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Business premises insurance

23 May 2016
This article is part of our Business Premises Guide
Providing information to support business owners with some of the more common decisions and considerations that you would need to take into account when moving business premises, from taking a commercial lease or buying a property to tips on who you should seek help from at each stage.
You will need adequate insurance for your premises to protect your business assets and building investments.

“Whether you’re trading from your commercial property, or leasing it to another business it’s essential you have the right insurance in place to protect your investment against the unexpected.”
says Alex McLaggan, Chartered Broker for Premierline

There are two main aspects of commercial property insurance:

Buildings insurance covers the cost of repairing, replacing or rebuilding your business premises if it is damaged or destroyed following an insured event. This insurance is not required by law but most mortgage providers will insist that you take out a policy to cover the building.

You should insure your business premises against the cost of rebuilding the property, not the sale price or market value. Factors to consider when establishing a rebuild cost will include; how long it will take to rebuild the premises (keeping in mind all of the materials that would be needed to rebuild) professional fees, site clearance and the contractors costs.  

“It’s always advisable to seek the help of a professional valuer when setting your rebuild value. Investing in this service leaves you safe in the knowledge that the cost of rebuilding your business premises has been accurately assessed.” adds Alex

Whether you are buying or renting a commercial property, you should consider the cost of replacing your business equipment and stock, if it is stolen or damaged after an insured event. Stock is normally insured as a separate item alongside your contents insurance.

Stock Insurance should take into account the cost price of your products, rather than the sale price. The stock sum insured should be set to the maximum amount it could be at any one time, for example around Christmas, and you should factor this into your estimations.

Alex comments, “Dependent on the nature of your business, you may have raw materials, work in progress or hold goods in trust on behalf of your customers. Regular monitoring of your stock insurance can help avoid shortfalls in cover at a time when you need it most.”

 Consider adding Business Interruption to your insurance policy, this will cover you for loss of profit or additional expenses should you be unable to trade following an insured event, depending on the type of cover taken out.
It is important to make sure that you have the right insurance in place to protect the business that you have built. Every business is different and has its own business insurance needs, which is why we work with some of the UK’s most well-known insurers to ensure that you are getting the right insurance cover for your business.
The information and tools contained in this guide are of a general informational nature and should not be relied upon as being suitable for any specific set of circumstances. We have used reasonable endeavours to ensure the accuracy and completeness of the contents but the information and tools do not constitute professional advice and must not be relied upon as such. To the extent permitted by law, we do not accept responsibility for any loss which may arise from reliance on the information or tools in our Insight Hub.