Commercial Landlord Insurance: What You Need

Insurance protects the building and your income, and the lease usually decides who arranges it and who pays. This is what a commercial landlord needs to think about.

The main covers

• Buildings insurance: on a reinstatement basis, meaning the full cost of rebuilding, not the market value. Under-insuring the rebuild cost is a common and costly mistake.
• Property owners' liability: cover for injury or damage claims arising from the property, particularly relevant for common parts you control.
• Loss of rent: covers rent lost while the building is unusable after an insured event, usually for a set indemnity period.

Who arranges it

On a full repairing and insuring lease the landlord typically arranges the buildings insurance and recovers the premium from the tenant as insurance rent. In multi-let buildings the premium is apportioned. See insurance rent.

Getting the sum insured right

Have the rebuild cost assessed properly and reviewed periodically, since construction costs change. Too low and a claim leaves you short; too high and you overpay.

Consider the extras

Depending on the property, consider terrorism cover, and remember cover changes when a building becomes empty. Use a broker who knows commercial property, and read the policy conditions.

What insurance does a commercial landlord need?

Buildings insurance on a reinstatement basis, property owners' liability, and loss of rent, plus terrorism and empty-property cover where relevant.

Why does the sum insured matter?

Buildings cover is on a reinstatement (rebuild) basis, so under-insuring the rebuild cost is a common and costly mistake.