COVERTRADE SERVICES
Commercial Let Insurance
Specialised coverage for your commercial properties and business spaces.
Who Insures What Under A Commercial Lease?
On a standard full repairing and insuring lease, the landlord insures the building and recovers the cost from the tenant as insurance rent. The tenant does not arrange buildings cover at all. They pay for it through the lease, and insure their own contents, stock, business interruption and liability.
That split is where the trouble starts after a fire, because paying insurance rent feels like being insured. It is not. Everything the tenant brought into the building is the tenant's to cover, and a great many discover that at the worst possible moment.
It is not always that way round either. On a full internal repairing lease, or where a tenant holds a whole building on a long lease, the obligation can sit with the tenant. The lease decides it rather than custom, which is why reading the insurance clause is worth the ten minutes.
Loss Of Rent, And Getting The Period Right
Loss of rent replaces your income while the property cannot be occupied after an insured loss, so a fire does not stop the rent as well as the trading. On a commercial let it is usually the section that decides whether a serious claim is survivable.
The part to get right is the indemnity period, and twelve months ( the common default) is frequently too short. The clock does not start with the builders. It runs from the loss through making the site safe, agreeing the claim, obtaining planning and building consents, tendering, rebuilding, and then finding a new tenant if the old one has gone elsewhere in the meantime.
On a commercial building, twenty-four or thirty-six months is often the realistic figure. Ask yourself how long it would genuinely take to have the rent flowing again, then insure for that rather than for the construction programme.
When A Unit Falls Empty
A void changes your cover materially, and the obligation to tell your insurer sits with you. Most property owner policies restrict cover once a unit has stood empty for a set period (commonly 30 or 45 days) typically reducing to fire, lightning, explosion and aircraft only. Theft, escape of water and malicious damage, which are precisely the risks an empty building attracts, drop away.
Conditions follow, and they are enforced: documented inspections at set intervals, the water supply drained down, letterboxes sealed, alarms maintained, and the property properly secured. Keep a written record of the inspections, because at claim time the record is the evidence.
Failing to notify a void is one of the most common reasons a commercial property claim is declined. If a tenant is leaving, tell us then rather than at renewal, and if the unit will be empty for a while, unoccupied property cover is usually the better answer than a restricted policy.
Before Renewal
Five things worth confirming on a commercial let policy.
- Reinstatement cost, including fees and clearance
- Loss of rent period. 12 months is often short
- Any unit empty, and for how long
- What each tenant actually does now
- Property owners’ liability limit
- Flexible payment options
- Dedicated account managers
- Out-of-hours contact should you need to make a claim or just have a question
- A quick and easy, pain-free service
- An excellent customer experience
Your Tenant’s Trade Is Most Of The Premium
Insurers rate a commercial let on what happens inside it far more than on the building itself. A solicitor’s office and a takeaway with a deep fat fryer can occupy identical units and present completely different fire risks, and the premium follows the trade rather than the postcode.
That makes changes of tenant, sublettings and changes of use things to declare rather than administrative details. A tenant quietly broadening what they do (adding cooking, taking on storage, subletting a floor) can affect your cover even though you had no hand in it. It is one of the practical reasons the permitted use clause in a lease is worth enforcing rather than letting drift.
Setting The Rebuild Figure
The sum insured on a commercial building is its reinstatement cost, not what it would sell for and not what you paid. It has to include demolition and site clearance, professional fees, and the cost of meeting current building regulations when rebuilding, which on an older building can be a long way above the original construction standard.
Get it wrong and an average condition, which most policies of this kind carry, can cut the settlement proportionately: insure a £1m building for £600,000 and a £300,000 claim is settled at £180,000. Construction costs have moved sharply, so figures set a few years ago are routinely short, and index-linking alone rarely closes the gap. A professional reinstatement valuation is the reliable answer on anything substantial.
Property Owners’ Liability
As owner you retain a duty of care for the parts of the property you control, and on a multi-let building that means the common parts: entrances, stairs, lifts, car parks, the roof. A visitor injured on a communal staircase claims against the landlord, not the tenant.
£5m is the usual limit and £10m is common where the public has free access. It also matters that contractors you engage for maintenance carry their own cover, because a claim arising from their work will find its way to you first if they do not. Premiums can be paid monthly or annually.
What We Need To Quote
The address and construction of the building, its reinstatement cost, what your tenants do and how much of the building each occupies, the annual rent and how long re-letting would realistically take, whether any part is currently empty, the type of lease and who it makes responsible for insuring, and your claims record for the last three to five years.
Protect Your Commercial Properties
So why wait? Protect your commercial properties today with CoverTrade's comprehensive insurance coverage. Contact us now to schedule a consultation with one of our expert advisors.
Cover that often goes with this
The gaps we most often find sitting next to this policy.
- Mixed use property insuranceAs soon as anyone lives above the commercial part, it is rated differently.
- Unoccupied property insuranceCommercial voids run long, and cover restricts quickly once the unit is empty.
Common questions
Who insures the building under a commercial lease, the landlord or the tenant?+
On a standard full repairing and insuring lease the landlord insures the building and recovers the cost from the tenant as insurance rent. The tenant does not arrange buildings cover at all; they pay for it through the lease. The tenant insures their own contents, stock, business interruption and liability. On a full internal repairing lease, or where the tenant holds the whole building on a long lease, the obligation can sit the other way round, so the lease decides it rather than custom.
What is insurance rent?+
It is the landlord’s buildings premium recharged to the tenant, usually annually alongside the rent and often with the service charge. It is not a separate policy and it gives the tenant no rights under the landlord’s policy unless they are named on it. Tenants are frequently surprised by it at renewal, particularly after a premium increase, and leases normally allow the landlord to recover the full cost.
Does the landlord’s policy cover the tenant’s stock and contents?+
No. The landlord’s policy covers the building and the landlord’s own interest. Everything the tenant brings in (stock, fixtures they installed, equipment, and their liability to customers and staff) is the tenant’s to insure. This is the gap that causes the most trouble after a fire, when a tenant discovers that paying insurance rent bought them nothing for their own losses.
What is loss of rent cover and how long should it run?+
It replaces the rent while the property cannot be occupied after an insured loss, so the landlord keeps their income during reinstatement. The indemnity period is the part to get right: it should reflect how long it would realistically take to obtain consents, rebuild and re-let, not just the construction time. Twelve months is a common default and is frequently too short for a commercial building. Twenty-four or thirty-six months is often more realistic.
What happens to my cover if the unit becomes empty?+
It changes materially, and you must tell your insurer. Most property owner policies restrict cover once a property has been unoccupied for a set period, typically 30 or 45 days: commonly dropping to fire, lightning, explosion and aircraft only, with theft, escape of water and malicious damage excluded. Conditions usually follow: regular documented inspections, the water supply drained down, letterboxes sealed, alarms maintained. Not notifying a void is one of the most common reasons a commercial property claim is declined.
Does what my tenant does affect the premium?+
Substantially, and more than the building itself in many cases. Insurers rate on the trade carried on inside: a solicitor’s office and a takeaway with a deep fat fryer in the same unit are very different fire risks. Changes of tenant, sublettings and changes of use all need declaring. A tenant altering their business without telling you can affect your cover even though you had no part in it, which is why lease terms about permitted use are worth enforcing.
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