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Occupants of commercial properties make difference to premium?

You have a commercial building and you want to rent it out and then take some commercial insurance. You are not sure what planning use you wish to use as the council said that you could have various different trades in the property. Will it affect my insurance?

Yes, it will definitely affect your insurance. Every occupant type will thus relate to the premium that’s involved. The first criteria that the insurance company will use will be as follows:-

Type of building 

What type of building is it? Is it brick, wooden, specially constructed for the type of occupant that you have?

What is the occupying trade? 

The occupant will make a huge difference to the premium rate. For instance, if you were in a restaurant going into the business it is a much higher rate than if it was an office block.

Is any loss of rent required and if so, how much? 

If you are going to rent the premises out then you would need to ensure that you have a clause for loss of rent.

Loss of rent itself could be anything from one year through to three years and you thus need to ensure that you insure the correct amount for the property. You never know if it burns to the floor how long it will take to put the property back.

Is any part of the building residential? 

This could improve your rating in relation to the property. The rating might actually come down if there was a residential above but then again it all relates to the commercial element and exactly what is being put to the property.

Why do I need commercial property insurance?

Commercial property or commercial landlord insurance is protection from property owners who are letting out to a third party for commercial use. If your tenant is going to be a business organization or group and there is going to be a lease in place where they will rent the property then you will need commercial insurance.

Why are commercial tenants treated differently from other tenant types?

There are differences with tenants. These are known as more domestic than they are commercial. A commercial tenant may be using industrial equipment, have 100s of employees, deal with hazardous waste or using commercial deep fat fryers for their property. A commercial insurance product will look at the users of the building and adjust the cover to match the risks of the occupants in the building. It is so important when you take your commercial property that you understand the type of tenant you are going to have and what they are going to do.

I am considering having an office block and renting it out, will there be set criteria for this?

The criteria in relation to office blocks are slightly more relaxed and the rates are normally substantially lower. The insurance companies treat these as a much lower risk. They will look into company status, the date the business was established. The number of full-time employees, the estimated wage roll for all employees, the annual turnover. They will also look into the business description i.e. are they solely using it as an office? They will look at the building itself and whether it has self-contained elements and a means of escape. They will look at how the property is occupied as well as any physical security measures that have been put in place as well as any health and safety.

What does the commercial property insurance cover?

Property owner’s liability

In commercial property, this is the most misunderstood and overlooked element for commercial landlords. This is liability insurance for commercial property to compensate a third party in respect of property damage and injury through negligence. If for instance, something fell off your building you are liable and not your tenants. But this is ultimately the landlord’s responsibility to oversee their property and make sure that it is adequately maintained.

For instance, if a third party delivery person takes a fall after tripping on a loose step in the entrance of your building you could be held liable in a compensation case.

There are various limits to liability but these can be anything from £1M to £10M for commercial properties.

The rebuild cost or reinstatement value

This can be one of the most important parts of commercial insurance. It deals with the cover of costs for repairing damage to rebuilding the property. You must insure for the full cost of rebuilding the property should it be destroyed. Please see previous articles on rebuild cost. Being under-insured could be catastrophic for you. If you under-insure the building the insurance company may not pay out for you to rebuild the property so getting this right is absolutely critical.

You will find that most insurers have an average clause. This means that the sum insured for the building which is not enough can reduce the claim by the percentage that you have underinsured. For example, you insure the building for £100,000.00 but it should be £200,000.00 and you are claiming £50,000.00 you could end up only being able to claim for £25,000.00 i.e. minus the 50% that you have under insured.

It is therefore critical that you look at this.

Loss of rent and the indemnity period

If your property should become uninhabitable for a period of time the insurance company will pay out for the rent that you are subsequently unable to collect meaning that you are not losing out financially.

How long should the indemnity period be for?

This could be anything between one to three years and is commonly available. It needs to be a serious consideration as you need to understand what is adequate for your building. You have to look at the worst-case scenario to include demolition, debris removal, architects, and finally rebuilding which can take a long period of time and sometimes even years.

Landlord’s contents

The contents of your building can be difficult to understand. In real terms, if you turn your building upside down anything that is unattached would be classed as contents. This could mean things such as tables and chairs but not doors, cupboards, and walls which will come under the building insurance. Contents insurance can be a vital part of your protection.

