Business Buildings and Contents Insurance Explained

Accidents happen, and when they affect your business premises, they can be expensive. Business buildings and contents insurance can help you sleep easier at night, covering the costs of repairing, rebuilding and replacing damaged property and lost goods.

Connor Campbell Published on 21 January 2022.
Business Buildings and Contents Insurance Explained

It is just as important to protect your business premises and everything contained within, as it is to make sure your employees and customers are covered in the event of an accident, malicious damage or a natural disaster. Often packaged together, business buildings and contents insurance do exactly that.

Read on to find out more about what business contents insurance and commercial building insurance actually cover, how much they cost, and when you might need them.

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What is business contents insurance?

Just as you would protect the objects in your home, business contents insurance is there to compensate you for the cost of replacing your items in the event they are damaged, destroyed, lost or stolen at work.

What does business contents insurance cover?

Depending on the breadth of the policy you take out, your business contents insurance may cover the cost of replacing:

  • stock and other promotional merchandise
  • items or equipment used off-site
  • furniture, fixtures and fittings
  • shop fronts, windows and displays
  • sanitaryware, such as toilets and sinks
  • personal items belonging to you, your employees, customers and visitors against damage and theft

Some, more thorough, policies may also include cover for loss of money, the deterioration of your stock over time, and any goods damaged, destroyed or stolen in transit.

You should also carefully read the small print to see how many consecutive days your business premises can be unoccupied before the policy is void. This is especially important now that so many people are choosing to work from home, often leaving commercial properties empty for longer.

But business contents insurance doesn’t just apply to your typical business premises, such as a shop or office.

If you work from home, and particularly if you store stock where you live, you can get a business contents insurance policy that will better provide the cover you need when compared to a standard home contents insurance policy. Similarly, if your employees also work from home, your policy can potentially cover them as well.

There are situations that business contents insurance potentially won’t cover, however. General wear and tear to your fixtures and fittings will likely not be included in your policy. And 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.

Business contents insurance examples

From a sole trader working at home to a small business such as a shop or restaurant or a larger enterprise based in an office, a good business contents insurance policy can be pretty elastic in what it covers.

Say you run a home-delivery bakery from your own kitchen, and there is a fire. Business contents insurance would pay for replacing the appliances you need to do your job.

The same is true if you are self-employed, and your laptop is damaged or stolen at home. With the right level of coverage, you would even be compensated if your employee’s laptop was nicked from their house, as long as they also worked from home.

If your shop front, meanwhile, was smashed overnight, some business contents insurance policies could help get the glass window replaced within 24 hours.

And if your stock was damaged by a flood in your warehouse, your business contents policy would cover that as well.

How much is business contents insurance?

The cost of your business contents insurance premium will be informed by, among other factors:

  • your industry
  • the size of your business
  • your location, e.g. at home or a shop/office
  • how many properties you want covered
  • what exactly you need covered, e.g. stock versus a laptop
  • any previous claims

What is commercial building insurance?

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. It can remove some of the financial stress, paying for 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 smashed windows and broken doors during a riot.
  • ‘Trace and access’, which means locating gas and water leaks hidden underground in cables, wires and pipes.

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.

But, unlike with business contents insurance, if you and your employees work from home, a standard home insurance policy may suffice.

And again, as with business contents insurance, you should check how many days your business premises can remain unoccupied before the commercial building insurance is no longer valid.

What commercial building insurance won’t cover is 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.

Commercial building insurance examples

The scale of damage covered by commercial building insurance can vary greatly, meaning it is a must-have for small businesses and bigger companies alike.

If you own a restaurant and the kitchen floods due to a burst pipe, commercial building insurance would pay for the repairs.

Or, if your shop front was graffitied, your commercial building insurance policy may potentially cover the cleaning costs.

And, if faced with a worst case scenario, for example the office block you own burns down in a fire, commercial building insurance will pay for the rebuild, as long as you have accurately calculated the rebuilding cost at the start of your policy.

How much is commercial business insurance?

As mentioned, 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.

What that number ends up being is 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.

» MORE: Do I need business insurance?

Image source: Getty Images

About the author:

Connor is a writer and spokesperson for NerdWallet. Previously at Spreadex, his market commentary has been quoted in the likes of the BBC, The Guardian, Evening Standard, Reuters and The Independent. Read more

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