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Why Standard Landlord Insurance Isn’t Enough For Office Landlords

By Darragh Timlin on October 12th, 2022

Standard landlord insurance helps to protect landlords letting out domestic properties to tenants. Landlords will need to take out cover such as buildings insurance and contents insurance to help cover the costs of repairs and rebuilds of their property should it be devastated by fire or flood, rendering it unsafe or unliveable for their tenants.

However, commercial landlord insurance differs from standard landlord insurance, and property owners need to know the difference. Commercial landlords that are letting out office space face very different risks and challenges compared to residential landlords, so it is only fitting that the type of insurance needed to protect yourself and your interests should be tailored to meet your very different needs.

Is Landlord Insurance Enough For Commercial Landlords?

Residential landlord insurance isn’t designed to cover commercial lettings where your rental activities differ from domestic tenants. By nature, an office environment will carry many more health and safety risks than domestic premises. Your office will be frequented daily by many more people and contain a lot more electrical equipment that poses a higher fire risk.

While landlord insurance isn’t a legal requirement, if you are planning to let out a mortgaged property, your lender may insist that you take out landlord insurance before you let to your tenants. Failure to do so can mean you are breaking your mortgage’s terms.

However, you should ensure that your policy is built to cover insurance for office landlords rather than residential landlords. Otherwise, you won’t be adequately covered should anything serious happen to your property where you need to make a claim on your insurance.

What’s The Difference Between Commercial & Residential Landlord Insurance?

The difference between residential cover for domestic landlords and insurance for office landlords is the need to cover a very different set of risks. Taking out residential landlord insurance for flats is recommended if you wish to lease to tenants looking for a place to live.

You will still need to cover yourself against the same risks regardless of whether or not you choose to rent a property to a family member.

While you may not want to take out insurance cover such as tenant default insurance and legal expenses insurance because you trust your family member, you can still cover your basic needs, such as buildings insurance and property owners’ liability insurance.

As a commercial landlord wanting to let out office space for business use, the policy you require will be the same for basic cover to protect your property against fire and flood. However, commercial landlord insurance goes further as it is geared towards business practices in particular.

There is a higher likelihood that your commercial tenants will have more keys to your property than a domestic tenant renting a house or flat. Your office landlord insurance will help cover the costs of changing the locks quickly, should keys be lost and the security of your property is compromised.

What Kinds of Insurance Should Office Landlords Have?

A common question asked is, do landlords have to have insurance, and if so, what kind of office landlord insurance should I get? Here is a rundown of the most essential insurance cover commercial landlords should protect themselves with:

  • Commercial Buildings’ Insurance: Buildings insurance is essential no matter what type of landlord you are. This will cover the costs caused by damage from fire, flood, and even vandalism or malicious damage caused by the occupants. We highly recommend getting building insurance as an office landlord due to the higher risks involved with the nature of the activities carried out on your property.
  • Accidental Damage Protection: Accidents happen no matter how careful your commercial tenants are. Accidental damage insurance is part of your contents insurance. Still, it covers things not normally covered by standard contents insurance, such as unintentional spills that ruin a new carpet, damage to hard flooring, broken windows etc.
  • Commercial landlords’ content insurance: Taking out contents insurance on your office property will protect you against loss or damage to goods and furniture. Many commercial landlords will rent out fully furnished office space, as it is more convenient for commercial tenants wanting to move in and operate their business from day one. This cover will protect you against damage or loss to your furnishings, but it won’t cover against long-term wear and tear.
  • Rental Income Protection Insurance: Rental protection insurance, or landlord rent guarantee insurance, offers protection against loss of rental income. This can happen if your property suffers severe damage caused by a fire or flood where your commercial tenants need to move out temporarily and won’t be expected to pay rent.

Can I Get Mixed Commercial-Residential Property Insurance?

Many commercial properties, especially older town and city centre buildings, were built as retail premises with residential flats above to house the business owner.

These days commercial landlords can bring in rental income from both a retail or office letting, plus a residential letting from an attached flat or living space, which can be let separately from the commercial business premises.

It can be frustrating to take out separate insurance to cover the two types of property, so it makes sense not to split the two and instead take out one policy to protect both. This makes it easier to manage and can be more cost-effective because you will be dealing with one provider with less admin involved.

Who can benefit from mixed commercial property insurance?

Landlords with mixed-used property have more complex insurance needs compared to residential or commercial landlords. Taking out mixed-used commercial property insurance will benefit:

  • Freehold landlords
  • Leasehold landlords
  • Property development companies
  • Property management companies

Conclusion

Many types of commercial premises can be covered by landlord insurance, but you need to ensure that you take out the correct type of insurance cover to meet your needs. Domestic home insurance is for your residential tenants to take out to protect their possessions. It isn’t suitable insurance for a landlord to take out to protect their rental property.

Residential landlord insurance is ideal for landlords letting to domestic tenants, but a commercial landlord’s responsibilities differ and they will need more specialist cover. This is why office landlord insurance is a better choice if you plan to let out office space for business use, as it will meet your needs better as a commercial landlord.

Insurance for office landlords is protection that you may struggle to find without the help of a specialist business insurance company, such as Brisco Business Insurance. Do not hesitate to contact us if you need help with your business insurance needs. Find the ideal fit for your needs by exploring the various types of business insurance that Brisco Business offers.

Darragh Timlin

With over 25 years’ experience, Darragh is an expert in all things insurance. Starting his career in commercial property underwriting, Darragh has worked for a number of global insurers and is now Managing Director of Brisco Business, part of the wider Henry Seymour Group.

All articles by Darragh Timlin

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