Commercial landlord insurance
Cover options for landlords of shops, offices, industrial units and multi-let buildings, including buildings, loss of rent and property owners' liability.
What is commercial landlord insurance?
Commercial landlord insurance covers buildings you own and let to business tenants, such as shops, offices, industrial units and warehouses. It usually combines buildings cover, loss of rent if tenants can't use the building after an insured event, and property owners' liability, with options such as terrorism and cover for units that are empty.
PIB Insurance Brokers arranges cover for landlords of single commercial units, multi-let buildings, industrial estates and mixed-use buildings. A broker can be particularly helpful when your letting is more complex, for example tenants with higher-risk trades, a building shared by several businesses, units empty between leases, or a lease that sets out what you must insure. If you occupy the building yourself, see commercial property insurance; for residential lets, landlord insurance; for blocks and mixed-use buildings, property owners insurance.
What commercial landlord insurance covers
Commercial landlord policies usually combine a core of essential covers with optional extras, depending on the building, the tenants and the leases. The summaries below are general examples of what may be covered in each section; your policy schedule and wording decide what is and isn't covered in any claim.
Core covers
Buildings
The structure of the building and its fixed fittings, such as shopfronts, against fire, flood, storm, escape of water, theft and malicious damage.
Watch for: A sum insured based on market value rather than rebuild cost, and restricted cover for units empty beyond a stated period.
Loss of rent
The rent you lose while tenants can't use the building after an insured event. Choose a period long enough to rebuild and re-let.
Watch for: A cover period too short for a commercial rebuild and re-let, and rent lost because a tenant doesn't pay.
Property owners' liability
Claims from tenants, visitors or members of the public who are hurt, or whose property is damaged, because of the building, such as a fall on a broken stair or a slate falling from the roof.
Watch for: Claims from your own staff (covered by employers' liability), defects you knew about and didn't fix, and liability you've taken on by contract.
Common parts
Fixtures and contents you own in shared areas, such as entrances, stairwells, lifts and car parks.
Watch for: Items belonging to tenants, which they insure themselves.
Optional covers to consider
Terrorism
Damage and lost rent caused by terrorism, which standard property cover usually excludes. Some lenders and leases require it.
Watch for: Usually bought as a separate policy; terms depend on location and the sums insured.
Engineering inspection
Thorough examinations of lifts, boilers and pressure systems that the law requires on a set schedule, for example every six months for passenger lifts. Note: This is an inspection service, not insurance, and isn't regulated by the FCA.
Watch for: Inspections are separate from breakdown cover and don't pay for repairs.
Equipment breakdown
Sudden failure of lifts, boilers, air conditioning and fire systems you're responsible for.
Watch for: Breakdowns caused by lack of servicing, wear and tear, equipment beyond a stated age.
Empty properties
Cover for properties between tenants or awaiting sale, usually on different terms from let properties. See unoccupied property insurance.
Watch for: Conditions such as regular inspections and draining down water, and restricted cover beyond a stated number of days.
Glass
Replacement of broken shopfronts and glass doors you're responsible for, including emergency boarding up.
Watch for: Limits per pane, and glass tenants are responsible for under the lease.
Legal expenses
Legal costs for some disputes, such as with tenants, neighbours or contractors, and some property disputes.
Watch for: Disputes that began before the policy started, claims below the policy excess.
Tenants, leases and recharging
In many commercial leases the landlord insures the building and recharges the premium to tenants through the rent or service charge. The lease usually sets out:
- What must be insured: the building, loss of rent and often terrorism, and the sum insured.
- Who insures what: tenants usually insure their own contents, stock, the fixtures they add, their business interruption and their liabilities.
- How the premium is recharged: keep the policy and schedule available, as tenants may ask to see what they're paying for.
Tell your insurer what each tenant does. A change of tenant or trade, such as a takeaway or a workshop moving into a unit, may change the cover and the price.
What commercial landlord insurance does not cover
Typical limits across commercial landlord policies:
- Problems that existed before the policy started: known damage and ongoing disputes are usually excluded.
- Wear and tear: buildings, fittings and contents wearing out over time isn't insurable damage.
- Poor maintenance: damage caused by defects that weren't repaired, such as a leaking roof or blocked gutters, may be excluded.
- Rent a tenant doesn't pay: loss of rent covers insured damage, not tenants who fall into arrears.
- Undeclared tenant trades: claims may be reduced or refused if a tenant's trade wasn't declared.
- Empty units: cover is usually restricted once a unit has been empty for a stated period, often 30 or 60 days.
- Underinsurance: if your sums insured are too low, the insurer may reduce a claim in proportion (known as average).
- An excess on most claims: most covers carry an excess (the amount you pay before the insurer contributes), which varies by cover.
Conditions matter too: claims may also be reduced or declined if policy conditions aren't met. Common examples: a new tenant or trade not declared, an empty unit not inspected as required, or fire alarms and sprinklers not serviced.
How much does commercial landlord insurance cost?
There is no standard price. What you pay depends on the rebuild cost, construction and location, what your tenants do, how many units are let or empty, fire protection and security, the length of loss of rent cover and your claims history.
What affects the cost
- A clean claims record: insurers usually look at the last three to five years.
- Tenant trades: offices usually cost less to insure than units with trades such as cooking, woodworking or storing flammable goods.
- Fire protection and security: fire alarms, sprinklers and an intruder alarm may lower the cost.
- Accurate values: an up-to-date rebuild valuation can help reduce the risk of underinsurance or setting the sum insured higher than necessary.
- Your excess: choosing a higher excess (the amount you pay towards each claim) may lower the premium, the price of your cover.
Why work with PIB Insurance Brokers
We explore your options
We can approach insurers that cover let commercial property and set out the differences in cover, not just price.
We look at how your units are let
We work with you to understand your insurance needs, including requirements relating to tenants, occupancy and terrorism cover.
We look for common gaps
A rebuild cost below the true figure, loss of rent too short to rebuild and re-let, or cover that doesn't match what the leases require.
Here when things change
Our team is on hand throughout the policy year for advice, whether your circumstances change or you're not sure what to do next.
What our clients say
Reviews from PIB Insurance Brokers clients across the sectors we work with, collected by Reviews.io.
Letting a commercial unit, or not sure your lease and cover match?
Get a quoteFrequently asked questions
Who is responsible for commercial building insurance, the landlord or the tenant?
The lease decides. In many commercial leases the landlord insures the building and recharges the premium to tenants through the rent or service charge, while tenants insure their own contents, stock, fixtures and business interruption. On some leases, such as a single tenant on a full repairing and insuring lease, the tenant may be required to insure the building instead.
Do I need commercial landlord insurance?
No law requires it, but in practice you'll usually need it. Mortgage lenders usually require buildings cover, and commercial leases usually require the landlord to insure the building. If you employ staff, such as a caretaker or cleaner, employers' liability is usually required by law.