Commercial Property Insurance

There is no general statutory duty to insure a commercial building. What makes it effectively compulsory is contractual: commercial leases normally require the landlord to insure and the tenant to reimburse, and lenders make buildings cover a condition of the loan. Employers’ liability insurance is separately and genuinely compulsory.

The rebuild cost is what it would cost to demolish, clear the site and rebuild the property, including professional fees, VAT where it applies and building cost inflation during the work. It excludes the land. For anything other than a small, simple building, a surveyor’s reinstatement cost assessment is the reliable route.

No, and treating them as the same is the most common mistake on commercial property policies. Reinstatement cost measures rebuilding; market value measures what a buyer would pay, and is mostly land. RICS requires a reinstatement assessment to state that the declared value has no direct relationship to market value.

It is the clause that lets an insurer reduce a settlement in proportion to any underinsurance. If a property is insured for 70% of its true rebuild cost, a claim can be settled at 70% of its value, even for partial damage. Under the Insurance Act 2015 a proportionate reduction can also apply without an average clause.

The RICS standard sets the benchmark as an annual adjustment for inflation with a full reassessment every three years, or sooner if the building is significantly altered. Index-linking alone is not a reassessment: it tracks inflation from your starting figure, so if that figure was wrong it stays wrong.

In almost all commercial leases the landlord insures the building and recovers the premium from tenants as an insurance rent. The tenant insures their own contents, stock and liability. Tenant fit-out and improvements often fall between the two, so agree in writing who covers them before there is a claim.

It can, as an extension rather than automatically. Loss of rent pays the rent you cannot collect while the property is unusable, for the length of the indemnity period chosen. Twelve months is the common default and is frequently too short for a commercial rebuild once planning and procurement are counted.

You must tell the insurer. Cover typically narrows after around 30 days of unoccupancy, commonly to fire, lightning, explosion and aircraft only, with accidental damage and theft restricted or removed. The policy will also attach conditions about inspections, draining down services and securing the building.

Usually yes, but in the open market. Flood Re covers residential property only, so there is no subsidised backstop for business premises. Expect a separate and larger flood excess, detailed questions about resilience measures, and in some cases a flood exclusion with the rest of the cover left intact.

Not automatically. Terrorism cover is bought as an add-on in the UK commercial market, and lenders financing larger assets frequently require it. It is a common gap on portfolios where one property was added to a schedule later and the extension was never mirrored across the whole account.

If you employ anyone connected with the property, including a caretaker, cleaner or maintenance staff, then yes. Cover of at least £5 million is required and the certificate must be available to employees. Close family-only businesses and single-employee companies where that employee owns half the shares are exempt.

It is the assessment of fire risk that the responsible person must carry out for non-domestic premises. Since section 156 of the Building Safety Act 2022 came into force on 1 October 2023, every responsible person must record the completed assessment in full, whatever the size of the business. The old small-employer exemption is gone.

The dutyholder, which is whoever is responsible for maintenance and repair under the lease. It may be the owner, the landlord, the tenant, or shared, with the owner taking the common parts. HSE is explicit that the legal obligation cannot be passed to a managing agent, even where the agent does the work.

At least EPC E in England and Wales, since 1 April 2018, unless a valid exemption is registered. Since April 2023 that applies to all non-domestic lettings, not just new tenancies. The proposed interim EPC C milestone for 2027 was dropped in June 2026, and the position beyond EPC E is now a proposal rather than law.

There is no standard price, and we do not publish example premiums. The quote depends on the rebuild cost, construction type, age, condition and location of the building, what is done inside it, whether it is occupied, let or empty, the fire and security protections in place, and the cover and excess chosen.

Yes. A portfolio policy puts several properties on one schedule with a single renewal date, which is simpler to administer and often cheaper than separate policies. It also makes it far easier to keep sums insured and extensions consistent, which is where multi-property accounts usually drift.

Usually. Insurers price on claims history, and a recent large loss at the property, or a pattern of smaller ones across a portfolio, will be reflected at renewal in the premium, the excess or the terms. It is still better to claim than to absorb a loss the policy was bought to cover.