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Commercial property insurance – flat roofs

Wednesday, September 1st, 2010

Chances are that if you have a commercial property insurance policy in force, there will be a condition or warranty relating to any non-standard constructed roofs. If your property or properties have a normal pitched roof covered with slates or tiles, then this does not apply. However, if part or all of your roof is flat, then you need to exercise care as to what exactly is, or is not, covered by your policy.

Most policies will provide the usual range of perils such as storm, flood, fire, theft, burst pipes etc. But, properties that have flat roofs are usually more susceptible to certain types of loss than a traditional roof.

Concrete roofs are not so bad. You do not see many of them nowadays (in new builds) but throughout the 70’s and 80’s this was a popular form of construction because it was quick and sturdy. What insurers are concerned about is flat roofs that can, over time, deteriorate in condition. We are particularly talking about felt or asphalt on top of timber. In the main, this type of construction was used on extensions as opposed to the whole roof on a new build. There are many properties though where the whole property is roofed with felt on timber.

If you are receiving rental income on the property, or you occupy the property yourself (for your trade) then you will have arranged a policy through a business insurance broker. 9 times out of 10, the policy will have been sold based on price. The cheaper the policy though, the more careful you need to look at the conditions and/or warranties.

For example, you may have a standard business insurance policy which has a nice, low, £100 excess. But, if you look carefully, any losses attributable to the flat roof may be subject to a significantly higher excess. £500 is the norm and this can rise to £750. This means that for every loss relating to the flat roof, you will pay a huge chunk of any claim, if not all of it. Also, the policy may state that you need to have the roof inspected every year, or bi-annually, by a competent contractor (ie not yourself) and any defects remedied.

This covers three points. Firstly, the increased excess may make the cheaper policy youhave bought not such a good deal. Secondly, the cost of getting a contractor even to look at a roof can be a few hundred pounds and thirdly, you will need to provide written evidence that you have had the roof inspected within the last twelve months. So you cannot get away from the additional costs.

All in all, it may seem like a good deal to get a cheaper premium, but as we always point out, the devil is in the detail.

Posted in business insurance, commercial building insurance, commercial property insurance, commercial property insurance quote, commercial property owners insurance | Comments Off

Commercial building insurance – separate policies

Monday, August 23rd, 2010

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.

Posted in business insurance, business insurance broker, commercial building insurance | Comments Off

Commercial building insurance – wear and tear

Tuesday, August 10th, 2010

Every commercial building insurance policy is designed to pay out on events that were not expected. It may seem simple, but this is really the crux of a policy. You are swapping some money, every year, in return for someone elese agreeing to shoulder the risk when damage is caused.

You cannot, in most cases, insure for things that you could reasonably expect to happen. I could not go to Lloyds of London and ask to buy a policy that pays out on me reaching my (next) 43rd birthday. Whilst there is unfortunately a very, very small chance that it will not happen, the overwhelming chance is that it will occur. So, no-one is going to want to lose money by paying out (more than the premium) on an event that is more than likely to happen.

The same can be said of commercial building and business insurance. You cannot buy a policy for an event that you know will occur. If you have a claim against your building policy for storm damage, then this must occur because of the storm.

If you have guttering or tiling on your roof that is in poor condition and obviously needs some repairs and maintenance, then you really cannot expect a policy to pay out for damage. If you had maintained the building better, then a storm would only cause damage if it was quite severe. However, if you have a gutter that has been hanging off for years and then a light gust of wind blows it onto your neighbours greenhouse, should your insurers pay out?

Posted in business building insurance, business insurance, commercial building insurance | Comments Off

Commercial building insurance – partial unoccupancy

Wednesday, August 4th, 2010

How does your commercial building insurance change, when you have only part of the premises unoccupied? As we begin to exit the terrible recession that 2009 represented, many commercial landlords are starting to, at last, see occupancy rates on the increase.

Many properties are either are retail or commercial on the ground floor with some residential above. Most of the properties with flats have seen occupancy fairly steady. Of course, landlords have had to reduce, or keep their rents unchanged.

But, many are now still trying to get their commercial portions let and it may be that you have a few commercial units, some of which are empty and some are occupied. You will, if you have business insurance, have this arranged on a property owners policy. This will cover the bricks and mortar, fixed glass, loss of rental income and property owners liability.

It depends on who are your underwriters for the cover, but in the main most policies will restrict the cover for the unoccupied portions of the property whilst empty. It is not only the restrictions you need to look out for, but also the terms and conditions that apply.

