Commercial Property Insurance

Commercial Property Insurance for Owners & Investors

Commercial property can represent a substantial investment. Protecting the building properly requires more than simply renewing the same sum insured and policy each year.

Insurance 2U arranges Commercial Property Insurance for property owners, investors and businesses across a range of commercial, retail, office, warehouse and industrial properties.

We take the time to understand the building, its construction, replacement value, tenants, business activities conducted at the property, rental income, location and the exposures that could affect both the property and the owner’s income.

What Types of Commercial Property Can We Assist With?

Subject to insurer appetite and underwriting requirements, we can assist with insurance for properties including:

Commercial offices
Retail shops
Warehouses
Industrial properties
Factories and workshops
Showrooms
Medical and professional premises
Mixed commercial properties
Multi-tenanted commercial buildings
Owner-occupied commercial premises
Commercial investment properties

Building Sum Insured — Getting the Value Right

The Building Sum Insured is one of the most important parts of a commercial property insurance program.

The market value of a property and the cost of rebuilding it are not the same thing. A suitable Building Sum Insured needs to consider the cost of reconstruction together with other relevant expenses associated with a major insured loss.

Depending on the circumstances, these can include:

Demolition and removal of debris
Professional fees
Architects and engineers
Building consultants
Council and statutory requirements
Escalating construction costs
Other rebuilding expenses

For substantial commercial buildings, an appropriate professional insurance valuation can be an important part of establishing the Building Sum Insured.

Underinsurance Can Become a Serious Problem

Construction costs can increase substantially over time. Simply carrying forward an old Building Sum Insured year after year can create an underinsurance exposure.

Depending on the policy wording, an underinsurance or average provision may affect the amount payable following a claim if the declared value is materially inadequate.

We therefore pay close attention to Building Sums Insured at renewal rather than concentrating solely on obtaining the lowest premium.

Your Tenants Matter to the Insurer

One of the major differences between residential and commercial property insurance is the importance of the activities conducted by tenants.

A professional office does not necessarily present the same property exposure as a restaurant, mechanical workshop, manufacturing business or warehouse storing combustible goods.

When arranging Commercial Property Insurance, insurers may require information about:

Each tenant and their business activities
Percentage of the building occupied by each tenant
Vacant areas
Cooking and food preparation
Manufacturing or processing activities
Storage of combustible or hazardous materials
Workshops and machinery
Hours of operation
Changes in tenancy during the policy period

A change of tenant can change the insurance risk. We encourage commercial property owners to tell us when tenants or activities at the premises change so that the insurer can be advised where required.

Construction — Not Every Building Is the Same

Construction can have a significant influence on insurer appetite and premium.

Depending on the property, insurers may consider matters such as:

External walls
Roof construction
Floor construction
Building age
Number of storeys
Fire separation
Electrical systems
Sprinklers and fire protection
Building maintenance
Combustible materials

EPS & Combustible Sandwich Panels

Expanded Polystyrene (EPS) and other combustible sandwich panel construction can be a significant underwriting consideration for commercial properties.

Where these materials are present, insurers may require information regarding:

The type of panel
Approximate percentage of the building containing the material
Where it is located
The activities conducted nearby
Fire protection and separation
Whether the panels form part of cool rooms or other structures

Not all insurers have the same appetite for properties containing EPS or other combustible materials. Accurately identifying the construction helps us determine which markets may be appropriate to approach.

Loss of Rent — Protecting the Income From Your Property

A commercial property is often an income-producing investment.

If an insured event causes substantial damage and tenants cannot occupy the premises, the property owner may lose rental income while repairs or rebuilding take place.

Depending on the policy selected, Loss of Rent or an appropriate Business Interruption section can help protect insured rental income following an insured property loss.

When considering the appropriate amount, we may need to understand:

Annual rental income
Recoverable outgoings
Lease arrangements
Expected rent increases
The realistic period required to repair or completely rebuild the property

A major commercial building claim can take considerably longer to resolve than simply replacing damaged contents. Planning for the potential interruption period is therefore important.

Flood, Storm & Natural Catastrophe Exposure

Location matters.

