A Guide to Business Interruption Insurance for Commercial Property Owners
Every commercial property owner understands the value of their assets, and will generally ensure that they have both buildings and contents insurance in place to protect them. However, a very significant risk occasionally overlooked by commercial landlords is that of Business Interruption. Business Interruption Insurance is designed to protect your rental income stream in the event that a building becomes temporarily uninhabitable due to an insured claim occurring.
This common oversight is due largely to the misconception that just because a buildings insurance policy covers you against water damage, for example, it will make good all of the consequential losses that arise from the claim. The fact is that it won't, and as the most common causes of business interruption are large water escapes and fires - both of which can make a building uninhabitable for a significant period of time - the rental losses associated with business interruption events can be substantial.
The Financial Damage Caused by Business Interruption
Most commercial landlords assume that a major event such as a fire or large water escape claim won't ever happen to them. The fact is that water escapes in particular are both common and damaging. After all, few water escapes are caused by major 'rainfall events'; most stem from more mundane causes such as a burst pipe or a fractured rooftop water tank.
Yet however low-key the cause of a water damage has been, its effects can be far-reaching. Even a cracked water pipe can cause substantial water damage if it is left unchecked for long enough. The cost of rectifying the physical damage caused by the water will then be covered by your buildings and contents insurance. However, water damage often has long-term consequences: particularly as it may be many months before a building has dried out sufficiently for repair work to even begin, leading to a lengthy and expensive period of business interruption, and a consequential loss of rental income.
The Essential Protection Offered by Business Interruption Insurance
In many cases, Commercial Tenants will have their own Business Interruption Insurance in place, which will cover the cost of rent on an alternative premises while yours is unusable: enabling them to keep paying rent to you in the meantime. This is by no means guaranteed however, and the risk of your tenant simply cancelling their tenancy contract and going elsewhere is high, even when they do have Business Interruption Insurance in place.
Yet even when you don't lose your tenant completely, the consequential losses that commercial landlords can suffer without Business Interruption Insurance are often extremely high.
Working With a Specialist Commercial Insurer
Commercial Insurance differs from private insurance in many ways, so it makes sense to choose an insurer and insurance broker that specialise in meeting the needs of commercial landlords, especially in an area as complex as Business Interruption.
Stride Limited has buildings insurance policies specifically designed for commercial properties, and the experience to tailor a policy that will ensure adequate business interruption cover is in place.
Just as importantly, we have the rare privilege of being a Licensed Lloyd's Cover Holder, as well as being Delegated Underwriters for six of Britain’s leading insurance groups.
This means that when you choose Stride Limited for your Business Interruption insurance, you are dealing with a company with more than 40 years of experience, not to mention access to policies from insurers like AXA, who have won a number of awards for the fairness and efficiency with which they handle every claim.
Business Interruption Insurance That's tailored To Your Needs
A number of factors determine the level of Business Interruption Insurance that you might require, but for commercial landlords the two most important are the level of rental income you receive and the length of time a building might remain unoccupied if an event such as flood or fire caused it to become uninhabitable.
Obviously, it is impossible to predict how long a damaged building might remain uninhabitable, as perils such as fire can lead to every eventuality from light smoke damage to the complete destruction of a building. However, we have the experience to evaluate all of the risks - from likely outcomes to worst case scenarios - enabling us to create a bespoke policy that offers you the peace of mind you need at a competitive price.
So when you are seeking Business Interruption Insurance, it makes sense to deal with an insurer and insurance broker who understand the specific insurance requirements of commercial landlords; and Stride Limited has the expertise to create a suitable insurance policy incorporating the correct level of Business Interruption cover for your needs.