Why Your Business Might Need A Commercial Property Owners Policy

If you’ve arranged all of your business insurance under one policy, you might be missing a fundamental and critical issue for protecting your property.

Who Owns The Property That You Operate Your Business From?

If you own the property personally (or via a pension fund, separate business/company) then you need to arrange cover on a separate Commercial Property owners policy.  The existing business insurance policy is then left to insure the remaining assets of the business (machinery/plant/stock) together with their liabilities.

Commercial Property owners policies will cover the building(s), landlords (ie. property owners) contents, loss of rent (rent not receivable by landlord following damage to the property) property owners liability (which encompasses public liability) and often commercial legal expenses too.  These policies give wider protection and cover to a property owner than is provided under standard buildings cover within a commercial combined or package business policy.

The crucial issue here is that the person(s), business, company that owns the property is the one that has to insure it. This is an issue of insurable interest; you have to have an insurable interest in something to be able to insure it (ususally by way of ownership or via a leasehold interest for example).

If you own your building personally and you are currently insuring it on a business policy that is in the business/company name then the property is technically not insured. Insurers take differing approaches to these situations but in our view, it isn’t worth taking the risk with an insurers compassion in the event of a claim.

If you aren’t sure about the legal ownership, a useful guide is to take a look at your business accounts. Is the property showing as an asset in the accounts? If the building is shown as an asset then this is a very good indication that the business owns the property. If not, you know that the business is not considering the property as one of it’s assets and therefore further investigation needs to be carried out regarding ownership.

Final determination on legal ownership ought to be carried out with the benefit of legal advice so we would recommend that you consult a Solicitor who should be able to assist you in clarifying ownership matters. Buildings are expensive assets and not having them insured correctly could lead to a very significant loss.

These things need to be arranged correctly so please contact us for further advice.