Commercial property insurance protects your company's own assets on the premises: the building, the machinery and equipment, and the stock. This article gives the basic answers to the most common questions – what it covers, how customisable it is, and where its limits lie.
- Property insurance protects the company's own assets – damage you cause to others is a matter for liability insurance.
- The backbone is the classic risk group: fire, storm, water damage from pipes, burglary – the add-ons build on this.
- Settlement is based on correctly stated values: underinsurance can trigger a pro-rata settlement, so keeping your values up to date is key.
What does property insurance protect against?
The vast majority of losses on business premises come from a handful of well-known sources: fire and explosion, storm and hail, water damage from pipes, and burglary and malicious damage. The basic cover of commercial property insurance is built precisely on these classic risks – experience shows this is what companies primarily need, and what they ask about first.
Optional modules can be added to the base cover: glass breakage, machinery breakdown, electronic equipment insurance, and others. Which ones you actually need depends on your activity and your machinery – this is best decided through a survey, not picked from a catalogue. The detailed map: What does it cover – and what not?
The three asset groups
Insurance typically handles the company's assets in three groups: the building (if company-owned), machinery and equipment (from workshop machines to office equipment), and stock (raw materials, work in progress and finished goods, merchandise). Each of the three groups has its own sum insured and, in part, its own rules – the details are set out in the article on the three asset groups.
On leased premises, the building is typically covered by the owner's insurance, while the company needs cover for its own equipment and stock – the article on owned or leased property covers this dividing line.
What determines the settlement – and where can it go wrong?
In the event of a claim, the insurer settles according to the sums and conditions set out in the policy. The two most common sources of disappointment are not a "bad insurer", but an incorrectly stated value and an unfamiliar condition. If the sums insured are below the actual value, the insurer may settle proportionally – this is the question of underinsurance. And if there's no cover for a type of loss, it can't be bought after the fact – which is why the exclusions need to be known before you sign. Applying an exclusion can be disputed (a complaint, the MNB, the Financial Arbitration Board (PBT), the courts), but that's already a long road.
Both can be prevented: with accurate, up-to-date values and knowledge of the conditions. This is the essence of a broker's work: I assess your needs and explain the options – the decision is always yours.
Who should be concerned with this?
Every company that has something to lose on its premises: machinery that would cost weeks and millions to replace, stock that a single water damage event could ruin, a building that forms the framework of the operation. The question is not whether you need property insurance, but whether your existing cover protects the company's current state – that's what the policy review is about.
The good news: advice is free of charge, and the broker's remuneration is paid by the insurer – so the survey gives you a clear picture at no risk.
Have a question specific to your premises? Book a free 20-minute site survey consultation →
