Knowing Which Are The Right Commercial Property Insurance Policies For You And Your Property
If you have decided to make a living out of buying and letting commercial properties, making sure that you are properly insured is essential. If you apply for a commercial mortgage to purchase retail, office, factory or warehouse space accessing the correct property insurance is a vital part of the commercial property process. In the same way that you would make sure you had the correct insurance policies on your home, it is crucial that you protect your commercial property business against a range of potential risks.
Specialised commercial property insurance, created to cover the needs of properties designed for business, not homes, gives you the peace of mind, knowing that your investment is protected. Whatever the nature of the business, commercial property insurance can be created to suit it.
Whatever kind of commercial asset it is that you have purchased, you must to ensure that it is fully protected against the main risks such as flood, fire, storm damage, criminal damage or earthquake. The property alone must be insured against these various perils; as it is unlikely that a mortgage lender will even consider offering you a loan without it.
The main factors that change the price of commercial property insurance are the value and type of the property you have bought, whether or not it is occupied, how it is occupied and the nature of business taking place on the premises. For instance, insurance for a shop is likely to be less costly than insurance for an industrial or manufacturing premises. The location of the property is also important, especially if it is located in an area with regular flood warnings or high crime.
An important extra service that owners of commercial insurance can add to their policy is 'loss of rent' cover. If you are the owner of a commercial property, you might often count on rental income paid by your tenants in order to finance your commercial mortgage. This has risks, because if the building were to be rendered uninhabitable through fire or damage by the tenant, you could be left covering the mortgage payments without anyone to pay the rent.
If your property cannot be tenanted because of a risk covered under the policy (e.g. fire) then 'loss of rent' cover will compensate you for this loss. The amount of cover is generally a percentage of the buildings sun insured (around 15-20 per cent) and will typically run for a period of a year.
Insurance for commercial properties also comes with a wide range of additional kinds of cover that can be included. For instance, you might think it wise to include contents cover if you have added furniture or other contents of the premises. This would insure your contents against a variety of risks including fire, flood and theft.
Another popular option is 'property owner's liability' insurance. If a third party or their property suffers a loss due to your property - perhaps the chimney stack collapses onto a car - then this insurance will cover you. 'Legal expenses' cover is another popular choice as it provides a sum of money towards court fees should you end up in a legal dispute regarding your commercial property.
Failure to obtain the right insurance cover could leave you significantly out of pocket. Losing your essential rental income or having to fund expensive repairs might have a huge impact on your business and so it is vital that you get the right commercial property insurance.
All insurance brokers and providers will have a broad spectrum of offers and cover to suit your needs, tailored to fit your needs, finances and circumstances.
About the Author
Timothy Frodsham writes for http://JustCommercialMortgages.com the UK's No.1 site for the latest commercial mortgage rates and commercial property finance news.
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