Whether you are a Developer, Property Manager, or Property owner, it is important to protect your investments from the many risks affecting Commercial Properties in Australia.
The foundation of a Commercial Property policy is based on Building Insurance, Rental Income, and Public Liability; however, Commercial Property Insurance has evolved to include a wider scope of coverages, such as:
Complex coverage for large machinery, plant, and mechanical equipment, with options to include coverage for the resultant business interruption costs.
Protection against the loss of income resulting from tenant eviction, receivership, cease of rental payment, and tenants vacating the property.
Coverage for the costs required to attract new tenants to a property following a loss, including cash payment, reduction of rent, and additional fit-out expenses.
Covers the cost of professional fees for the preparation, presentation and settlement negotiations for various types of large commercial property claims.
Allocates additional funds to the development of a property to attract new tenants if a property is damaged or destroyed.
Coverage for loss of rental income or disruptions in normal business operations if caused by the damage to a property adjacent from the insured property.
Provides coverage for the loss of rental income or disruptions in normal business operations should a key tenant vacate the premises (ex. A large supermarket in a small suburban shopping centre).
This covers the expenditure necessary to induce tenants to lease or re-lease a building following reinstatement after a loss (including partial leases).
This covers certain after-loss expenses such as cleaning, taxes, pest extermination, building maintenance, and electricity.
To ensure a claim is fully paid by the insurer, it is important that the property is valued at its full replacement cost.
We recommend having a professional insurance replacement cost valuation completed every 3 years to keep the value up to date.
When calculating the annual rental income for a property, one should factor in
1. Indemnity (recovery) Period, consider the following:
– Time to demolish and rebuild.
– Time for Council approvals.
– Time to re-tenant the building
– Minimum of 24 months recommended, your rental income will be covered for the period you select.
2. Outgoings, which includes parking and utilities.
3. Escalation costs over this period.
An Industrial Special Risk policy provides property damage and business interruption cover by any cause not specifically excluded by the policy. This all-encompassing policy is designed for mid to high-value properties, typically from $5,000,000 upwards.
The Business Package offers protection for small to medium size properties against insured perils stated in the policy wording (fire, theft, vandalism, impact damage, water damage, etc ). Typically not as comprehensive as the ISR policy, but can be more price competitive if the property is valued under $8,000,000.
It is the legal responsibility of the person applying for insurance to disclose relevant information to the insurer before a contract is entered into.
The insurer is within their rights to remove themselves from a policy if they become aware of a risk they did not previously know of.
The term ‘Combustible Cladding’ has been mentioned a lot in the property industry over the last 12-18 months, and rightly so. The last 2 decades has seen major building fires around the world, with occurrences directly related to Aluminum Composite
Whether you’re a developer, property manager or owner, you’ll know how important it is to safeguard your commercial property with the right insurance – particularly if it’s a property that has been left vacant for an extended period of time.
“Correctly Insured” is a term that is often thrown around and not always taken seriously. The truth is, insurance policies are not always structured correctly, especially when you're talking about Commercial Property.
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