Commercial property insurance
Cover options for owners and occupiers of offices, shops, industrial units and warehouses, including buildings, contents, loss of rent and property owners' liability.
What is commercial property insurance?
Commercial property insurance covers the buildings your business owns or is responsible for, and the contents inside them, against damage from events such as fire, flood, storm, theft and escape of water. It's also called business buildings insurance. Policies usually combine buildings, contents and loss of income or rent with property owners' liability, plus optional covers such as terrorism and equipment breakdown.
PIB Insurance Brokers arranges cover for owners and occupiers of offices, shops, industrial units, warehouses and mixed-use buildings. A broker can be particularly helpful when your property is more complex, for example an older or listed building, non-standard construction, a building that's empty for part of the time, several sites, or a lease that sets out what you must insure. If you let property to tenants, see our landlord insurance, and for empty buildings our unoccupied property insurance.
What commercial property insurance covers
Commercial property policies usually combine a core of essential covers with optional extras, depending on the building, what it's used for and whether you own, occupy or let it. 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 your building, outbuildings and fixed fittings such as shopfronts, against fire, lightning, explosion, flood, storm, escape of water, theft and malicious damage.
Watch for: A sum insured based on market value rather than rebuild cost, a higher excess for subsidence, and restricted cover if the building is empty beyond a stated period.
Contents and equipment
Furniture, computers, machinery, tools and fixtures you've added, against the same events and, often, accidental damage.
Watch for: Wear and tear, gradual deterioration, theft without forced entry, and equipment already insured under a lease or finance agreement.
Stock
Goods held for sale or used in production, often with an automatic increase for busy seasons.
Watch for: Stock kept outside or in vehicles, and limits below what you hold at peak times.
Business interruption or loss of rent
Lost income and ongoing costs such as wages while you can't trade after an insured event. If you let space, the rent you lose while tenants can't use it. See our business interruption insurance page.
Watch for: An indemnity period too short to rebuild and re-let, and closures from causes the policy doesn't cover.
Property owners' liability
Claims from visitors, tenants or members of the public who are hurt, or whose property is damaged, because of the building, such as a fall on a broken step or masonry falling from a roof.
Watch for: Claims from your own staff (covered by employers' liability), liability you've taken on by contract, and defects you knew about and didn't fix.
Optional covers to consider
Terrorism
Damage and lost income 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.
Equipment breakdown
Sudden mechanical or electrical failure of boilers, lifts, air conditioning and production machinery, including repair costs.
Watch for: Breakdowns caused by lack of servicing, wear and tear, equipment beyond a stated age.
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.
Glass
Replacement of broken shopfronts, windows and glass doors, including emergency boarding up.
Watch for: Limits per pane, and glass that was already cracked.
Legal expenses
Legal costs for disputes with tenants, contractors, suppliers or neighbours, and some property disputes.
Watch for: Disputes that began before the policy started, claims below the policy excess.
Owners, landlords and tenants: who insures what
Who insures what depends on how you hold the property.
- You own the building and occupy it: you usually insure the building, your contents and stock, loss of income and property owners' liability.
- You own the building and let it: you usually insure the building, loss of rent and property owners' liability. Your lease may let you recharge the premium to tenants. See our landlord insurance.
- You lease your premises: the lease sets out who insures the building. In many commercial leases the landlord insures it and recharges the premium through the rent or service charge. You usually insure your contents, stock, the fixtures you've added, loss of income and your liabilities.
Check the lease before you buy cover, so the building isn't insured twice or left uninsured, and so your cover meets any conditions the lease sets, such as terrorism cover or a minimum sum insured.
Rebuild cost, not market value
The buildings sum insured should reflect the full cost of rebuilding, including demolition, site clearance and professional fees, not what the property would sell for. An out-of-date figure could leave you underinsured, and the insurer may then reduce a claim in proportion. A professional rebuild valuation every few years helps, especially for older, listed or non-standard buildings.
What commercial property insurance does not cover
Typical limits across commercial property policies:
- Problems that existed before the policy started: known damage and ongoing disputes are usually excluded.
- Wear and tear: buildings, fittings and equipment wearing out over time isn't insurable damage.
- Poor maintenance: damage caused by defects or systems that weren't maintained, such as blocked gutters or a leaking roof left unrepaired, may be excluded.
- Empty buildings: cover is usually restricted once a building has been empty for a stated period, often 30 or 60 days. See unoccupied property insurance.
- Flood in high-risk areas: flood cover may be restricted or carry a higher excess where the flood risk is high.
- 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: an intruder alarm not set or maintained, fire alarms or sprinklers not serviced, or the insurer not told about a change of use, new tenants or building work.
How much does commercial property insurance cost?
There is no standard price. What you pay depends on the rebuild cost, the building's age, construction and condition, its location and flood risk, what it's used for and by whom, security and fire protection, whether it's ever empty, and your claims history.
What affects the cost
- A clean claims record: insurers usually look at the last three to five years.
- Construction: brick or stone buildings with a standard roof usually cost less to insure than timber-framed buildings or those with composite panels.
- Fire protection and security: fire alarms, sprinklers, an intruder alarm and CCTV may lower the cost of property cover.
- 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 commercial property and set out the differences in cover, not just price.
We look at how you use the building
Tenants and their trades, a change of use, building work or a period when the building is empty may each change what you need to tell your insurer.
We look for common gaps
A rebuild cost below the true figure, loss of rent set too short to re-let, or a lease condition, such as terrorism cover, that the policy doesn't meet.
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.
Buying, letting or not sure your building is covered properly?
Get a quoteFrequently asked questions
What insurance do I need for a commercial property?
It depends on whether you own it, occupy it or let it. Owners usually insure the building and property owners' liability, and add loss of rent if they let it. Occupiers usually insure their contents, stock and loss of income. If you employ staff, employers' liability is usually required by law, with a minimum of £5m. If you have a mortgage on the building, your lender usually requires buildings cover.
Is commercial property insurance a legal requirement?
No law requires you to insure a commercial building, but in practice you'll usually need to. Mortgage lenders usually make buildings cover a condition of the loan, and leases usually say who must insure the building and for how much. The main insurance required by law for businesses is employers' liability, which most businesses need once they employ staff.
What is the difference between commercial property insurance and business insurance?
Commercial property insurance covers damage to buildings, contents and stock, and the income you lose as a result. Business insurance is a wider term that usually also includes liability covers such as public, products and employers' liability. Many businesses buy them together in one policy, often called commercial combined insurance.