Why Do I Need Commercial Building Insurance?

Why Do I Need Commercial Building Insurance?

Suppose you are a landlord that leases a building or a number of buildings for business purposes. In that case, commercial buildings insurance will protect you from the financial expense of certain damages caused to your property.

Owning a commercial building means that you are responsible for the safety and maintenance of a building and its systems to keep any tenants or occupants safe from injury. Performing routine checks and adhering to an annual maintenance schedule can help keep the cost of repairs down. But what about other things that can cause problems?

Life can be unpredictable, and in managing property, many unforeseen circumstances can cause damage to your building. Even if routine maintenance is performed, events may still arise that affect your property and leave you holding a large bill. Issues can occur from many things like burst water pipes, fires, storms, or even intentional damage to the building.

If insurance coverage is not in place at the time of these events, then the landlord will be responsible for the cost of building repairs. As there is the potential for damage of this type to run into large sums of money, most landlords will purchase a commercial buildings insurance policy to protect them from any expenses.

How do I buy a commercial buildings policy?

If you are a landlord who needs to obtain a commercial buildings insurance policy, it is advisable to do some research. It is important to buy a policy with the appropriate limits to ensure that your building or buildings are adequately protected.

NimbleFins provides a quote tool to enable readers to get commercial building insurance quotes from potential providers. It’s important to get multiple quotes for comparison purposes, because policy premiums can fluctuate between different insurance companies, and included coverage can vary.

Is commercial building insurance a legal requirement?

While it is not a legal requirement for landlords to obtain a commercial building insurance policy, most will acquire coverage. As one property claim can easily outweigh the monthly premiums paid for the policy, business landlords understand that it is wise to purchase protection to cover the cost of any damages.

There may also be building insurance needed if the property is being purchased with a mortgage. Typically lenders will require building insurance to be provided as part of the finance terms. Additionally, local authorities or other organisations may demand that coverage is in place and specify required limits.

Even though the law does not require landlords to purchase building insurance, protecting the property from damage is good practice to reduce exposure to costly claims. Landlords that purchase buildings insurance usually pass the cost on to tenants as part of the lease. Meaning that the monthly premiums will be paid for by the occupants of the building for the time that they are renting the premises.

This gives landlords even more reason to obtain building insurance coverage, and they benefit from the protection that the policy provides without being financially responsible for the monthly payments. Any damages or repairs needed to the building will be covered provided the monthly premiums are paid. For many landlords and building owners, it’s a win-win situation.

What does commercial building insurance cover?

Maintaining commercial building insurance on a property means that the cost of claims from damages or the repair of a building will be covered. There are numerous reasons why a property may suffer damages, and while protection will vary from one policy to the next, it often protects against things such as:

Damage to the property arising from the building own systems:

  • Fire caused by wiring
  • Flooding from burst pipes
  • Explosions from gas tanks

Damage to the property caused by natural forces:

  • Earthquakes
  • Storm damages
  • Lightning strikes

Damage caused by a human element:

  • Riots 
  • Robbery/theft
  • Malicious damage

Protection from building insurance extends beyond the structure of the property and can include external features like car parks, walls, fences, and gates. A commercial policy may cover damages to these fixtures.

Not all items are automatically included in each policy, and specialised cover may need to be added for items that pose a threat. For example, if there is a high risk of the flood where the building is located, then premiums can be higher, and coverage can be difficult to find from someone other than a specialist.

A commercial buildings insurance policy can also protect unoccupied buildings, but premiums tend to be higher. This is because issues that can cause damage to the property have a risk of going undiscovered for a period of time, potentially resulting in even more damage to the building.

A burst water pipe, for example, could cause water to leak into plaster, carpeting, and flooring for days or weeks before being found, causing extensive damage, and even creating problems like mould or mildew.

Resource sources:




Leave a Reply

Back to top