Commercial Property Insurance

Protect your Business and Receive a Commercial Property Insurance Quote

No matter how successful your business may be and regardless of whether you’re a small operation or a big company, disaster can strike at any time and cause enormous damage to the business you’ve worked so hard to build up. The list of possible problems that can arise is extensive, featuring everything from fire and floods to theft, accidental damage and even personal injury to an employee or a customer.

It therefore makes good sense for businesses of all sizes to have adequate insurance cover in place to cover everything from product liability to the contents of your business. This is where commercial property insurance comes in, designed to protect your business against a range of possible problems and ensure that unexpected events won’t result in any financial loss.

If you are ready to speak with a consultant about different business insurance options available, simply enter your details in the form. Keep reading if you want to learn more about the different types of cover available.

What will Commercial Property Insurance in Australia Generally Cover?

Commercial property insurance covers the damage to or loss of your business buildings and contents. The definition of buildings and contents includes all tangible property that belongs to you, or for which you are legally responsible, or for which you have assumed the responsibility to insure. However, the definition generally excludes things like stock, money, jewellery, works of art, watercraft, aircraft, vehicles or trailers registered or licensed to travel on a public road, livestock and features like bridges and railway tracks. Check the PDS of each policy closely to make sure you know exactly what items are included in your policy.

The types of loss and damage that will generally be covered by most providers include:

• Loss of or damage to your property at your premises caused by fire, lightning or thunderbolt, explosion, earthquake, or volcanic eruption.
• Impact caused by vehicles, watercraft, falling trees, falling buildings on neighbouring properties etc.
• Riot, civil unrest and labour disturbances.
• Storm, wind and rain, including snow, sleet and hail.
• Water damage caused by items such as damaged water mains, pipes and water systems.
• Accidental damage to property.
• Loss of or damage to your contents and stock caused by theft, attempted theft, armed hold up, assault or vandalism. Loss caused by employee dishonesty is also often included in cover.
• Loss of or damage to glass or signs at your premises.
• Machinery breakdown. This includes computers and electronic equipment, as well as boilers and pressure plants.

Learn more about the different types of business insurance available in Australia

Commercial Property Building Insurance Additional Cover Options

Several additional cover options are generally available on policies, including:

• Professional fees incurred to repair damaged buildings and reinstate the property. This can include legal fees and fees charged by architects and surveyors.
• The cost of the removal, disposal, demolition or dismantling of debris.
• Reinstatement of the sum insured following a claim for a partial loss.
• The cost of temporary repairs to maintain the safety of the property or allow access.
• An increase in the sum insured for stock in trade at certain times of the year, which can be especially during heavy trading times such as the lead-up to Christmas.
• Cover for stock lost, damaged or destroyed while in transit.
• Fire extinguishing costs.
• The cost of the restoration of computer data after a machinery breakdown may be covered.
• Cover for directors’ and employees’ personal property that is lost, damaged or destroyed on your business premises as the result of an insured event.
• Cover for temporary security measures, including security guards, to help ensure your business property remains safe and secure.
• Cover for government fees that may need to be paid in order to repair or replace your premises.
• If you decide to repair or replace property with a more environmentally-friendly option, your insurer may be willing to pay out more money to cover increased costs.
• Cover for the cost of the temporary removal of stock to another premises.
• You may be covered if, for example, a refrigerator breaks down and you are forced to throw out stock that needs to be kept chilled.

Commercial Property Owners Insurance Exclusions

Items generally excluded on most policies are:

• Loss or damage caused by war, invasion, rebellion, revolution or looting. Acts of terrorism are also commonly excluded.
• Intentional acts. If you or someone else with your knowledge deliberately causes the loss or damage, you will not be covered.
• Flood. Flood cover is sometimes an optional extra in these types of policies.
• Loss or damage caused by the action of the sea or tidal waves are generally not covered, unless they occur as a result of an earthquake or seismological disturbance.
• Fraud and embezzlement. You won’t be covered if you or any of your employees engage in fraudulent or dishonest acts that result in a loss.
• Storm surges.
• Some policies will exclude disasters such as cyclones and bushfires.
• Losses incurred by any clerical or accounting errors.
• Other errors. Cover will not kick in if damage is caused by things like faulty workmanship, non-compliance with government regulation and requirements, or the incorrect location of buildings due to architectural error.
• Erosion and subsidence often aren’t included, unless they’re the direct result of something like an earthquake or storm.
• Termites, vermin and other insects are generally excluded, as is damage caused by problems like mould, rust and oxidation.
• General wear and tear. Your insurance won’t cover you in situations where items suffer from gradual deterioration, for example things like scratches, fading or developing flaws.

