Commercial insurance

Commercial insurance is vital for businesses to be fully insured and protected should the worst-case scenario happen.

The commercial insurance plans can vary, however generally they cover the cost of rebuilding or repairing equipment, machinery, business premises and replacing stock. The risks facing businesses include fire, theft, weather damage, flooding, burst pipes and overall damage.

This type of insurance essentially provides the same amount of coverage

Commercial property insurance falls under two brackets;

• Buildings insurance
• Contents insurance

Buildings insurance for commercial property

This is a policy which covers damage to the main structure of the building, including the infrastructure, ceilings, walls, roof and flooring. Although it is not required by law, mortgage providers, during their risk analysis, will insist that you have building insurance before they give you a loan.

If you are the outright owner of the property, you will not be required to have any insurance however it is strongly encouraged to protect the building in case of any damage which would lead to repairs and restoring the building. When renting the property, the landlord typically deals with the insurance of the building. The items within the building however would not be insured, so taking out Business Personal Property (BPP) insurance will protect the office equipment and machinery assets inside the building, as long as they are not fixed to the building.

Contents insurance for commercial property

Business Personal Property, or contents insurance, cover the cost of replacing business equipment and machinery in the event of it being damaged or stolen.

The stock is usually insured as its cost price, not at its sales price. Insurance cover should change and reflect an increase in stock levels should it be a period of high season demand.

Some commercial contents insurance will also cover personal possessions belonging to employees.

Insurance for business machinery

There are two types of contents insurance policy for business machinery

Replacement as new policies replace an item that has been stolen or damaged beyond repair with a new one which means the cost to replace similar equipment brand new at today’s market prices. This cost should also include delivery duties installation and commissioning.

Indemnity polices take wear and tear into account, replacing items at their current second hand equivalent market value. For example, if you bought an item in 2010 for 1,500 and it’s cost today based upon second hand market is 1,000 your insurer will pay out the lower amount if you make a claim.

Business interruption insurance

Business interruption insurance covers the business if the business cannot trade as normal as a result of an event that caused damage to premises or equipment. It is usually offered in addition when building or contents insurance is purchased.

It covers:

• any shortfall in pre-tax profits resulting from the event
• any increased costs in running your business because of the event, such as extra accountants’ fees

Commercial insurance is a vital component of any business. Should you take out new commercial insurance and require your assets to be valued, please contact our machinery and business assets department.