Commercial Property Insurance

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.

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.

Types of business insurance

Workers compensation insurance

Mandatory in Australia, this covers the wages of employees who are unable to work due to injury or illness incurred while on the job.

Public liability insurance

Covers legal costs and compensation claims if a third party is injured or their property is damaged due to your business activities.

Professional indemnity insurance

Protects against claims of professional negligence or errors in your work, providing financial coverage for legal costs and damages.

Product liability insurance

Provides coverage if a product you supply, sell or manufacture causes injury or property damage, covering legal costs and compensation claims.

Commercial property insurance

Protects your business property and assets from damage or loss due to events like fire, theft or natural disasters.

Business contents insurance

Covers loss or damage to your business equipment, stock and contents due to events like theft, fire or natural disasters.

Business interruption insurance

Financial protection if your business is unable to operate due to a covered event, covering lost income and ongoing expenses.

Management liability insurance

Protects directors and officers from legal claims related to their management decisions and actions, covering legal costs and damages.

Business equipment insurance

Covers loss or damage to your business equipment and machinery including portable items due to events like theft, fire or accidental damage.

Cyber liability insurance

Protects against financial losses and liabilities arising from cyber-related incidents, including data theft, cyber attacks and ransomware demands.

Tax audit insurance

Insurance that covers the cost of professional fees associated with responding to tax audits, including accountant fees and legal representation costs.

Small business insurance

A comprehensive policy combining public liability, property and contents insurance, tailored for small businesses.

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