Commercial Property Owner’s Insurance

Above: This is the current Trade Risk office when we first signed the lease in 2021.
We’re still tenants rather than owners however…

What is commercial property owner’s insurance?

Most tradies and builders will be familiar with general property insurance, which is more about your tools and equipment.

Often this is referred to simply as tool insurance.

Property owner’s insurance is all about the building, and more specifically, a building that you own.

An easy way to understand is to compare it with home insurance.

Commercial property owner’s insurance = building insurance.

General property insurance = contents insurance.

As is the case with a home your live in, if you own the building you need to insure both the building and your contents, but if you’re renting you only need to insure the contents.

The same is essentially true with commercial property.

What does property owner’s insurance cover?

Property owner’s insurance covers commercial and industrial buildings of most types.

For a trade or building business it’s most likely to be a warehouse or workshop space, possibly with some office space included.

There may also be retail space if you’re selling products to the general public.

The types of perils covered by property owner’s insurance are similar to what you’d expect from a typical home insurance policy:

• Fire damage
• Storm damage
• Malicious damage
• Flood (optional)

What else should I be covering?

Taking out a commercial property owner’s policy doesn’t provide blanket cover for everything that might go wrong at your property.

Other options and coverages to consider include:

• Machinery breakdown insurance
• Business interruption insurance
• Glass coverage
• Contents & stock insurance
• Theft

Your insurance broker can run through all of these options with you in more detail.

Do I need this form of insurance?

Broadly speaking, if you own commercial property, you’ll need commercial property insurance.

If you have financed the building, the bank or finance provider will require a copy of your insurance certificate, just like when you purchase a home with a mortgage.

There are some cases where you won’t need to insure the building, with the most common one being that your premises are part of a strata plan.

In this case, even though you own your particular unit in the building, the entire building is covered under a single policy through the strata plan.

We strongly recommend speaking with your Trade Risk insurance broker to determine whether or not you need to insure your part of the building separately.

What if I rent my property to someone else?

You might outgrow your business premises, but instead of selling, you hang onto it and rent to someone else.

Or you might simply have purchased it as an investment property from the start.

Either way, you’ll still need much the same form of property owner’s insurance regardless of whether you’re operating a business from there yourself or renting it to someone else.

One option you may wish to add is loss of rent insurance, or rent default insurance.

Your Trade Risk insurance broker can discuss these options with you, and we can certainly help with your insurance regardless of whether you’re an investor or owner occupier.

Do I need separate public liability insurance?

This will depend on how the property is owned.

If the property is owned by the same entity that operates the business, a single public liability policy will generally cover your business operations including what happens on premises.

But many business owners will own the premises outside of their operating entity. Our clients sometimes own property through their self-managed super fund or a separate family trust.

In this case the super fund or the family trust (or whatever the entity happens to be) will need to hold it’s own public liability insurance as the property owner.

The reason for this comes down to which entity is found to be responsible for an incident.

We’ll take a look at two separate examples.

Example one:

You operate your electrical contracting business from a mixed use commercial unit which includes warehouse space downstairs and some office space upstairs.

A supplier is visiting your business to talk about a new product, but as they walk back down the stairs they trip on a piece of carpet that has come loose, and suffer a nasty fall.

Although the incident happened whilst the person was there to visit your electrical business, the responsibility for the loose carpet on the stairs may sit with the property owner rather than the electrical business.

Even though both the business and the property are ultimately controlled by you, the individual entity is very important when it comes to legal liability.

In this case it might be found that both the property owner and the business operation have shared responsibility, and both policies will be claimed on.

Example two:

In this example we’ll look at a claim that is likely to be more clear on which entity is responsible.

A friend who also runs an electrical company is visiting your premises to borrow a tool for a job they’re on.

They walk through your workshop and slash their leg on a sharp piece of sheet metal that has been left protruding into the walkway.

In this case it’s more clear that the claim isn’t related to the maintenance of the building, and is more about the business operating with the premises.

Either way, it’s important to have public liability insurance for each entity which owns and / or operates the premises.

What information is needed for a quote?

Much of the information needed for a quote on commercial property owner’s insurance will be similar to what you’d be asked for a home insurance policy.

Common questions will include:

• Age of the building
• Building materials used
• Replacement cost
• Building location
• Security
• Building use

The insurers may also ask about certain other types of business which are located in the same building or complex. If they are considered high risk, they could impact upon your own premiums.

Will I need a property survey?

For properties over a certain value, the insurance company may request a survey.

This is to establish exactly how much the property would cost to rebuild, and therefore how much it should be insured for.

This is generally for properties valued in the millions.

More information

Although Trade Risk is often associated with smaller trade and building operations, we do help numerous clients with multi-million dollar commercial properties.

If you’re an existing Trade Risk client you should contact your broker directly. If you’re not a current client, or don’t have contact details for your broker, simply call the office on 1800 808 800.

Your Trade Risk broker can discuss your assets and your needs, and let you know how best to protect them with the right insurance.