Written by Commercial property insurance is a form of business insurance designed to safeguard the physical assets of a business. It provides coverage for a wide range of assets, including buildings, equipment, inventory, furniture, and fixtures. This insurance policy protects businesses from financial losses resulting from risks such as fire, theft, vandalism, natural disasters, and other covered events.
Commercial property insurance applies to any non-residential building used for commercial purposes. If an insured event occurs, the insurance can cover the cost of repairing or replacing the building and machinery.
Why compare business insurance through Savvy?
Our comparison tool doesn't cost you a cent, allowing anyone to compare offers from trusted insurers around Australia for free.
You can consider the inclusions, premiums, benefits and other key factors easily with us, whether you're at home or on the go.
Considering offers from trusted insurance providers can help give you peace of mind that you're comparing high-quality policies.
We’ve partnered with BizCover to bring you a range of business insurance policies to help you compare them side by side.
What does commercial property insurance cover?
Commercial property insurance typically includes cover for:
- Building coverage: This encompasses the physical structure of your commercial building, including walls, floors, and roof coverings.
- Fixtures and fittings coverage: It extends to the fixtures and fittings that are integral to the building, such as lifts, built-in extraction fans, air conditioners, or heaters.
- Machinery coverage: This includes coverage for machinery permanently installed in the building, such as production line machinery, lifts, hoists, or escalators.
- Loss of rental income: In the event that your building or machinery requires repairs, resulting in your tenants being unable to utilise them, commercial property insurance can cover the loss of rental income during the repair period.
Commercial property insurance applies to any non-residential building used for commercial purposes. If an insured event occurs, the insurance can cover the cost of repairing or replacing the building and machinery.
Types of commercial properties covered
Commercial property insurance typically applies to various types of commercial buildings. These may include:
- shops, retail outlets, and shopping malls
- industrial properties and manufacturing plants
- hospitals, medical, and child care centers
- places of worship and community gathering
- storage units and warehouses
- offices and co-working spaces
- contiguous office space (e.g. multiple floors of a commercial high-rise building)
All these commercial buildings require robust property insurance to protect owners or landlords in case of unforeseen disasters. To ensure you choose an appropriate insurance policy for your commercial premises, you can compare a selection of online quotes from reputable Australian insurers right here through Savvy.
What does commercial property insurance cover?
Commercial property insurance provides coverage for various events that can have a significant impact on your business. Let's explore some of the key areas that this insurance can protect you from:
Extreme weather damage
Commercial property insurance safeguards your building in case of storm, lightning, or fire damage. It typically covers the cost of building replacement, offering protection against bushfires (depending on the location and policy terms).
Floods and water damage
Coverage for floods caused by seawater or freshwater may vary depending on the location of your commercial building. Policies may have exclusions for natural flood damage, especially in flood-prone areas near major river systems. It's essential to review your policy to understand the extent of coverage for water-related risks.
Power outages
Sudden power outages can have severe consequences for businesses, resulting in income loss and potential spoilage of perishable goods. It's crucial to ensure that your policy covers the loss of income and stock during extended power outages. Be aware of exclusions related to user error, such as leaving freezer doors open or accidental unplugging.
Escape of liquids
This coverage applies to incidents like burst water pipes, malfunctioning dishwashers, or leaking appliances that cause property damage. However, you may need to demonstrate that you have properly maintained the affected pipes or appliances to qualify for coverage.
Theft and theft damage
Commercial property insurance not only covers theft but also the damage caused by thieves during break-ins, such as broken locks, doors, or damaged roofs. Keep in mind that not all policies include coverage for window or glass breakage. If protecting your glass shopfront is crucial, carefully compare insurance policies to ensure glass damage coverage is included.
Vandalism and malicious damage
Coverage extends to intentional damage and vandalism, including the costs associated with graffiti removal. Review the policy exclusions to ensure coverage for events that could pose significant harm to your commercial business as a tenant or landlord.
Impact damage
Commercial property insurance also provides coverage for impact damage. This includes incidents like cars colliding with your shopfront or trees falling onto your building, resulting in roof damage. The coverage often extends to adjacent buildings damaged by impact, leading to business closure for safety or assessment purposes.
By understanding the coverage offered by commercial property insurance, you can proactively protect your business from potential risks and ensure business continuity in the face of unforeseen events.
What isn’t included in commercial property insurance?
