Commercial Property Insurance Guide & Competitive Quotes

My Go-To for Competitive Commercial Landlord Insurance Quotes

If you landed on this page for one thing and one thing only – a recommendation on where you might be able to grab some competitive commercial landlord insurance quotes – then I’m going to put you out of your misery by pointing you in the direction of QuoteSearcher. I’ve successfully used their service (and subsequently partnered with them) for several years now, and they’re usually the service I recommend without hesitation.

If you slap the ‘quote’ button below, you will be directed to a landlord insurance form. After completion, specialist brokers’ will contact you to run through your requirements and the options available. There is no obligation and receiving the quotes are 100% free.

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Over the years, I’ve received a butt-load of positive feedback from fellow landlords that have made significant savings by using QuoteSearcher off the back of of my recommendation. Make of that what you will.

Hope you enjoy the ride.

What Is a “Commercial” Rental Property?

Generally speaking, a building rented out to someone to operate their business from is considered a commercial property. Examples include shops, offices, restaurants, showrooms, and garages.

But oddly enough (at least, I personally think it’s odd), commercial insurance can also be required for residential rental properties if it’s being used to run a home business. More on this subject further down the page.

What Does Commercial Landlord Insurance Cover?

Similar to regular landlord and home insurance, there are two types of commercial property cover – buildings insurance and contents insurance.

Generally, buildings insurance will cover the rebuild or repair costs of the building itself, as well as protection in the event of:

• Burst pipes
• Flood
• Fire
• Storms
• Subsidence
• Theft

Business contents insurance covers what’s inside the building. For example, equipment and stock.

Most commercial landlords don’t require (or acquire) contents insurance because they don’t provide any contents with the property, and any contents provided by the tenant are their responsibility to arrange suitable tenant contents insurance (unless specified otherwise in the lease contract). However, some commercial properties might come with furniture or be fitted with equipment, provided by the landlord. In such cases, it’s the landlord’s responsibility to protect these items with contents insurance if they wish (once again, unless specified otherwise in the lease contract).

If landlords require both commercial building and contents insurance, most insurance providers can combine the coverage into one policy. Obviously it will add to the cost of the premium.

Types of Insurance Available for Commercial Landlords

Other than the two most common types of insurance policies for commercial properties – building and contents insurance – most insurers will allow you to tailor your policy with add-ons. These additional options may or may not be suitable for you, depending on your circumstances. For example:

• Property owner’s liability insurance can cover costs if a tenant or visitor is injured on your property or if their belongings are damaged, and they seek compensation. For example, if someone stacks it on a wire and sustains a serious injury.
• Accidental damage cover provides protection if your tenants unintentionally damage your building or contents. For instance, if your tenant is a complete cluts and spills a large amount of paint on the carpet, and it can’t be cleaned or repaired, this cover would kick in.
• Rent Protection cover provides financial protection if tenants default on rent and fall into arrears.

Do Commercial Landlords Need Insurance? Is It a Legal Requirement?

The fact that Commercial Landlord Insurance is NOT a legal requirement can be a bit of a curveball for many people – they instinctively assume it is because that’s what common sense dictates. I don’t disagree, but the reality is, there is no legislation (at least, currently) stipulating that commercial landlords must insure their building.

But obviously you’d be an imbecil of epic proportions to go without.

However, it’s important to bear in mind that if you have a mortgage on the property, most lenders require commercial landlord insurance as part of the terms and conditions of the loan. Needless to say, breaching the agreement could result in some pretty ghastly consequences, including calling in the loan (in extreme cases).

Do I Need Commercial Property Insurance if My Tenant Runs a Home Business?

I could dedicate an entire blog post to this question alone (and maybe I will one day, but not today), because I have a tenant that runs a home business, and I was quite surprised by the challenges I faced when trying to get appropriate coverage (and wouldn’t cost an arm and both legs). I actually think it’s a particularly important issue because I suspect it applies to many landlords, many of whom are grossly under-insured, or even worse, unknowingly voided their policy.

In my case, my tenant opened a beauty treatment business from the residential property she was renting from me.

I spoke to several landlord insurance companies, and most of them simply didn’t have policies suitable for tenants operating a home business from a residential property. I found that odd, because it seems like a very normal situation.

Interestingly, I discovered that insurance companies can offer different solutions, and that’s the key takeaway: there doesn’t appear to be one universal solution, but rather two (though there might be more, I only came across these two):

• Commercial insurance policy – I spoke to some insurers who would only insure me if I acquired a commercial insurance policy. I thought this was pretty nuts and it didn’t make sense to me whatsoever. Why do I need a commercial insurance policy just because my tenant is running a home business? That’s crazy!
• Regular landlord home insurance policy with a home business insurance policy – this is pretty self-explanatory. Essentially, I had to purchase a “home business” add-on to my policy (which includes Property owner’s liability insurance. More on this shortly!), which meant I was covered if any insurable incident occurred as a direct consequence of my tenant’s business. This made the most sense, so I went for this option.