Accidental damage

This isn’t always offered as standard. You must make it clear that you want to be covered for this before you request the policy. Accidental damage is considered damage to your property that is not classed under an insurable peril such as a burst pipe when nailing into a wall.

Legal cover and expenses

This will help with your legal expenses when taking somebody to court for all such items. Legal cover again is not a standard part of the policy but can be requested as an optional extra.

Malicious damage

Again not necessarily a standard clause within the policy. This is because tenants are normally considered to be on your property with your consent. If there was an incident where they were expressly causing malicious damage with intent this option would cover you for the costs.

What if my property is unoccupied for commercial purposes?

Commercial properties that are empty are problematical when it comes to insurance. You need to understand that the risk is extremely high for an insurance company and they may not always give insurance.

What is the criteria?

The criteria is normally a list of questions that the insurance company will want answered and positive answers to. These will normally be as follows:-

How long has the property been vacant for?

This is relevant to the insurance company as they will want to know what is going on to fill the property and to occupy it. Is it a long term vacancy or is it just short term where you are in between tenants. It is critical that the insurance company know that you have a plan for the property.

How long do you expect the property to be vacant for?

If you don’t have a plan for the property or schedule of works, have it on the market and/or a programme to bring it into occupied use or a change of use then the insurance company will ask you to put this in place.

Is it being let or sold?

This could affect the price of the insurance quite dramatically if you are thinking of selling it rather than letting it.

Is it currently on the market?

The insurance company will see whether it is on the market and whether you are actively doing something about trying to re-let the property.

Are there works taking place?

The insurance company will want to know whether works are taking place in relation to the property.

If works are taking place what are the works?

The insurance company will want to know what works are taking place, how long they are going to take place and how much they are going to cost and who is going to fund it. What is the purpose of the works and what the long term strategy is in relation to the property.

Are there any major or hot works going on?

Hot works normally refer to flat roofs, and work with bitumen this can be high risk and as such the insurance premium could be substantially more.

Is there a jct in place?

A jct is a contract that facilitates the process of delivering a building project. In simple terms, they set out the responsibilities for all parties within the process and their obligations to each other. In this way, it is then clear what work needs to be done and who is doing it, when they are doing it and for how much. They are critical within a building construction business.

Will the property be regularly inspected?

The insurance company will want to know if the property is unoccupied that it is regularly inspected.

Is the property boarded up or bricked up?

You are no doubt aware that it is illegal for squatters to occupy the residential property but when it comes to commercial it is not the case. It is thus important that the property is either boarded up and all doors made secure or bricked up. This would be critical. The insurance company may need full-time security on-site as well.

If you are considering any form of commercial insurance then why not contact us and discuss it with us and what your requirements are. Every policy for commercial property is different.

Commercial Buildings Insurance for Landlords

We provide herewith a summary of questions relative to commercial insurance, this is not an exhaustive list.

Will my landlord insurance cover my commercial property?

Absolutely not! You will need an commercial landlord insurance policy made specifically for commercial buildings. Insurers treat commercial properties differently to residential buildings. An important factor in the premium calculation is the type of business occupying the premises. For instance, an office block occupied by clerical workers may be a very low risk for an insurance company. Whereas a takeaway restaurant with a deep fat fryer could be a very high risk. It all depends on what the occupier does, and at what time of the day and week. There are some categories which may be a surprisingly high risk to insurers. Trades such as DIY stores, electrical goods stores, furniture and carpet shops and dry cleaners/launderettes.

What type of cover will I have?

You will have insurance covers including the building as standard. This will also include property owners liability insurance. That will cover guests or employees attending your premises that hurt themselves due to a building fault. The level of cover can vary between £2M to £10M.

Can I have loss of rent covered?

Yes, we can cover you for loss of rent and again this relates to the type of business. The longer the cover i.e. whether 12 or 36 months then the cheaper the cover can be.

Does it cover my employees working on site?

Yes, it can. This may be subject to an additional premium. It depends on what they are doing at the property.

Are legal costs included?

Legal disputes can stretch the resources of any business. They can be complicated, costly and time-consuming. We can provide specialist policies that will help businesses and employees during legal disputes. You will find that most insurance companies have some form of legal costs cover for commercial property policies. However, it is important to check the perils covered and the level of cover provided. You can request to add legal expenses cover either from the start of the policy or midway through. Therefore, ensuring that the right cover is in place.
You will find that most insurance companies have some form of legal costs cover for commercial property policies. It is important to check the perils covered and the level of cover provided.

