In this brief article, we’ll be answering some of the frequently asked questions on the subject of commercial property insurance.

What is commercial property insurance?

This type of cover typically affects several areas of a commercial property and the business functions it supports:

• the building’s structure (including fixtures);
• its contents, including stocks and equipment;
• the employers’ liability insurance for employees;
• public liability;
• professional indemnity cover.

There may be a number of combinations applicable here and even additional cover elements included as required.

Won’t it be the property owner’s responsibility to provide some of this cover?

Possibly.

Typically the owner of the bricks and mortar of the building will have structural buildings’ cover in place. That might even be a condition of their mortgage on the property – if they have one.

Do remember though that any such insurance is designed to protect them – not you.

So, your stock and machinery is most unlikely to be covered by the property owner’s policy and that applies to your employees or any members of the public on site. You also won’t be covered for your own personal and business liabilities.

What has employers’ liability insurance got to do with commercial property insurance?

If taken literally, little or nothing. That assumes you interpret the “property” in that to mean the building itself.

However, commercial property usually involves a business operation and that in turn brings a range of additional risks to the business concerned. As a result, it’s not unusual to find a broad range of cover provided under the general heading of “commercial property insurance”.

 Will the building owner’s cover protect my fittings?

That might be extremely unlikely.

When the owner’s insurance company assessed the building and its fittings as part of their original writing of the owner’s policy, the description will have been frozen at that point in time.

If you have since added, presumably with the owner’s permission, numerous fittings then they are at your risk not the owner’s. The owner’s insurance provider might know little or nothing of enhancements and additional fittings you might have included to facilitate your business operations. So, they won’t be covered unless you do so.

At what point are my employees considered to be “onsite” for insurance purposes?

This can be a very tricky area and it might be advisable to consult an employment lawyer and specialist provider of commercial property insurance to be sure.

Typically, you will be liable for your employees from the moment they arrive and report for work on your premises. Their travel to and from their place of normal employment won’t typically be at your risk.

Note some potential complications here though:

• employees who start the working day at home (e.g. in a telephone conference), at your request, might be considered to have reported for work at that point. They will therefore be working while travelling to their normal place of work;
• if you ask an employee to stop on the way and collect a parcel (or similar activity) then from that point on they may be your responsibility, as their work will have commenced;
• car park accidents can be complex for both your employees and the public. A lot will depend upon whether they’re private (i.e. yours in a leasing sense) or public and shared.

Do I need to cover my sub-contractors?

Possibly – it’s hard to say in isolation and without specifics.

If your sub-contractors are larger established firms, they should have their own employers’ liability cover in place. If you’re using agency freelancers or self-employed sole traders, it is much more open to debate and that means risk for you.

It might be prudent to discuss their inclusion in your cover. Your insurance provider should be able to offer further advice.

Do keep in mind too that there is a clear set of legal precedents for companies being held accountable under product and professional liability laws, for actions carried out on their behalf by sub-contractors.

Don’t take chances in this area – make sure you’re covered!