Who owns the building?
Whoever owns the building is the one who has to insure it under the ‘insurable interest rule’. however the tenant may pay for the insurance if it is part of the lease agreement.
If you are the owner – then you would need a standalone property owners insurance.
If the business is the owner of the property then you would add this to a ‘Commercial Combined’ Insurance policy which allows you to combine various different types of insurance in one packaged product.
If some parts of your building are unoccupied this is usually fine as long as its not continual long periods and only represents up to 30-40% of the building. Obviously the lower the percentage the easier it is to find cover.
What value should I note as the building sums insured?
Insurance documentation is confusing even more so with property sums insured. You will normally have two values listed on your policy.
1. Declared Value – the actual rebuild value of the property NOT the market value.
2. Day One Value – This is the rebuild value of the property with an additional percentage to take into consideration inflation adjusted costs throughout the policy year, so if costs of rebuild increase then you don’t need to worry as insurers have inflated your cover automatically.
You should always get a RICS approved valuation to ensure you have the correct valuation.
Did you know you can obtain this from as little as £150 from a virtual RICS (https://www.rics.org/uk/) building surveyor. Blending technology with traditional methods they are able to obtain accurate RICS valuation which is the only one insurers will approve.
This gives you a cost-effective way in which to obtain a true rebuild value of your policy then for peace of mind you can index link this to increase with inflation and review every 3 years to make sure it is in line with market movements.
What happens if I have sandwich panels / composite panels on my building?
Check if you have any composite panels on your buildings.
Composite panels are cheaper, light weight and an easy way to construct a commercial property.
However, there are some serious implications when looking at your insurance exposures.
We have seen in recent times that some composite panels do very little to contain fire with some causing exponential damage and make it dangerous for emergency services to deal with.
As such it is one of the most important material facts to disclose to your insurers so that if the worst happens they have been made fully aware of their exposures. Whilst this could increase the premium it is better than having a claim dismissed and receiving no payment if your building burns down.