Commercial Property insurance is principally designed to cover a business's tangible assets such as building and contents, money and securities, accounting records, stock in trade, furniture, machinery, computers etc. Commercial Property Insurance can also be extended to cover loss of income from business interruption, or the increase cost incurred by a business following loss of, or damage to the commercial property insured.
The most basic policies provide cover for restricted perils such fire, lightning & explosion. Additional perils can be included such as storm, flood, theft with the widest coverage provided by 'All Risk' polices which provide cover for all risks of physical loss or damage to the commercial property insured.
The construction of buildings and the commercial nature of a business have the greatest influence on the price required by Insurers when evaluating a Commercial Property risk. Insurance companies will want to know the age of the buildings and services, how the property is constructed and how the buildings are occupied with detail of the business processes employed on the premises. In addition Insurers will require details as to the level of Risk Management and Health & Safety control applied by management in the operation of their business's. The insurer will also require details of the location of the commercial property to allow them evaluate the exposure to any increased risk from environmental factors such as subsidence or flood.
These details of construction, business processes, management practices and location help the insurance company calculate the degree of risk associated with a particular proposal and in turn the premium they require. Offices tend to attract the lowest rates with fast food catering establishments, factories involved in certain types of high risk manufacturing processes or older properties that have been poorly constructed or badly maintained attracting higher levels of premium.
Businesses with good risk management procedures and claim histories often pay lower insurance premiums than companies without. Taking steps to prevent loss – incorporating a well established maintenance schedule, hiring security personnel to prevent shoplifting, installing a sprinkler system to contain fires or using an alarm system to protect against theft – can help control the level of risk and therefore the cost of commercial property insurance.
Many businesses purchase property insurance through a Commercial Combined Insurance Policy which bundles property and liability insurance into one policy; however, since the amount of coverage available in a Commercial Combined Insurance policy may not be suitable for larger or more complex risks these may require separate property and liability policies which can be designed to reflect the specific risks and requirements of a business.