Owning a commercial property comes with risks. Without the right commercial landlord insurance, a single event could lead to expensive repairs, legal claims, or lost rental income.
Fires, storms, and vandalism can cause costly damage. If a tenant or visitor makes a legal claim, landlords may face large payouts. Without proper insurance, these costs could seriously affect your business.
A common issue is underinsurance - when a policy does not cover the full cost of rebuilding a property. Many landlords only realise this gap when it’s too late. Some properties also need specialist cover, such as for unoccupied buildings or mixed-use premises.
This guide will help you understand your options and choose the right commercial buildings insurance for landlords. The right cover will protect your property and reduce financial risks in an unpredictable market.
What is commercial landlord insurance?
Commercial landlord insurance protects property owners who rent buildings to businesses. This includes offices, warehouses, shops, and industrial units. It also covers mixed-use buildings, such as a shop with flats above. These properties need specialist cover because they face risks that standard building insurance does not cover.
Commercial property landlord insurance helps protect against property damage, legal claims, and lost rental income. Without the right cover, landlords may face expensive repairs or legal costs if something goes wrong.
Key parts of commercial landlord insurance:
Buildings Insurance: Covers damage from fire, storms, floods, or vandalism. This helps pay for repairs or rebuilding costs.
Contents Insurance: Protects items owned by the landlord, such as fixtures, fittings, and furniture. Tenants must insure their own belongings, but this covers what the landlord provides.
Liability Insurance: Covers legal costs if someone is injured on the property. It helps pay for legal fees and compensation, reducing financial risk.
Different policies cover various risks, so selecting the right one is important. Explore our guide on choosing the right building insurance cover for complete protection.
How is it different to standard building insurance?
Commercial properties often have more risks than others. They may have complex heating or electrical systems. There is also a higher chance of legal claims from customers or employees. Standard building insurance does not cover these risks. That’s why commercial buildings insurance for landlords is important for those renting to businesses.
Landlords who own both residential and commercial properties may need a multi-property policy for full protection.
Extra Cover Options
Loss of Rent Cover: Compensation if a property cannot be used due to damage. This helps cover lost income during repairs.
Accidental Damage Cover: Protects against unexpected damage caused by tenants.
Legal Expenses Cover: Helps pay legal costs for disputes, evictions, or contract issues.
The right commercial property building insurance ultimately protects landlords from financial risk.
Why landlords need insurance
Owning a commercial property comes with risks. Without the right cover, landlords could face big financial losses.
Common risks for landlords
Property Damage – Fires, storms, and floods can cause major damage. Commercial property landlord insurance helps cover repair and rebuilding costs.
Liability Claims – If someone is injured on the property, the landlord may have to pay legal fees and compensation. Liability insurance helps cover these costs.
Loss of Rent – If a property cannot be rented due to damage, landlords may lose income. Commercial buildings insurance for landlords helps cover this loss.
When special cover is needed
Unoccupied Properties – Empty buildings face higher risks of vandalism, theft, and damage. Unoccupied property insurance provides protection during vacant periods.
Mixed-Use Buildings – Buildings with both businesses and residents have different risks. Specialised insurance covers both under one policy.
The importance of custom cover
A basic policy may not provide enough protection. Commercial landlord insurance should match the property type, risks, and tenants. The right cover, which is customised to specific risks, helps landlords keep their investment safe.
How rebuild costs affect insurance
What is the difference between rebuild cost and market value?
The rebuild cost is the amount needed to rebuild a property from the ground up if it is destroyed. This includes materials, labour, and professional fees but not land value. Many landlords mistakenly insure their property based on market value, which can lead to underinsurance.
The risks of underinsurance
If a property is insured for less than its rebuild cost, landlords may face financial shortfalls when making claims. For example, if a building is insured for only 70% of its rebuild value, the insurer may only pay that proportion of any claim. This could leave landlords covering the rest of the cost themselves. In some cases, claims may even be denied.
Learn more about underinsurance and how it affects claims.
How to get an accurate rebuild cost
Get a Professional Assessment – This is where we can help. Our desktop rebuild cost assessment provides an accurate valuation without an on-site visit. Using industry data and Chartered Surveyors, we ensure your property is covered for the correct rebuild cost. This cost-effective service helps landlords avoid underinsurance and protect their investment.
Review Regularly – Rebuild costs change over time due to rising material and labour prices. It’s important to update your insurance cover regularly to avoid underinsurance. Read our guide to learn how often you should reassess your Rebuild Cost Assessment.
By understanding rebuild costs, landlords can avoid underinsurance and ensure their property is fully protected.
Choosing the right insurance policy
Key factors to consider
Property Type – Different buildings have different risks. Listed buildings, empty properties, and mixed-use spaces may need specialist cover.
Coverage Needs – Make sure your policy includes commercial landlord building insurance, liability cover, and extras like loss of rent protection or accidental damage cover.
Exclusions – Check what is not covered. Some policies do not include damage from wear and tear or certain tenant activities.
How to compare providers
Trusted Reputation – Choose an insurer with strong reviews and industry recognition.
Flexible Cover – A good policy lets you adjust coverage based on your property’s needs.
Good Customer Service – A provider with helpful support and an easy claims process can reduce stress.
Dispelling myths about landlord insurance
Misunderstandings about insurance can leave you at risk of unexpected costs. Here are three common myths—and the facts that debunk them.
Myth 1: Market value is enough for insurance
Some landlords believe they only need to insure their property for its market value. However, commercial landlord insurance should cover the rebuild cost – which includes materials, labour, and fees. Market value considers location and demand but not what it costs to rebuild.
Myth 2: My standard landlord insurance covers my property even when it’s unoccupied
Many assume their commercial landlord insurance covers an empty property. But most policies reduce or remove cover if a building is vacant for more than 30 to 60 days. This can leave landlords at risk of theft, vandalism, or water damage. For full protection, specialist unoccupied property insurance may be needed.
Myth 3: All tenant-caused damage is automatically covered
Some policies cover accidental damage, but not all tenant-related damage is included. Issues caused by neglect or intentional actions may require extra cover.
By understanding these myths, landlords can make better choices and ensure their property is fully protected.
Protect your investment with the right cover
Having the right commercial landlord insurance protects your property from unexpected risks. It helps prevent financial losses, covers liability claims, and gives you peace of mind.
To avoid underinsurance, it’s important to have an up-to-date rebuild cost assessment. That’s why we offer a desktop rebuild cost assessment. This provides an accurate valuation without an on-site visit, ensuring your commercial property landlord building insurance reflects the true rebuild cost.
Contact us today to arrange an assessment and get the right cover for your property.
Important disclaimer: The information provided here is for general informational purposes only and is not intended as professional advice. While we strive to ensure all information is accurate and up-to-date, the content may not reflect the most current legal or regulatory developments, standards, or practices. No representations or warranties are made (express or implied) about the accuracy of the information provided, and reliance on this information is strictly at your own risk.
We do not offer financial advice and nothing within this content should be construed as such. We recommend consulting with a qualified professional who can provide tailored advice based on your individual circumstances before making any decisions related to insurance.
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