Have you recently purchased your first commercial property? Congratulations! You’re one of many Australians opting for this type of investment to secure their business dreams and financial wellbeing.
Now, there are many ways to protect your most recent investment, and the most significant is to initiate commercial property insurance from day one. As one of the more crucial insurances to have, our experts share the top ways that a new property owner will benefit.
Commercial Property Insurance Explained
Typically, this type of insurance refers to a comprehensive policy that protects and covers various aspects associated with your commercial property. As an extensive cover, protection extends to the building in general, existing and added fixtures, loss of rental income and public liabilities.
Why Investing in Commercial Property Insurance is a Necessity
If you’re still on the fence about getting the necessary insurance, our expert reasons should convince you why you should take up this cover sooner rather than later.
Potential Loss of Rental Income
We’ve all seen firsthand what can happen to businesses in instances where they are unable to trade as normal. With salaries, loans and rentals to be paid, it can put the company under tremendous pressure. This often leads to unpaid bills, including the rental expenses that should come to you as a property owner.
The section of commercial property insurance that covers potential loss of rental income is also often covered under the Business Interruption clause. Typically this is the rental received from tenants and will most likely be used to cover mortgage costs.
Having this insurance ensures that you’re covered even if the tenant doesn’t have this particular clause in their own insurance portfolio.
Instances of Malicious Damage
Another aspect that’s covered by commercial property insurance is malicious damage. This refers to vandalism, broken windows or doors or any other instance where damage is willfully caused by a third party. Many buildings in city areas may be subject to this type of damage, especially instances of graffiti or windows being knocked out.
Natural Disaster Damage
It’s no secret that Australia regularly experiences harsh weather conditions. The buildings located in certain areas often also experience severe weather damage caused by tornados, tsunamis or even hurricanes.
Furthermore, it’s also not uncommon for buildings in these areas to experience roof damage caused by gusts of wind or continuous rain. That said, it’s worth pointing out that roof repairs are among the costliest building repairs to undertake! With the right type of insurance, the cost of repair and replacement will either be covered in full or at least partially.
Water Damage to Any Area of the Property
Another repair that can be quite expensive is water damage to any part of the property. Internal water leaks or storm damage can result in damage to furnishings, carpets and computer equipment. Excess external water damage on the other hand can lead to paint needing to be replaced or even mould that needs to be removed.
If your property is in an area that experiences extensive rain, our experts recommend opting for a policy that has a very comprehensive water damage cover.
Tip: be sure to check the exact types of water damage that will be covered. For instance, will the policy only cover water damage caused by storms or will it cover burst pipes as well?
Instances of Public Liability
For the most part, commercial properties experience a lot of human traffic. Whether your property is used for running a business or simply as a storage facility, there’s always the risk of a visitor or vendor getting injured.
Keep in mind that while employees may be covered by separate insurance, you will need to make sure that your visitors are equally protected. The last thing you need is to be slapped with a public liability lawsuit as a result of a simple slip and fall injury on your premises. The extent of the insurance you have here may vary, depending on the type of business that the tenant is running.
Taking Responsibility and Ownership is Key
It’s not uncommon for commercial property owners to pass the responsibility of insurance onto their tenants. While this is legally allowed, it makes good business sense to have your own coverage.
Remember, a tenant’s interests will differ from yours and their cover may only extend to the contents of the building, rather than aspects such as the roof or existing plumbing.
Furthermore, there may be instances where you’re between tenants, leaving the building empty. This not only puts your property at risk of increased vandalism but also leaves you without cover in the event of a natural disaster. The moral of the story is to ensure that you have your own insurance to protect your investment as best as possible.
Take the first step in protecting your commercial property by ensuring that you have adequate insurance. This will ensure you’re covered in any eventuality, especially in instances where the liability falls to you. It’s as easy as speaking to your insurance broker about the best options available!