Commercial Property
Insurance.

Commercial property insurance for investors and landlords is typically arranged under a Business Pack policy. It covers the building structure against physical loss or damage and can include Business Interruption cover for loss of rental income and Public and Products Liability for third-party injury or property damage at the property. It is arranged by investors who own office buildings, retail premises, warehouses, industrial facilities and other commercial properties leased to business tenants. It is distinct from Commercial Strata insurance, which is arranged by an owners corporation for strata-titled buildings.

Commercial property insurance does not typically cover the business contents or fit-out of tenants within their leased premises. Business interruption for individual tenants is also not covered by the landlord policy. Wear and tear and gradual deterioration are generally excluded. Vacant or unoccupied properties may be subject to restrictions or require separate arrangements. Conditions and exclusions vary significantly by policy.

There is no single law requiring all commercial property owners to hold insurance in Australia. However many lenders may require building insurance as a condition of a commercial property mortgage, and some commercial lease agreements may include requirements around the landlord maintaining adequate insurance. Requirements vary by lender, lease and jurisdiction.

A wide range of commercial property types can be insured under a commercial landlord insurance policy. Common examples include office buildings, retail shops and showrooms, warehouses and industrial facilities, mixed-use buildings with commercial and residential components, medical and healthcare premises and hospitality properties. The availability and cost of cover varies by property type and the business activities of the tenants.

The type of business tenants operate in a commercial property is one of the most significant underwriting factors for commercial property insurance. A property tenanted by a professional services firm presents a different risk profile from one tenanted by a restaurant, a gym or a chemical distributor. Insurers assess the occupancy type when quoting commercial property risks, and material changes in tenancy during the policy period should generally be disclosed to us. If your tenant type is changing, get in touch before a new lease is executed.

Vacant or unoccupied commercial properties are considered higher risk by most insurers because they are more susceptible to vandalism, water damage from undetected leaks and delayed response in the event of a fire. Many standard commercial property policies include conditions around vacancy, such as requiring regular inspections or limiting cover if the property has been vacant beyond a specified period. If your commercial property is vacant or becomes vacant, notify us promptly so the implications for your cover can be addressed.

Under a Business Pack policy, loss of rental income is covered under the Business Interruption section. This can respond when your commercial property becomes untenantable following a covered event such as fire, storm or flood, and you lose rental income during the repair period. The amount covered is based on the rental income insured under the Business Interruption section, subject to an indemnity period agreed at policy inception. Conditions and limits vary by policy.

The cost of a Business Pack for a commercial property varies depending on the property type, location, building sum insured, tenant type and the scope of cover selected. Most commercial properties can generally attract premiums from around $6,000 to $15,000+ per year. These are general market ranges only. An accurate premium requires an underwriter assessment of your specific property and circumstances.

Commercial property claims vary widely. A straightforward storm or water damage claim may involve tens of thousands of dollars in repairs. A major fire or flood event resulting in significant structural damage and an extended repair period can produce claims of hundreds of thousands to millions of dollars in building costs and lost rental income combined. For property investors, an uninsured loss of this magnitude can have a severe impact on the investment asset and cash flow.

Underinsurance occurs when the building sum insured is less than the actual cost to fully rebuild the structure. For commercial buildings, rebuild costs can be substantially higher than market value due to the cost of commercial construction, specialist fit-out elements in common areas and demolition and removal costs. Building costs have increased significantly in Australia in recent years. A commercial property owner should review the adequacy of the building sum insured at each renewal and consider obtaining a current valuation to ensure the cover is appropriate.

Commercial property insurance is typically arranged by a single building owner who holds the property on one title. Commercial strata insurance is arranged by an owners corporation covering a strata-titled building where individual lots are owned by separate parties. If your commercial property is on a single title with you as the sole owner, a Business Pack is the appropriate product. If your property is strata-titled and managed through an owners corporation, commercial strata insurance is what applies.

Insurers typically ask for the property address, type and year of construction, the total floor area, the current building sum insured, the type of business activities carried out by tenants, the annual rental income, the Business Interruption indemnity period required, the current vacancy status, any recent claims or loss history and any lender or lease requirements. When you get in touch, we will guide you through what we need and present your risk to our insurer panel.

Notify us as soon as possible after an event. For major structural damage, the insurer may appoint a loss adjuster before authorising repair works. Do not authorise significant repairs or remove damaged materials without first consulting us. For Business Interruption claims, document the rental income lost and the expected repair timeline. We will be actively involved throughout the claims process to ensure your interests are properly represented.

A decline from a standard insurer does not mean cover is unavailable. We have access to a wider range of insurers beyond the standard market, including options for unusual occupancies, prior claims, vacant periods and other situations outside standard appetite. Get in touch and we can identify what options are available for your situation.