For example, after 30, 45 or 60 days, most policies will restrict the cover to fire, lightning, explosion, aircraft and property owners liability. This is normal for most insurers. But, certain ones will have un-occupancy conditions, which may or may not include any of the following:-

1) The need to turn off all services and drain down water systems (even if you do not have cover for burst pipes).

2) Letter boxes to be sealed up.

3) Weekly visits to be made, with a log recorded of each and every visit.

4) Ground floor windows to be boarded up.

Most of these conditions, apart from the letter box one, are fairly strict and wil cost you time and money. Other insurers are more flexible, depending on how long they are likely to empty for.

Posted in business building insurance, business insurance, commercial building insurance | Comments Off

Subsidence – make sure you have adequate cover.

Monday, July 19th, 2010

Since the terrible summer of 2007 and the floods across the country we have not had such dry weather. 2008 and 2009, whilst not so bad, were hardly the summers we remember from the past.

No-one will forget the Met Office announcing with great fanfare that 2009 was going to be a “barbecue summer”, only to state 5 months later that this was only a 60% prediction, which of course was wrong.

As a result of this, the business insurance companies, that insure buildings and properties, have seen a marked dip in claims for subsidence over the past four or five years.

We have had cracking weather in 2010 so far, a few blips of course, but the “phew what a scorcher” headlines have been justified. Whilst we have had a good summer, we have also had a very dry winter. A lot of snow of course, but this has not soaked through to the soil under our houses and businesses.

We are starting to see an increase in claims under business building insurance for cracks in the actual structure. The causes of subsidence are many, the main ones being a simple draining of soil, which results in shrinkage which cracks the structure and tree roots, in search of moisture, drying out surrounding soil.

With the advent of websites that “offer” to compare business insurance, as they are price driven, there is an increase in quotes being provided at a very basic level. What this means is that people are getting quotes without subsidence, because it can be 10 or 20% cheaper.

This will start to be a problem as people start to have claims and then realise that there is no cover in place. The first thing you should do is speak to a business insurance broker and get them to review all of your insurance requirements, one of them being the cover you have. Secondly, if you do not have subsidence, heave or landslip (the 3 main covers) either get this added to your policy or take out a new one with this, vital, cover.

Posted in block of flats insurance, business building insurance, business insurance, commercial building insurance, commercial insurance, commercial property insurance, commercial property insurance quote, commercial property owners insurance, compare business insurance | Comments Off

Business insurance – insuring a building I do not own.

Sunday, June 13th, 2010

One of the basic principles of business insurance, along with other types, is that you must have an insurable interest in the item, building, asset etc that is to be insured.

For example, you could not take out a commercial building insurance policy on the local supermarket and receive a payout if it suffered a fire. There are two reasons, firstly you have nothing to lose if the building is damaged, and therefore no financial relationship to it and secondly, there will be dual cover in force.

But, there are times when you can arrange a policy for a building that you do not own. This is when the landlord allows you to insure the property, but they have their financial interest, as the beneficial owner, noted on the policy. This is usually through you having a full insuring and repairing lease.

You have, through the signing of the lease, agree to arrange suitable cover. But, if the building were destroyed, then as you are not the beneficial owner, then you do not receive any financial gain.

A full insuring and repairing lease is more rare, but it is always worth checking whether you need to arrange cover.

Posted in business insurance, commercial building insurance | No Comments »

Pub insurance – should I insure the brewery stock?

Tuesday, May 11th, 2010

A standard pub insurance policy, available from most UK insurers, will offer a range of covers that are suitable, or most likely to be used or needed, by a public house.

You will have the option of picking and choosing many of the covers, although a certain “core” list of covers must be taken out, these include public liability insurance and business contents insurance cover. The optional covers will be for commercial building insurance, goods in transit and employers liability with others available.

Where you are a landlord, effectively renting or leasing a building from a brewery, you will receive stock on what is more or less a sale or return basis. Technically, you do not own the stock as the brewery could turn up and re-claim this at any point.

But, as the stock is in your care, custody or control you are responsible, at law and through the terms of the lease. So, the answer to the question is yes, you do need to insure the brewery stock. The good news is that a pub insurance policy can include cover for your stock either of food, wines and spirits or other stocks.

You need to work out what the maximum stock holding is likely to be and to make sure that your policy covers this. Some of the better policies will have an automatic seasonal increase of 15 or 25%. This means that in the week preceding and following any Bank Holiday your stock sum insured is increased, free of charge, as these are the likely periods when you will have more stock on the premises. This is to prevent you having to notify your broker every time your stock sum insured goes above the policy limit.

