, you may have decided to rent out the space as a means of generating additional income. This can only happen if your tenant is able to maintain a stable payment history.
It only takes one natural disaster or flood on the premises to cause the business to temporarily close. When this happens, your tenant won’t be able to sustain their rental payments, which could hamper your own mortgage payments. Both you and the tenant can invest in this insurance to ensure that financial obligations can still be met.
- Protects Against Loss Caused by Natural Disasters
Excessive weather and potential natural disasters can wreak havoc on any business and property. Examples of this would include hurricanes, tornadoes or even tsunamis. While there may be no extensive damage to the general building, severe winds may cause roof damage. It’s important to ensure that the cover you’re opting for includes this type of insurance, as roof repairs can be very costly if you’re paying out of pocket.
- Offers Protection in Events of Water Damage
Water damage can result from the severity of unexpected weather conditions, such as increased rain patterns in a particular area. Another common reason for water damage can result from leaking plumbing systems that are not repaired on time.
Once a building has experienced water damage, the repairs can run into millions of dollars to repair or replace. It’s always an innovative idea to opt for a policy that has extensive water damage cover.
- Offers Financial Protection Against Malicious Damage
For the most part, malicious damage refers to vandalism, broken windows and any other instances where a third party willfully causes damage to the building or property. Depending on where your building is located, it could be more susceptible to external damage, such as graffiti or broken windows. Investing in a policy that covers this is always a good idea.
- Provides Cover for Public Liability
Whether your commercial property is open to the public or functions as a closed warehouse, there’s always the risk of personal injury claims. The most common of these are “slip and fall” type injuries where employees, customers or other visitors can fall anywhere on the premises.
This can leave the business or property owner liable for injury claims and medical costs. Having the right insurance in place keeps everyone protected, no matter what type of business is being run on your property.
Final Thoughts
While commercial property insurance isn’t compulsory, our legal experts highly recommend that every business owner invest in it. This will ensure that your business is covered from any eventuality that may affect the financial stability of your company. This will give you peace of mind that your business, your employees, and your financial security are always safeguarded!