Many companies will include cover for buildings in their standard business insurance policy. This can be for one of three main reasons:-
1) The business, whether a sole trader, ltd or partnership, actually owns the building that they operate from.
2) There is a full insuring and repairing lease in existence.
3) The business does not own the building, nor does it have an insuring and repairing lease but still arranges cover.
The question regarding option 3 is, whether this is the correct way of doing things. There are many basic principles and rules relating to insurance. One of these is that you cannot arrange cover on any property or person that you do not have a financial interest in, unless this is legally required.
For example, I cannot arrange commercial building insurance for the factory down the street, because it is nothing to do with me. If it burns down tonight, why should I benefit financially?
There are cases where an individual owns a building and decides to put this in a trust, related to their pension. In these cases, the individual may choose to rent the building to their own limited company.
This needs to be considered very carefully though. The reason being that if the limited company is in financial trouble at all, then there is the potential for the cover on the structure not to be paid or if there is a loss, the payment will only go to the limited company and it’s creditors may claim the settlement monies.
In these cases, the actual policy that covers the building should formally note the financial interest of the building owner. ie a policy for ABCDE Limited, should note the financial interest of Mr Joe Bloggs as the beneficial owner of the building. Therefore, in the event of a loss, to the buildings, that is covered by a policy, the payment will only be made to Mr Joe Bloggs.
If there is any doubt about this, you need to speak to a specialist, independent business insurance broker to make sure you have the right cover in place.