Business Package vs Commercial Property Owners Insurance
We understand that being a property owner is one of the biggest investments for small business owners and many self-managed super funds but without adequate insurance protection you could be exposing yourself and what you have worked so hard to build.
Most commercial property owners will have taken out a standard business package insurance policy which can include the following covers (If selected);
What happens when a tenant defaults on their rent and/or abandons the lease and how could your insurance respond?
The potential for tenants to default on their rental payments is a real risk to commercial property owners who rely on that income to meet their mortgage repayments and other expenses, yet many standard business insurance packages do not include rent default cover.
If you have taken out Business Interruption insurance under a business package, then the policy may include Loss of Rent but this is only payable if a loss such as a fire occurs and you are unable to lease out the property for a prolonged period.
There are now specific commercial property owner packages available which can provide cover for situations such as loss of rent due to tenant default and includes cover for the associated legal costs that you may incur to evict a tenant and recover lost rental income.
Tailored to meet the risks associated with property ownership, many commercial property owner policies also include automatic limits and additional covers specific to commercial landlords. The additional covers can include accidental damage and theft cover up to the building sum insured, cover for OH&S breaches and standard money cover.
Some important things to remember when purchasing insurance for your commercial property :
Managing Agents - Rent Default cover is generally only provided if your investment is managed by a licenced property agent at the time of the loss.
Tenants - Insurers price business insurance packages and commercial property owner policies on the occupation of the tenant. Some tenants will be considered a lower risk, while others may be hazardous. If there is a change of tenants during the policy period, it is important that you contact your insurance adviser so that they can make the insurer aware.
Unoccupied Buildings – Most insurance policies will include exclusions of cover for buildings that are unoccupied over a certain number of days. The standard is 60 days but, in some cases, could be less. If your building becomes unoccupied during the period of insurance, you must contact your adviser so that they can relay this information to your insurer.
**What usually isn’t covered –**Policy wordings, exclusions of cover and excesses vary greatly between insurers. Make sure that you have read and understood the policy you have purchased and if not sure, ask your adviser.
If you are purchasing a new property and need insurance or you are not sure if you have the right covers in place and would like an alternate quotation, contact one of our experienced insurance advisers for an obligation free quotation.