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Insuring commercial property can be complex.
Commercial buildings come in all shapes, sizes and material construction. They generally need specialised heating, lighting and ventilation systems and the flexibility to cater for a variety of businesses or tenants.

Commercial_Property_InsuranceInsurers will assess multiple factors when they are calculating premium costs. A commercial landlord or property owner will need to provide details such as:
  • Location and any risks such as flooding
  • Type of construction and materials
  • Fixtures and fittings
  • Security
  • Type of industry using the building
Underinsurance
One of the regular mistakes made when insuring commercial property is assessing the full rebuilding cost. When calculating the sum insured for building and contents, it can be easy to undervalue the full rebuilding and replacement costs. This will leave you with a shortfall if you need to claim for a total rebuild if the property is destroyed.

Often, commercial property insurers will work on a pro rata “condition of average clause”; for example, if you are claiming for a partial loss of 100k out of your insured value of buildings and contents of 200K and you are underinsured by 50% (the full rebuild value is 400K), you will only receive an amount minus the percentage you are underinsured (50% of 100K = 50K). This could have serious financial consequences when you come to make a claim.

Property owner’s liability
Commercial property owners will need property owner’s liability insurance to protect against claims from a third party due to an accident resulting in injury or damage to their property.
The amount of cover will be determined by the type of business and the risks involved.

Business interruption and loss of rent
Following the total loss of a commercial building through fire, flood or another event, it may take some time to rebuild or repair the property. During this time, you will be losing rental income and you may have to find alternative premises for your tenant.

The amount of insurance cover will depend on your type of property and how long rebuilding work is expected to take. Calculations will include time taken for clearance, planning permissions, rebuilding and replacement of fixtures and fittings. This will determine the indemnity period (12, 24 or 36 months).

Legal cover
This is usually offered as an add-on to your commercial property policy and covers your legal costs if you are involved in disputes for non-payment of rent, data protection or employment etc.

Insurance broker
An insurance broker will be able to help you assess your individual requirements and provide an accurate valuation to ensure your building is adequately covered.
Business_InsuranceAt a glance
  • Underinsurance, online reputation management and cyber security are likely to be key issues for many businesses in 2016
  • CLA is committed to offering you new ways to help manage these three key risks
We understand that our business customers face a unique set of challenges. We realise, too, that your needs can be complex, with risks that need to be carefully understood before they can be managed appropriately.

Underinsurance
Underinsurance is a significant challenge for businesses. Inadequate sums insured frequently arise in relation to business interruption (BI) policies and commercial property valuations. It is estimated that 40% of businesses underinsure their business interruption cover and up to 80% of commercial properties could be underinsured.

Many businesses also set insufficient indemnity periods, often misjudging the time it could take to replace specialist materials and machinery following a loss.

Online reputation
Up to 75% of an average corporation’s value is now based on its intangible assets – including its brand name and reputation.

Here are more reasons why online reputation is so important:
  • The average adult in the UK spends more than four hours a day using computers, tablets, smartphones and other digital media
  • 61% of customers read online reviews before making a purchase
  • 50% of potential sales are lost because customers cannot find the information they are looking for online
  • Customers that are happy with the response they receive to an enquiry on social media are 43% more likely to recommend that company to family and friends

Companies without a strong online presence, or those that fall foul of negative online reviews, risk losing ground to competitors or suffering reputational damage.

Cyber Risk
Cyber crime is a growing threat to UK businesses with official government figures showing that 90% of larger businesses have suffered a cyber breach in the past year. The average cost of the worst single cyber breach suffered by each large UK business last year was more than £3 million.

More than 1,000 UK businesses have adopted Cyber Essentials, a government scheme that sets out five technical controls to protect businesses against the most common online threats, including viruses, malicious software and hacking.

Employees can be encouraged to play their part, for example by spotting potential phishing scams and alerting them to their company’s IT department.

However, even with robust technology and a workforce that has been educated on how to detect certain cyber threats, it is impossible for companies to completely eliminate the risk of a cyber breach, which is where the role of insurance comes in.

How CLA can help
We can offer you new ways to manage the risks outlined above.

Our services cover six key trade sectors; manufacturing, food and beverage, wholesale and retail, sports, leisure and entertainment, professional business services & technology and communications.

Call us to find out more.