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Your small business means everything to you, which is why it’s so important to protect every aspect of your business from harm. The best way to do that is by taking out a suite of robust business insurance policies.
When it comes to business insurance, you can’t consider yourself properly protected unless you have cover for your business premises … and everything inside.
There are two policies, often packaged together, which can provide protection for your premises and peace of mind for you.
Commercial building insurance and business contents insurance can protect your business premises and their contents, respectively, from harm, whether malicious or accidental. Read on to arm yourself with the knowledge you need to protect your livelihood.
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Commercial buildings and contents insurance
Business contents insurance and commercial building insurance are often sold together, as looking after your premises generally also involves looking after everything inside.
Depending on your insurer and your chosen policy package, you might find this handy pair of insurance policies packaged as commercial buildings and contents insurance.
If you encounter that term, know that you’re probably dealing with joint business contents insurance and commercial building insurance.
What is business contents insurance?
Just as you would take out a domestic contents insurance policy to protect the objects in your home, business contents insurance is there to cover equipment stored in your offices or company premises.
If any contents insured by your business are damaged, destroyed, lost or stolen, business contents insurance can compensate you for the cost of replacing them.
What does business contents insurance cover?
Business contents insurance is there to protect items kept in your work premises from accidents, theft, fire and water damage.
Business contents insurance could include protections for:
- business equipment (things like computers and office furniture)
- fixtures and fittings
- manufacturing equipment
- tools
- stock
- documents
- staff or client belongings left on the premises
Business contents insurance may also provide cover for your shop front – as well as additional cover for any high-risk stock on your premises.
Some more thorough policies may also cover cash, the deterioration of your stock over time and any goods damaged, destroyed or stolen in transit.
And if your business holds more stock at busy times of year – like Christmas, say – some business contents insurance policies allow for seasonal increases in stock cover… giving you year-round peace of mind.
In some cases, business contents insurance can also cover the loss of business data and software – provided it was lost as a result of physical damage (such as a fire in the office) rather than a cyber attack or accidental erasure.
Business contents insurance when you work from home
Just because you run a small business doesn’t mean you have business premises. Perhaps you work from home instead.
You may already have home contents insurance, but if you store stock or tools at your residential address, your work-related equipment won’t necessarily be covered by your domestic contents insurance policy.
Make sure you tell your insurance provider you’re running a business from your home – and while you’re at it, ask whether you can extend your home contents insurance to cover business equipment.
If not, you might need to take out an additional business contents insurance policy to cover any business belongings, stock or equipment stored at home.
» MORE: Home business insurance explained
What isn’t covered by business contents insurance?
There are some situations that business contents insurance potentially won’t cover
For example, general wear and tear to your fixtures and fittings will likely not be included in your policy.
To make a claim relating to theft, you would need to prove that all the proper security steps were followed, such as locked doors and windows. Where fraud is involved, you may have a limited window to report the loss before your claim is invalidated.
Don’t expect your business contents insurer to pay out for loss of equipment due to inherent defects, rot, fungus, mould, vermin or infestation, or for a mechanical or electrical breakdown.
And bear in mind that your business will only be covered for claims up to your excess.
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How much is business contents insurance?
No two businesses are alike, and so the specific costs and coverage of your business insurance are likely to depend on the context of your business.
Generally speaking, the cost of your business contents insurance premium may be affected by:
- your industry
- the size of your business
- whether you work from home
- the nature of your business premises
- your location of your premises
- what exactly you need covered
- the value of your stock and equipment
- any previous claims
What is commercial building insurance?
Assuming your business has commercial premises (i.e., you don’t run your business entirely from home), you need to think seriously about protecting the property from which you operate.
Damage to your commercial property can cost thousands and thousands of pounds to fix, often while leaving you to deal with a major disruption to your business activities.
That is why you might want to consider taking out a commercial building insurance policy – also known as commercial property insurance or business buildings insurance.
As well as insuring the contents of your business premises with business contents insurance, insuring the property itself with commercial building insurance can provide peace of mind and, in the event of a disaster or mishap, remove some of the financial stress from the situation.
Having the right policy in place could spare you the financial pain of repairs and other costs related to accidental and criminal damage to your business property.
What does commercial building insurance cover?
A commercial building insurance policy covers the repair and rebuilding costs associated with:
- Accidental damage, for example, incurred during floods and storms, as well as by burst pipes and fires.
- Criminal damage, such as vandalism or smashed windows and broken doors during a riot or break-in.
- ‘Trace and access’, which means locating gas and water leaks hidden underground in cables, wires and pipes.
- Subsidence.
If you are in rented business premises, it is your landlord’s responsibility to source commercial building insurance. However, you would need to secure your own business contents insurance to protect possessions, tools or equipment belonging to your business.
What isn’t covered by commercial building insurance?
The specifics of your cover will depend on your exact policy, but as a general rule, building insurance is unlikely to cover costs associated with general wear and tear.
Acts of war and terrorism are also likely to fall outside the scope of property insurance.
Commercial building insurance is also unlikely to cover the loss of income potentially suffered if your business premises is damaged or disrupted to the extent that you can no longer carry out your normal operations.
For that you would instead need business interruption insurance.
How much is commercial building insurance?
Before you take out commercial building insurance, it is of the utmost importance that you accurately work out the total cost of rebuilding your commercial property.
That doesn’t mean how much you bought it for, or its current market value, but the total price of the labour, materials and time it would take to rebuild it from the ground up. This should give you an indication of how much cover you need.
That number is also likely to be a key element in deciding your commercial building insurance premium. Other factors include:
- What industry your business is in, and the unique risks attached.
- Where your commercial property is located.
- How many premises you are looking to insure.
- The level of coverage you select.
- The size of your business.
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