Depending on where the property is situated, insurers may consider exposures including:

River and creek flooding
Overland flow
Stormwater
Storm and hail
Cyclone exposure
Bushfire
Other natural catastrophe risks

Flood cover and other catastrophe protections vary between insurers and policies. We review the terms available rather than assuming every commercial property policy responds in the same way.

Fire Protection, Security & Risk Management

For larger or more complex commercial properties, insurers may require detailed information about the building’s risk management arrangements.

This can include:

Fire extinguishers and hose reels
Automatic sprinkler systems
Fire detection and alarms
Security alarms
CCTV
Monitored security
Electrical maintenance
Building condition
Fire separation between occupancies

For larger risks, an insurer may also undertake a property survey or risk engineering inspection.

Public Liability for Property Owners

Commercial property ownership also creates liability exposures.

Owners may have responsibilities relating to common areas, access ways, car parks, stairs, paths and other areas of the property.

Depending on the policy and ownership structure, appropriate Public Liability cover should therefore form part of the overall insurance review.

Business Pack or Industrial Special Risks (ISR)?

Not every commercial property should be insured in exactly the same way.

Smaller and less complex commercial properties may be suitable for a Business Pack-style policy, while larger, higher-value or more complex property risks may require a broader commercial property or Industrial Special Risks (ISR) solution.

The appropriate approach depends on factors such as property value, occupancy, construction, tenant activities and the overall complexity of the risk.

Our role is to assess the information and determine which insurance markets and policy structures are appropriate to consider.

Claims Management — When a Commercial Property Suffers a Major Loss

A significant commercial property claim can quickly become complicated.

A major fire, storm, impact or water damage claim may involve property owners, tenants, property managers, insurers, loss adjusters, engineers, builders, restoration contractors and other specialists.

Insurance 2U remains involved throughout the insurance claim.

For clients whose insurance we manage, our claims assistance can include:

Helping lodge the claim correctly
Preparing and collating supporting information
Communicating with the insurer and claims personnel
Working with loss adjusters and assessors
Following up builders, engineers and repair quotations where relevant
Monitoring outstanding reports and insurer decisions
Helping explain insurer information requests
Considering applicable Loss of Rent or Business Interruption benefits where insured
Assisting with progress payments and claim documentation where applicable
Helping explain proposed settlements
Escalating unreasonable delays where appropriate
Assisting with disputed claim matters where required
Advocating for our client’s interests throughout the claims process

A property owner should not have to become an insurance claims expert because their building has suffered a major loss.

Our objective is to help manage the insurance process, reduce the administrative burden on our client and work towards a fair outcome under the policy.

Commercial Property Insurance Markets

Insurance 2U has access to major Australian insurers and specialist underwriting markets for commercial property risks.

Depending on the property, construction, occupancy, sums insured, claims history and underwriting requirements, markets we may approach can include:

Allianz
QBE
Chubb
Vero
CGU
Zurich
Lloyd’s markets
Other specialist property underwriting agencies where appropriate

Different insurers have different appetites. An insurer that is highly competitive for an office building may not necessarily be appropriate for a warehouse, manufacturing property or building containing EPS.

This is where understanding the risk before approaching the market matters.

Why Insurance 2U for Commercial Property?

Commercial property experience: We understand that building insurance involves much more than selecting a Building Sum Insured.
Tenant analysis: We consider the activities conducted within the property and how they affect insurer appetite.
Construction knowledge: We identify relevant issues such as EPS, combustible materials and building construction.
Income protection: We consider Loss of Rent and the realistic period required to recover from a major insured loss.
Underinsurance awareness: We pay attention to replacement values and the consequences of inadequate sums insured.
Broad market access: We can approach major insurers and specialist commercial property markets.
Claims management: We help lodge, manage, follow up and escalate commercial property claims.
Claims advocacy: We advocate for our client’s interests throughout the claims process.

Talk to Insurance 2U About Your Commercial Property

Whether you own a single commercial investment property, warehouse, retail building, office, industrial property or a larger portfolio, talk to Insurance 2U about your Commercial Property Insurance requirements.

Commercial Property Insurance — protecting the building, protecting the income and providing experienced claims support when a major loss occurs.