When insuring a commercial premises, understanding the terminology is essential. Many business owners and landlords hear both business buildings insurance and commercial property insurance used in the market, but the terms can refer to different types of cover. Knowing the difference could help ensure the right protection is in place.
Below, we explain the distinctions, what each type of cover might include, and why the differences matter when arranging insurance for your premises.
What Is Business Buildings Insurance?
Business buildings insurance typically refers to cover for the structure of a commercial property. This includes the roof, walls, floors, windows and built-in features such as heating or plumbing systems. The policy could cover the cost of repairing or rebuilding the property following events like fire, flood, storm damage, vandalism or accidental impact.
This type of insurance is often arranged by landlords, property investors or business owners who own the premises. It is generally designed to protect the value of the building as a physical asset.
What Is Commercial Property Insurance?
Commercial property insurance is a broader term that may include buildings cover but can also extend to other types of protection. Depending on the policy, it might include:
- Contents insurance for equipment, stock or furnishings
- Property owners’ liability
- Loss of rent
- Business interruption
- Shop front or signage cover
Some providers use this term to refer to a bundled package of covers for those who own or operate from commercial premises. It may be suited to landlords, retailers, office-based firms or manufacturers, depending on the risk profile.
How the Two Terms Differ
The key difference lies in the scope of the insurance:
- Business buildings insurance usually relates only to the physical structure.
- Commercial property insurance often refers to a wider insurance product that combines buildings, contents and liability cover.
However, naming conventions can vary between insurers, so it is important to review the policy wording or consult a broker for clarity.
Which Type of Cover Might You Need?
The type of insurance required depends on the nature of the property and its use. For example:
- A commercial landlord may prioritise buildings cover and loss of rent protection.
- A business owner who owns their premises may need both buildings and contents insurance.
- An investor with multiple properties may benefit from a tailored commercial property insurance package.
If tenants are occupying the building, landlords may also want to consider property owners’ liability insurance in case a third party is injured due to building defects.
Why Clarity Matters When Arranging Cover
Assuming that a commercial property policy includes all necessary elements could lead to underinsurance. For instance, a landlord may take out commercial property insurance expecting full structural cover, but the policy may only apply to contents or liability.
Conversely, a buildings-only policy may not include protection for valuable contents or tenant-related risks.
A broker can help review the specific needs of the property and ensure the cover arranged reflects those requirements. This could help reduce exposure and avoid costly gaps in protection.