Posted in commercial building insurance, pub insurance | No Comments »

Commercial building insurance – index linked sum insured?

Saturday, April 17th, 2010

Most commercial insurance policies that cover business buildings will have some form of index-linking built in at renewal. What this means is that each year a certain percentage is applied to your sum insured to increase this to ensure that, over time, inflation does not erode the suitability of the sum insured.

With commercial property insurance you, the policyholder, must ensure that the amount that the building is insured for is adequate. For example, if a building costs £500,000 to purchase, the rebuilding cost could be less or more depending on the age of the building, the construction materials and where it is. In certain parts of the country, even after the recession, up to 40% of the purchase cost of some buildings refers just to the value of the land (with permission for residential/commercial use) it sits on.

If you insure for the incorrect amount (too low) then your claim payments could be reduced, although you do get a 10-20% margin of error with most insurers. If you have had a commercial building insurance policy that fell due for renewal recently, you may have found that the sum insured has not been index-linked. This is a consequence of the price crash over the past 18-24 months. Rebuilding costs always lag behind and insurers have, for a few months, not increased sums insured. This is likely to change very shortly and sums insured will increase again.

What you do need to do is to review your sum insured every year. Forget about the figures on your insurance schedule and work out yourself what the rebuilding cost is likely to be. A really basic rule of thumb for standard construction, post 1900, commercial premises is £100 per square foot. If your sum insured is less than this amount, you should speak to your broker to get this changed. The caveat is, that this is no more than a guide and you should always consult a professional surveyor or valuer if you want to ascertain the correct rebuilding cost.

Posted in commercial building insurance, commercial property insurance | No Comments »

Commercial building insurance – loss of rental income cover

Saturday, April 10th, 2010

If you are looking for a commercial building insurance quote, you are in luck because this is one of the easiest insurance products to purchase.

You do not need a surveyor to visit your building prior to getting a quote, you just need to look on the net for a business insurance broker and check that they are independent. The broker being independent means that they have the ability to get prices from a number of different insurers, rather than a restricted market of one or two. The basic information you need is a rebuild cost, the location of building, the type of tenants, basic construction details and your claims history.

When speaking to a broker, they will usually offer you the option of including loss of rental income insurance. Nowadays, many insurers include this free, up to 20% of the overall building sum insured. This does not mean that you will get a straight 20%, this is just the limit they will pay, you need to provide the rental income for, say, the last six months. One common error is to believe that this covers you if the tenants defaults, for whatever reason, this cover is not available in the open, commercial market.

Loss of rent covers you if there is an insured event, ie a fire, flood, break in and as a result the tenant has to move out of the property and you no longer receive rent.

It may be that you don’t want to pay the small extra premium for this cover but, you have to consider with all insurances the pro’s and con’s. The downside is that you have to pay extra for it, and that is about it. The good points are that you have that financial cushion that your mortgage can continue to be paid whilst your property is being repaired or rebuilt.

On balance, the cover is worth having. If you do not currently have it in place, you can usually add mid-term to your existing policy.

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Pub insurance – can I include commercial building cover?

Sunday, March 14th, 2010

The majority of public houses in the UK are owned by the large breweries or pubco’s. They tend to lease each property to individual tenants. Hence the phrase, tenanted public house.

In the terms of these leases, which are becoming less onerous thankfully, the building owner places certain obligations upon the tenant as regards arranging cover.

It is usually the responsibility of the incoming tenant to arrange their own pub insurance which covers the business contents, or assets, stock, liabilities and fixed glass and sanitary ware.

It is the responsibility of the owners to arrange commercial building insurance for the physical structure or “bricks and mortar”. In the terms of the lease though the tenant has to pay for the insurance. We do get asked whether we can offer a better quote for the buildings than the landlord has arranged. In nearly every case, because we consider each quote on it’s merits, we can beat the existing terms.

Whilst this will offer a saving to the tenant, they can only arrange cover if the landlord agrees. The owner does not want to say yes, you can arrange cover and then find out 6 months later that you have forgotten to pay and a huge fire claim goes unpaid.

The way around this is, if the landlord agrees, to get their interest noted on the policy as the beneficial owner. Therefore, the policy will not be cancelled (if this has to happen) without the landlord receiving written notification of this. Thereby allowing them the option of getting their own policy in force.