Opinion

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Commercial insurance

21 June 2017

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.

Julian joined Cavendish Maxwell as Chief Economist in January 2019. Coming from an old real estate family in Ireland, his career as an economist began with a first-class honours degree in philosophy, politics and economics at the age of 19, following which Julian was an analyst with the UK Government. He later helped develop and launch the UK’s residential forecasting service with the firms that merged to become Global Insight. Julian subsequently developed derivatives in the City of London and established real estate futures contracts for what is now the International Commodity Exchange. He also ran a property development and management firm, before eventually serving as an international consultant and trainer to governments, central banks and notable firms including AXA, Citibank, DBS, Deloitte and Thomson Reuters.

Julian fills his work-free time with academic pursuits; he holds several postgraduate degrees, including a PhD in International Risk Management Policy, and also the Licensed Conveyancer qualification. Julian has published many business and academic texts and articles, and is also a keen walker – especially fond of the Scottish Highlands.
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Sarah-Jane joined Cavendish Maxwell in January 2020 as Head of Marketing and is responsible for the development of the marketing strategy and execution across the Middle East region. An energetic and results driven marketer, Sarah-Jane possesses a wealth of multi-channel marketing experience, within both B2B and B2C environments which she has gained over a 25 year career. Prior to joining Cavendish Maxwell, Sarah-Jane held senior marketing positions for major developers in Dubai including Emaar, Dubai Properties and Dubai Sports City. She also worked for IWG as the Regional Marketing Director responsible for the MEA and APAC regions. Before relocating to the UAE in 2005, Sarah-Jane held various management roles in public and private sector companies in the UK including ten years at Royal Mail and seven years at the Bank of America.

Sarah-Jane is a member of the Chartered Institute of Marketing and has a BA(Hons) Degree in Business and Marketing
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Siddhi Sainani is a business and finance writer and a public relations professional with experience across markets in the UAE, Oman, India and the United States.

At Cavendish Maxwell, Siddhi is responsible for crafting research and marketing communications material for the firm’s various stakeholders including clients and government entities. She also leads the public relations activities for the firm, focusing on media outreach, reputation management and spokesperson profiling.

In her previous roles, Siddhi has reported on the financial markets for news outlets, developed institutional research for several institutions, and undertaken corporate communications initiatives for leading firms across sectors such as real estate, finance, banking, audit and advisory, and technology, among others.

Siddhi has a Bachelor of Mass Media degree with a specialisation in journalism and also holds a Post-Graduate Diploma in Integrated Communications covering advertising, marketing and public relations from Xavier Institute of Communications, Mumbai, India.
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