There can be a range of exclusions in commercial property insurance policies, so it’s important to read the small print carefully and find out what’s not covered.
As mentioned above, glass replacement and flood damage (particularly if you live in a known flood-prone area) are common exclusions. Other exclusions you may come across include:
- standard wear and tear
- operational errors (such as leaving a heater on overnight, causing a fire)
- gradual deterioration due to natural causes
- mould damage
- defective design
- asbestos and gradual pollution
- damage caused by pests or vermin (such as mice, rats and termites)
- livestock and pets
- acts of terrorism
- looting, invasion and war
- fraud, illegal activities and intentional damage
- items considered non-essential to your business operation (such as paintings, artwork or decorations in your building, which can be covered in a separate business contents insurance policy if required)
Because there can be so many exclusions in commercial building insurance for landlords, it’s well worth discussing the insurance coverage you have with the tenants of your building if you’re a landlord. This may assist you to choose the type of insurance which is most appropriate for the potential risks you face.
For example, you could find yourself uninsured if there’s an explosion in one of your shops caused by the storage of chlorine if your tenants didn’t tell you they were running a swimming pool maintenance business on the side. Unauthorised storage of chemicals is a common exclusion in business insurance policies.
How should I compare commercial property insurance policies?
When selecting commercial property insurance, there are several important factors you should compare. Let's take a closer look at these considerations:
Policy coverage
A good commercial property insurance policy provides coverage for a wide range of events, ensuring comprehensive protection. It's crucial to review the policy and ensure it includes all the necessary coverage without any significant exclusions. Remember, the best policy is the one that adequately covers all potential risks, rather than simply being the cheapest option.
Cost
Finding the right commercial property insurance also involves considering the cost. While insurance can be expensive, it's essential to compare prices and find a policy that offers a balance between coverage and affordability. However, keep in mind that prioritising events covered by the policy should always take precedence over price alone.
Maximum benefit amount
Different insurance policies may offer varying maximum payout amounts. When comparing commercial property insurance options, it's important to consider the maximum benefit available for each type of coverage. If your business requires higher coverage limits in specific areas, it may be possible to customise or tailor the policy to meet your specific needs.
Excess requirements
Some insurance policies may have excess requirements, meaning you need to pay a certain amount out of pocket before the coverage applies. Keep in mind that opting for a lower excess amount will result in higher premium costs. If you aim to reduce overall insurance expenses, consider increasing the excess amount you're willing to pay.
By carefully considering these factors, you can make an informed decision when choosing the right commercial property insurance policy for your business.
Top tips for finding the best commercial property insurance
The pros and cons of commercial property insurance
Types of business insurance
Frequently asked commercial property insurance questions
Yes, liability coverage is typically included in commercial property insurance. It offers protection in case someone is injured or their property is damaged due to negligence on your business premises. This coverage helps cover legal expenses, medical bills, and potential settlements or judgments. It is an essential component of commercial property insurance, as it safeguards your business from potential liability claims and lawsuits.
Yes – some policies do come with a limit on the number of claims possible in a year, whilst others are unlimited. A large number of claims in any one period will result in higher premiums when you come to renew your insurance and the loss of your no-claims bonus.
Probably not – one of the most common exclusions for this type of policy is damage caused by action of the sea. For instance, if an unusually high tide damages your coastal commercial property, you’re unlikely to be covered.
Yes – the cost of your commercial building or commercial landlords’ insurance can be claimed back on your tax return as a cost of doing business.
Yes – if you feel the coverage you currently have in your landlords’ or commercial property insurance is insufficient, in some cases it’s possible to increase it. Apply for more insurance quotes through Savvy to see how much this will increase the cost of your premiums.
Some policies do, but not all insurance for your commercial building is inflation indexed. For this reason, you should review your insurance coverage regularly, particularly in periods when inflation is increasing. For example, on the Gold Coast, the cost of construction was estimated to have risen by 11.5% in 2022, so the cost of insurance on the Gold Coast also rose in line with this soaring inflation cost.
Business insurance by Industry
Compare business insurance online
Disclaimer:
Savvy is partnered with BizCover Pty Ltd (ABN 68 127 707 975, AFSL 501769) to provide readers with a variety of business insurance policies to compare. Savvy earns a commission from BizCover each time a customer buys a business insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via BizCover.
Savvy does not compare all business insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.
For any further information on the variety of insurers compared by BizCover or how their business works, you can read their Financial Services Guide.
