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Low cost commercial insurance: Are you properly covered?

Updated: 7 days ago

A concerned business woman with a thought bubble that says, "What about rebuild cost?" in an office setting. Represents the confusion many business owners feel about underinsurance and rebuild costs.

Finding low cost commercial insurance is a top priority for many business owners and landlords. But while saving money is important, it’s just as crucial to make sure your policy gives you the right protection. The cheapest option might not cover everything you need – especially when it comes to rebuild costs, liability cover, and policy exclusions.


With insurance prices going up and many businesses at risk of being underinsured, knowing what affects your commercial building insurance costs can help you make a smart choice. This guide explains the key factors that impact pricing, clears up common misunderstandings, and shows you how to get affordable commercial insurance without sacrificing essential coverage.


Why understanding commercial building insurance matters

Owning a commercial property comes with financial risks. Without the right insurance, damage from fire, flooding, or structural issues could leave you with huge costs. Commercial building insurance helps protect business owners and landlords by covering repair costs, rebuild expenses, liability claims, and lost rental income.


But many businesses are underinsured – often realising too late. Our data shows that up to 79% of UK commercial properties don’t have enough cover, putting owners at risk of financial loss.


Do you have the right cover?

Many landlords believe their policy is enough – until they need to claim. A common mistake is confusing market value with rebuild costs, leading to inaccurate commercial building insurance quotes. You can learn how to make sure your policy reflects the true cost of rebuilding here.


Use our free Rebuild Cost Checker to see the likelihood that your commercial property insurance is accurate.



How much does commercial building insurance cost?

Commercial building insurance isn’t the same for everyone. Your premium depends on several factors, including your property type, location, and the level of risk insurers attach to it. Understanding these factors can help you better compare policies and find the right cover.


Common misconceptions about low cost commercial insurance

A business woman sitting at a desk, looking confused while reviewing paperwork and financial documents. Represents business owners struggling to understand insurance costs and policy details.

Many property owners wrongly believe that market value equals rebuild cost. This mistake can lead to inadequate cover. Some rely on a commercial building insurance calculator, expecting an exact rebuild cost. But these tools often oversimplify estimates and don’t always consider:


  • Building structure – Older buildings or those with special materials may cost more to rebuild.

  • Listed or unique properties – These often require expert valuations.

  • Changing material and labour costs – Prices can rise over time, affecting rebuild expenses.


Relying on an online calculator alone could leave your property underinsured. Premiums don’t just depend on the building itself. To make sure your policy provides the right cover, it’s essential to base your sum insured on an accurate rebuild valuation. Learn more about the key differences between rebuild cost and market value.


Key factors that affect commercial building insurance costs


  1. Property type & rebuild cost

    • A high-rise office in a city costs more to rebuild than a small shop in a rural town.

    • Larger or older buildings are often more expensive to insure due to higher rebuild costs.

    • Listed or specialist properties may need tailored insurance, which increases premiums.

    • Some insurers calculate commercial building insurance cost per square foot, based on location, materials, and risk.


  2. Location & risk factors

    • Insurers assess risks like flooding, subsidence, and crime rates in your area.

    • Properties in flood-prone zones usually have higher insurance costs.

    • City centre buildings may also face increased premiums due to higher liability risks.


  3. Business type & liability cover

    • A warehouse with few visitors has a lower risk than a restaurant or shop with daily customers.

    • Some industries require extra liability insurance, which increases overall costs.


  4. How insurers calculate premiums

    • Insurers look at rebuild costs, location, and business type to set your premium.

    • Choosing a higher deductible can lower your premium but means paying more if you claim.

    • Wear and tear is not covered in most cases – owners are responsible for maintenance costs.


So, what can help? It’s important to regularly review your rebuild cost, to ensure you’re not overpaying or leaving your property underinsured. Comparing providers can also help you find affordable commercial building insurance quotes that offer the right level of protection without unnecessary costs.


Comparing insurance costs by property type

A close-up of a person using a calculator and analysing financial charts with insurance-related data. Represents how insurers calculate commercial building insurance costs based on various factors.

Property Type

Typical Insurance Cost Trend

Retail Shop

Moderate – higher foot traffic increases liability risks.

Office Building

Lower – generally lower fire and damage risks.

Warehouse

Lower – fewer liability risks but affected by location factors.

Restaurant/Pub

Higher – increased fire risk and public liability exposure.

Industrial Unit

Variable – depends on the machinery and processes used.

Are you properly covered?

Understanding the latest commercial building insurance cost UK trends can help businesses choose the right policy. But many owners unknowingly insure their property based on outdated or incorrect rebuild values. This can leave them underinsured when they need to make a claim.


Use our free Rebuild Cost Checker to see the likelihood of your property being accurately insured.



Types of commercial building insurance & coverage options

Picking the right commercial building insurance means knowing what is covered – and what isn’t. Different policies protect against different risks, so it’s important to choose one that matches your business needs.


