Commercial Property & Building Insurance

If you own a commercial property or building, then you'll need to get right commercial property insurance.

Whether you rent our your space or use it for your own business operations, disasters can happen. This can include damages from fire, floods, thefts or even accidents to employees or customers in the building.

This is where commercial property insurance comes in. It's designed to protect your business against a range of possible problems and the potential costs.

Compare commercial property and building insurance

Get quotes online Speak to a broker

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.

Should I use a broker?

If you have a complex business setup and need some help it can be worth speaking to an insurer.

• Get quotes with a qualified broker
• Customise an insurance package to suit your commercial project

Commercial property & building insurance quick tips

Average cost refers to the majority of people (60%) in the industry from historical costs.

What is commercial property insurance coverage?

Commercial property insurance, sometimes called business property insurance, is designed to protect businesses against the damage to or loss of essential business equipment. Disaster can strike when you least expect it, and no matter whether you lease or own your work premises, you can be left significantly out of pocket.

What will commercial property insurance in Australia generally cover?

Commercial property insurance covers the damage to or loss of your business buildings and contents.

These events are usually covered

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

In what situations would contents and property be covered

Depending on the policy, you can usually get cover for:

• Additional features covered

  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.

Traps to avoid when getting cover

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? Determine the value of the property

When determining how much cover you need, remember that the aim of commercial property insurance is to return your property 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

• Actual cash value
• Replacement cost method

How do I compare commercial property insurance?

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?

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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. 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.
• Cyclones and bushfires.
• Accounting errors. 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.

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

Commercial property insurance pros and cons

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.

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