If you’re in this situation, you can use my recommended supplier, QuoteSearcher. However, instead of completing their commercial insurance quote form, complete this residential insurance quote form. They should be able to find you insurers that can provide cover, as long as you fully disclose that your tenant is running a home-business.

How Much Does Commercial Landlord Insurance Cost?

You’re not going to like this answer: how long is a piece of string?

I told you.

But it is the truth.

Prices wildly vary depending on several factors, including:

• Location – local crime rate statistics can impact the premium.
• Rebuild costs of the building and whether it’s standard or non-standard construction.
• Age of the property
• Type of property
• Type of business – the type of business which is operating from the premises
• Security
• Level of cover and any add-ons
• The excess amount

Captain-obvious statement (but I’m going to say it anyways): similar to any other type of insurance, the cost largely depends on the level of coverage you choose – you can go for a bare-bones, no-frills policy, or pay extra for comprehensive protection with all the bells and whistles.

Does the Tenant or Landlord Pay for Commercial Property Insurance?

There is no definitive right or wrong answer, as there is no legislation enforcing how it should be handled.

However, it’s typically the landlord’s responsibility to arrange commercial buildings insurance (similar to residential landlord insurance), which is exactly how it should be (because it’s the most sensible approach). Meanwhile, it’s the tenant’s responsibility to arrange coverage for their own contents (e.g. equipment, stock, etc.).

In the case of residential rental properties, landlords usually absorb the cost of BTL landlord insurance (though they may factor it into the rental price). However, for commercial properties, it’s quite common for landlords to arrange and pay for the insurance upfront and then be reimbursed by the tenant or leaseholder. That’s actually how I do it: every year, I renew the commercial insurance policy and then invoice my tenant.

Commercial Property Insurance & Commercial Leases

“Full Repairing and Insuring” (FRI) is the most common type of commercial lease. It essentially means that the tenant is responsible for repairs and insurance costs, though the landlord typically arranges the insurance policy (as mentioned already, this is the best way to do it, in my opinion). In other words, the lease explicitly states that the tenant must fully repair and insure the property.

If the lease isn’t carefully worded or the insurance coverage is insufficient, either party could end up covering unexpected costs, effectively becoming the “insurer of last resort” (and trust me, no one wants that). This situation arises when the rebuild cost stated in the insurance policy is too low, leaving a financial shortfall for necessary repairs.

To prevent this, landlords should ensure the rebuilding cost is fully covered and that the lease clearly defines each party’s responsibilities. So, when your insurer asks what you want to set as the rebuild cost, make sure it’s adequate – don’t lowball yourself just to get a cheaper quote. Cutting corners here could leave you with a serious financial shortfall if disaster strikes.

Whether you’re starting a new lease with a tenant or already in the middle of one, if you’re unsure about the insurance terms and who is responsible for what, now might be the perfect time to review them, before you arrange your policy!

If you’re midway through a lease, your hands are tied, and you’ll need to abide by the existing terms regarding insurance. However, if you’re about to draft new contracts, here are my personal recommendations:

• The lease should clearly state that the tenant or leaseholder is responsible for covering the cost of valuations (i.e. determining the rebuild cost).
• The lease should explicitly state that the landlord is responsible for arranging buildings insurance and must ensure the rebuild cost is set at its full value to avoid shortfalls.
• If a rebuild cost shortfall occurs (e.g. the insurance payout isn’t enough to cover full repair costs), the tenant should not be held liable under the FRI lease. This protection should be clearly outlined in the lease agreement.

How to get an accurate Rebuild Cost for a Commercial Property (and why it’s so important)

I think ensuring an adequate rebuild cost is determined often overlooked, even though it can be the difference between financial ruin and recovery if disaster strikes, as highlighted in the section I just wrote on FRI leases.

There are several ways to determine an accurate rebuild cost, though some methods are, admittedly, more reliable than others. But I’ve always been told that seeking professional advice is a must!

• Hire a Chartered Surveyor (Most Reliable) – a RICS (Royal Institution of Chartered Surveyors) certified surveyor can provide a Reinstatement Cost Assessment (RCA), which gives a precise estimate of the cost to rebuild your property. You can get some quotes for a RICS Regulated Surveyor from here.
• Consult Your Insurance Provider – some specialist commercial insurers provide rebuild cost assessments or guidance as part of their service.
• Speak to a Quantity Surveyor or Building Contractor – If you’ve recently built or renovated the property, a quantity surveyor or contractor can give a good estimate of rebuild costs based on materials, labour, and regulations.

I’d personally always hire a RICS Certified Surveyor to ensure an accurate valuation, because an incorrect assessment could lead to underinsurance, giving the landlord grounds to sue for professional negligence. This highlights the importance of using a qualified, experienced valuer to determine the correct rebuild cost.

Leases often stipulate that the tenant or leaseholder is responsible for covering the valuation costs. So, once again, it’s worth checking the fine print to be sure! Moreover, getting a valuation every 4-5 years is prudent, as it will ensure it remains in line with inflation and current rebuild costs.

Would it be obscenely obnoxious of me to give QuoteSearcher one last shout for your Commercial Property Insurance needs before we wrap this up?

Yup, and I agree.

But here we are.

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Landlord out xo