Do I need Terrorism?

It is essential in certain areas to have terrorism cover. It will depend on individual factors specific to the business and its nature. The policy will protect the business against property damage and interruption caused by the acts of Terrorism. We would always suggest that you have this cover but it is up to you. You could always add the cover as an additional item and pay an additional premium. Please don’t hesitate to speak to us in this regard.


We can cover a wide range of commercial properties. This can range from purpose built office blocks to mobile home sites to retail shops and restaurants. There are very little scenarios that cannot be covered. However, each commercial policy needs an individual rating. We need to ensure that we have the whole of your property covered with the right commercial insurance for your building. We can even cover unoccupied commercial property. Which can be difficult to find a provider for.
Mark Harrington
Managing Director

Unoccupied Commercial Property Insurance

Most standard home insurance, contents insurance, office insurance, or shop insurance policies are designed for occupied properties. Whether the occupant happens to be a homeowner, a tenant or a small business (in case of commercial property). Insuring an unoccupied property is a lot more complicated because empty properties are classed as non-standard and thus need a specialist insurance policy.

The reason a standard insurance policy won’t cut the mustard is if your building is empty insurers generally tend to see an unoccupied property as a high insurance risk. That might be because their insurance claims data suggests that empty buildings have a higher risk of water damage, rising damp, vandalism, burglary, or squatters. But whatever the reason for it. If your property is going to be vacant for an extended period of time (more than 30 days) you will need to invest in a policy that takes those elevated risks into account.

Why are vacant properties hard to insure?

Empty properties have a higher risk of water damp, mould, rising damp and even fire damage because they are left unattended for extended periods of time.

Squatters are much more likely to target an empty commercial property. Offices or shops particularly if they have been vacant for a long time. Empty properties are more likely to experience vandalism than occupied properties. Most of the time, they also represent an easier target for thieves. Since there is much less chance of a burglar to be caught in the act.

All those increased risks translate to high insurance premiums when signing up for unoccupied property cover. Since insurance providers will take into account the increased likelihood that they might have a claim.

Unoccupied commercial insurance is extremely difficult to arrange compared to standard commercial insurance. Many insurance companies do not like to insure the properties as they represent a high risk. Insurers are reluctant to provide cover and premiums can often be higher compared to other building types. We can still obtain insurance covers for you but the actual cover itself may be quite restrictive.

Should I take professional advice on how to protect my unoccupied commercial property?

You will find that most insurance companies will require some form of security protection at the property. Especially considering that squatters cannot reside in residential properties. An insurance company may request 24-hour security, wired fencing and even surveillance cameras. It is important to drain down the water systems and turn them off. Also, make sure that there are no valuable contents within the property itself. It may be that the insurer requires boarding up of the windows as well.

Do I need to look at the security of my property?

Yes, we would suggest that you, first of all, do a risk assessment of the property. This is to see if there are any potential points of entry for someone looking to break in. Seek local advice from the police of whether there could be a problem with an empty property. We would suggest that you secure the perimeter to deter people from entering the property. Also, you can look at installing closed-circuit TV and alarms.

You will often find that CCTV is a must have for anyone looking to protect a commercial property. It will go a long way to potentially reducing the buildings insurance risk which improves the insurance premium. You should then ensure that any important equipment at the property is either removed or secured. It would also make sense to advertise the security on the outside of the building to let potential criminals know that they are being watched. We would suggest that you also carry out regular checks or have somebody carry these out for you.

The more security measures that you put in place the more likely your premium will come down. It is essential to show your insurance company that you are doing your best to protect your investment.

Can I take out a policy for a short or long period?

Yes, you can take out a policy for any length of period as long as the Insurance Company are willing to offer it. Terms can be quite restrictive and premiums extremely high but we are able to offer cover.


Unoccupied commercial property insurance is extremely difficult to obtain. We do have markets that will help you cover your property but terms can be restrictive and premiums high. It is important that you do your best to ensure that security professionals check your property. This is to ensure that you are doing the best you can to protect it. If you would like a quote for an unoccupied property insurance request a call back and speak to one of our team.

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