The vast majority of UK businesses will rent, or lease, the business address from where the business trades. It is simple economics that it is cheaper, in the short term, to rent a premises than to take out a mortgage or a business loan to purchase. Whilst in the long term it may be better economically to take out a mortgage on a property, very few businesses can absorb the ongoing costs of this.
This means that in the majority of cases, when arranging their business insurance, the actual bricks and mortar, the structure, are not included in the costs of the policy. You will normally pay a monthly rent, a monthly service charge and contribute to, or pay in full, an annual insurance policy. If it is a building with more than one business in or more than one address, then the commercial landlord will normally arrange one overall block policy for the whole building;. The costs are then sub-divided, hopefully on a proportional basis, between each of the tenants.
In certain cases though, usually when you lease the whole building in it’s entirety then you may have what is termed a full insuring and repairing lease. In theory, this should be cheaper rent wise, than a standard lease. The reason being because the lease is more onerous, upon you the tenant, because you are responsible for all repairs to the building and you need to insure the building as well.
You do have a choice between adding this to your existing policy or arranging a separate commercial building insurance policy. It may be preferable for you, or even cheaper, if you arrange a separate policy. You can keep tabs on this one separately and you can also provide this to your landlord for information, without having to provide potentially confidential business information to them which may be in your standard package policy. This is where you need to speak to your business insurance broker to get them to at least price up the different options for you.
Tomorrows blog will concentrate on what your policy has to do to comply with your full insuring and repairing lease.