Exclusions can differ significantly from one policy to the next, so take the time to study each PDS to know exactly what is and isn’t covered.

Commercial Property Insurance Pros and Cons

Things to Remember When You Apply for Commercial Property Insurance

There are a number of common mistakes to avoid when purchasing commercial property insurance:

• Not updating cover. Many business owners forget to update their policy to accurately reflect the increased value of their business property, whether this is due to renovations or simply rising building costs. As a result, these businesses are under-insured. If the cover is updated annually, some policies won’t be updated to reflect a business’ increase in turnover.
• Not aware of exclusions. There’s a reason we keep telling you to study the PDS closely, and that’s so you know exactly what your policy covers. If you’re not aware of what is excluded from your policy, you could get a nasty surprise when the unexpected occurs.
• Underestimating. Many business owners also underestimate the cost they need to insure, from misjudging the cost required to reinstate a building, to failing to allow for the cost of replacing machinery.
• No business interruption insurance. This insurance is designed to help cover the loss of income a business suffers when it is unable to trade due to an unforeseen event. While it’s useful cover that can stop companies going bust, the percentage of businesses that have this type of insurance is quite small.
• Not getting advice. Insurance is complex at the best of times, and commercial property insurance can be particularly confusing. Get expert advice from an insurance broker to get the coverage you need.

How Much Commercial Property Insurance Do I Need?

When determining how much cover you need, remember that the aim of commercial property insurance is to return your company to the same financial position it was in before the insured event took place. In order to assign a coverage amount to a property, there are two ways to determine the value of that property: Actual Cash Value and Replacement Cost.

The Actual Cash Value is the present-day value of a property. That figure is arrived at by calculating how much it would cost to replace a property, and then deducting for depreciation caused by wear and tear.

The Replacement Cost method calculates the replacement cost of the property as new, rather than at its depreciated value. This figure can be very different to a property’s real-world market value, and location is a particularly important consideration in this method.

Many brokers recommend using the Replacement Cost method to calculate how much cover you need, but speak to an expert to get tailored advice for your situation.

How to Make a Commercial Property Insurance Comparison

Below are the features of business insurance policies you should compare to help find suitable cover:

• Range of losses covered. Does your policy cover a large variety of events and situations, or are there exclusions you feel should be included in your cover? You can also take into account the location and type of your business when comparing this feature.
• Range of additional benefits. Added cover options can make a big difference to your level of cover. From covering professional fees to repair your business, to restoring computer data after a machinery breakdown, compare the different benefits offered by each policy.
• Exclusions. All policies feature many exclusions, so check if they are things you can do without or whether they represent essential coverage for your business.
• Conditions for benefit payment. Read the fine print to make sure what conditions are attached to your policy to determine if and when you will receive a benefit payment in different situations.
• Policy excess. As with any other type of insurance cover, consider what excess you’ll have to pay if you make a claim.
• Actual cost of the cover. Are the premiums reasonable or expensive? Don’t be sucked in to buying the cheapest coverage available without checking if it’s right for you.
• Premium payment flexibility. How often do you have to pay premiums on each policy? Find a policy that offers a payment plan that suits your financial situation.
• Cooling-off period. How long do you have to change your mind if circumstances change or you decide one policy is not right for you.
• Policy inflation indexation. Is the policy indexed to reflect inflation, or is there a danger of you ending up under-insured?
• Policy cancellation. How easy is it to cancel your policy? Are there any fees or other drawbacks involved?
• Maximum level of cover provided. Consider whether each policy’s maximum level of cover is enough for your business? Will you be able to restore your business to its former financial state when disaster strikes, or will the policy fall short of what you need?

Consider all of these questions when shopping for commercial property insurance, and speak to an expert to get tailored advice and the right cover for your business.