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Cover Overview: Commercial Property Insurance

Commercial Property Insurance

Your property is subject to many risks, including social and catastrophe perils. Structural issues and even disputes with tenants. By purchasing a commercial property insurance policy you can make sure that you are protected against these risks.

Insurable Perils

Basic commercial property insurance policies provide one of two basic levels of cover. All risks, and named or defined perils. All risks cover generally applies to all losses caused by perils that are not specifically excluded by the policy. Named or defined perils are enumerated in the policy and can include:

  • Fire
  • Explosion
  • Lightning
  • Smoke
  • Floods
  • Windstorms
  • Hail
  • Acts of terrorism
  • Riots or civil commotions
  • Theft
  • Malicious damage
  • Vehicles and aircraft
  • Subsidence
  • Accidental damage or loss

Make sure you know what perils are covered under your current policy and what perils are excluded.

Buildings Insurance

Typical commercial property insurance includes cover for buildings on your property. Buildings insurance covers the cost of rebuilding or repairing buildings after loss due to the perils listed above. Items usually covered under buildings insurance include:

  • Structure (eg walls, roof and floors)
  • Fixtures and fittings, such as kitchen units
  • Outbuildings
  • Gates and fences
  • Car parks and garages
  • Pipes and ducts
  • Cables and wiring equipment

Property owners commonly insure their premises on a reinstatement basis rather than on an indemnity basis. This means that instead of the insurance settlement having a deduction for wear and tear (indemnity basis), the settlement would allow you to repair or replace the covered buildings as new (reinstatement). The reinstatement cost is based on the sum insured value of the property—that is, the total cost to rebuild and repair. These costs are determined at the time of the loss, not when the insurance was actually purchased.

When you purchase insurance, it is important to select a sum insured value that takes into consideration the cost of inflation throughout the duration of the policy

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