What’s covered?

Most commercial property insurance policies include these key types of cover:


  1. Buildings Insurance vs. Contents Insurance

    • Buildings insurance covers damage to the structure caused by fire, floods, storms, or vandalism.

    • Contents insurance protects fixtures, fittings, and equipment owned by the landlord.


  2. Public Liability & Employer’s Liability

    • Public liability insurance covers claims if someone is injured on your property.

    • Employer’s liability insurance is required by law if you have staff. It covers workplace injuries and illness claims.


  3. Business Interruption Cover

    • Business interruption insurance helps if your business has to close due to an insured event, like fire or flood damage. It can cover lost income during this time.


Want to learn more? Read our complete guide: Commercial building insurance: what you need to know.


Customising your policy

A "To Let" sign on the side of a traditional brick building. Represents commercial property owners needing tailored insurance policies, including landlord-specific coverage.

Every business faces different risks. A standard commercial building insurance policy covers the basics, but you may need extra protection. Here are some optional add-ons to consider:


✔ Accidental Damage Cover – Protects against unexpected damage that isn’t caused by wear and tear.

✔ Loss of Rent Cover – Ensures landlords still receive rental income if the property becomes uninhabitable.

✔ Terrorism Cover – Covers damage caused by terrorist incidents, which is often excluded from standard policies.

✔ Unoccupied Property Insurance – Essential if your property will be empty for a long period.


What’s not covered?

Not all policies cover every risk. If you don’t check exclusions, you could face unexpected costs when making a claim. Common exclusions include:


  • Gradual wear and tear

  • Poor maintenance or neglect

  • Damage from events that aren’t insured (e.g., some natural disasters)


Reading your policy terms carefully helps ensure there are no hidden gaps in your cover.


How to compare & choose the right insurance provider

Selecting a commercial property insurance provider isn’t just about finding the lowest price – it’s about ensuring reliable coverage, fair claims handling, and financial security when you need it most. Many business owners make the mistake of focusing solely on cost, only to face unexpected policy gaps or claim delays.


Checklist: How to choose the right commercial property insurance provider

Finding low cost commercial insurance with the right coverage can be tricky. Use this checklist to compare providers and avoid common mistakes.


What to look for


✔ Does it cover everything you need? Look for policies that cover your rebuild costs, include liability cover, business interruption, and unoccupied property protection.

✔ Are the costs clear? Some policies have hidden fees. If a deal looks too cheap, check for missing coverage.

✔ Is the claims process fair and fast? Some insurers delay payouts or make claiming difficult. Read reviews and check how quickly claims are settled.

✔ Is the provider trusted? Look at customer reviews, case studies, and industry ratings to see if the insurer is reliable.

✔ Is the provider financially secure? Make sure they are regulated by the Financial Conduct Authority (FCA). This helps protect your investment.


Understanding the average clause & underinsurance risks

A burnt-out commercial property with an insurance claim form stamped "DENIED." Represents the financial risks of underinsurance and the impact of the average clause on claims payouts.

Even with a trusted insurance provider, underinsurance is a major risk for commercial property owners. Many policies include an "average clause," which can reduce claim payouts if your property is underinsured.


Here’s how it works:


  • If your property is insured for only 50% of its true rebuild cost, your insurer may only pay 50% of any claim.

  • This means you would have to cover the rest of the costs yourself.


This clause can leave you financially exposed if disaster strikes.



Not all policies are created equal

A low-cost commercial insurance policy means nothing if your insurer delays or denies claims when you need them most. Choosing a trusted provider with transparent pricing and strong claims handling is key to protecting your property.


Save money & get the best coverage

A smiling business woman in glasses shaking hands with a professional in an office setting. Represents business owners securing the right commercial insurance coverage with expert guidance.

Many business owners assume their commercial property is fully covered – until they file a claim and find out otherwise. Underinsurance is a persistent problem, with our data suggesting that up to 79% of UK commercial properties underinsured (latest industry infographic). The financial consequences can be devastating, leaving property owners responsible for unexpected shortfalls.


Key Takeaways:


✔ Price isn’t everything – A cheap policy is useless if it doesn’t pay out when you need it.

✔ Rebuild costs matter – Ensure your coverage reflects the true cost of rebuilding, not market value. Read our full guide on how to prevent underinsurance to help.

✔ Expert guidance helps – Working with surveyors and insurance specialists can prevent costly mistakes.


Is your property properly insured?

Don’t leave it to chance. Check your rebuild cost today to avoid financial risk.

Check your likelihood of underinsurance with the Rebuild Checker.


Get an accurate rebuild cost with a desktop assessment, an affordable and reliable solution from RebuildCostASSESSMENT.com.



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.


Please note that we are not regulated by the Financial Conduct Authority (FCA) and as such, are not qualified to provide specific financial or insurance advice. Please see our footer for further information about us, including our website terms of use, privacy policy and more.

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