Commercial property insurance protects the physical premises a business operates from, offices, retail units, industrial premises, and warehousing, against damage, but the sum insured is where most businesses get caught out.
This cover typically protects the buildings, contents, stock, and equipment at a business's premises against risks like fire, flood, storm, theft, and vandalism. For businesses that own their premises, buildings cover is essential, for tenants, contents and equipment cover matters most since the landlord typically insures the structure.
The most common costly mistake: Underinsurance. If a property is insured for less than its true rebuild or replacement cost, most policies apply an "average clause", meaning a claim is only paid out at the same reduced proportion as the shortfall. A property insured for two-thirds of its true value only pays two-thirds of any claim, even a small one.
The sum insured should reflect the cost to rebuild the property from scratch, including materials and labour at current prices, not its market sale value. These two figures can differ substantially, and using the wrong one is the single most common cause of underinsurance disputes at claim time.
Standard commercial property cover often excludes or restricts cover once a property sits empty beyond a set period, typically 30 to 60 days. If premises will be vacant during a refit, between tenants, or during a slow trading period, this needs checking explicitly rather than assumed.
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See My Cover Options →Rebuild cost assessments should be carried out by a qualified surveyor. Always review your sum insured at each renewal rather than assuming it remains accurate.