Commercial landlord insurance

A steady guide to protecting commercial property

Commercial landlord insurance helps protect the building you let to businesses, along with your rental income if damage temporarily stops tenants trading. It is a package of covers designed to handle real-world risks like fire, storm, theft, liability claims, and equipment breakdown. For many landlords, it is the safety net that keeps cash flow stable while repairs are made and tenants get back on their feet.

Insurance can offer real financial protection, but only when you understand what is covered - and where the gaps are. In the UK, rebuild costs strongly influence premiums. In 2025, average annual premiums for commercial properties commonly range from a little over two hundred pounds to several hundred, rising with the building’s rebuild value. Accurate valuations matter because underinsurance can reduce any payout at the moment you need it most.

Market conditions also play a role. Property insurance rates have been declining in 2025 due to increased competition, yet severe weather and higher claim volumes still challenge owners to keep cover adequate. Many UK SMEs remain underinsured, which can impact landlords if tenants cannot recover from a loss. Clear lease terms and sensible checks help protect rental income and limit disputes.

This guide explains the core protections, how claims typically work, what drives price, and what to check before you buy. It does not sell any specific policy. Instead, it sets out the facts in plain English so you can choose cover that genuinely fits your property and your risk appetite.

Strong insurance starts with correct rebuild values and transparent lease wording.

What is typically covered and how claims work

A typical commercial landlord policy centres on buildings insurance. It covers the cost to repair or rebuild after insured events such as fire, storm, flood, escape of water, malicious damage, and theft. Many packages include business interruption cover that replaces lost rent while repairs are carried out, engineering cover for plant like lifts or boilers, and public property owner’s liability with limits that commonly reach up to £10 million. Glass, signage, and landlord’s fixtures and fittings are often included or can be added.

Exclusions usually relate to gradual wear and tear, poor maintenance, and pre-existing defects. Flood cover may be limited in very high-risk zones. Subsidence may carry higher excesses or specific conditions, and unoccupied periods often require additional security measures or restricted cover. If a tenant’s activities materially increase hazard - for example hot works or storage of flammables - the insurer must know.

Claiming usually involves notifying the insurer promptly, taking reasonable steps to prevent further damage, and providing evidence such as photos, invoices, lease details, and professional estimates. For large losses, a loss adjuster will assess damage and review compliance with policy conditions. Business interruption claims hinge on accurate rent schedules and a realistic maximum indemnity period. A clear, up-to-date rebuild valuation helps avoid average being applied, which would otherwise reduce the payout if you are underinsured.

Simple example: a fire damages a warehouse roof. Buildings cover pays for repairs. If tenants cannot occupy, business interruption cover replaces the rent for the agreed period while works are completed.

Who genuinely benefits from this cover

This insurance suits freeholders and long-lease landlords who let shops, offices, warehouses, light industrial units, and mixed-use premises. It is especially valuable where rental income supports mortgages, where a single property accounts for a large share of your portfolio income, or where a tenant’s operations make downtime particularly costly. Landlords undertaking improvements or structural works can benefit from adding construction-related covers during projects.

It may be less necessary for owner-occupiers whose needs are met by a standard commercial combined policy designed for trading businesses. Likewise, if a property is being redeveloped and not yet let, a specialist site or contractors’ policy may be more appropriate until practical completion. For multi-tenant buildings, coordinated cover ensures consistent protection and avoids gaps between landlord and tenant policies.

If rental income is important to your finances, business interruption cover deserves careful attention.

Choose your cover level with confidence

1. Basic buildings only

   • Covers the structure against named perils like fire, storm, and theft. May exclude accidental damage and have limited glass or signage cover.
   • Best for lower-risk, modern buildings with low exposure and simple leases.

2. Standard buildings plus rent protection

   • Adds business interruption for loss of rent, typically with 12-36 months indemnity. Includes property owner’s liability and options for accidental damage.
   • Suits most let offices, retail, and light industrial units needing balanced protection.

3. Enhanced comprehensive package

   • Wider accidental damage, higher liability limits, equipment breakdown for plant, and cover for landscaped areas, solar panels, EV chargers, and tenant improvements where the lease requires.
   • Ideal for higher-value portfolios, single high-spec assets, or properties with complex plant.

4. Optional add-ons

   • Terrorism cover for certified events where required by lenders or covenants.
   • Subsidence where not automatically included, with appropriate excess.
   • Legal expenses for property disputes, arrears recovery, or eviction proceedings.
   • Loss recovery assistance to fund expert claims support.
   • Non-damage denial of access and utilities extension for BI in urban centres.
   • Engineering inspection for lifts, boilers, and pressure plant to meet statutory duties.

Match the indemnity period to realistic repair times, including planning, tendering, and lead times for materials.

What it costs and why prices change

These figures reflect UK market patterns in 2025. Premiums vary by insurer and risk profile. A detailed rebuild assessment and clear tenant disclosures typically produce the most reliable quotes.

Are you eligible and what insurers look for

Most UK commercial landlords can apply, including individuals, partnerships, and limited companies. Insurers typically require the full address, construction details, year built, listed status, fire and security protections, and accurate rebuild cost from a chartered surveyor or RSCS-based tool. They also ask about tenancy schedules, activities carried out, lease responsibilities for improvements, and unoccupied periods.

Expect to provide recent rent schedules, mortgage details, and any prior claims within five years. Properties with significant existing damage, extensive combustible cladding, or prolonged unoccupancy may face higher excesses, restricted perils, or be declined. Material non-disclosure - such as previous fires, subsidence history, or hazardous tenant processes - can invalidate cover. For high-value assets, insurers may require risk surveys and compliance with recommendations.

From quote to claim in clear steps

1. Gather property details, accurate rebuild value, tenancy schedule, and risk protections.
2. Request multiple like-for-like quotes with the same sums and indemnity period.
3. Compare perils covered, exclusions, excesses, and special conditions line by line.
4. Confirm material facts about tenants, unoccupied periods, and any construction works.
5. Purchase the policy and store documents, schedules, and endorsements securely.
6. Implement required risk improvements within stated timeframes and keep records.
7. For a loss, mitigate damage, notify the insurer promptly, and document evidence.
8. Track repairs and rent recovery against the agreed indemnity period and limits.

Balanced view - advantages and watch-outs

Key checks before you press buy

Review the declared rebuild cost using a professional valuation or recognised tool and update it for current materials and labour. Confirm the business interruption basis is loss of rent and choose an indemnity period that reflects real repair timelines, including planning, tenders, and lead times. Check excesses for each peril, especially escape of water, flood, and subsidence. Read exclusions and any warranties or conditions that require specific actions, such as weekly inspections of unoccupied premises or maintaining alarms.

Ensure lease wording is clear on who insures what, how premiums and commissions are disclosed, and how tenant improvements are treated. With market rates currently softening, focus on cover quality rather than chasing the lowest price. Keep documentation organised so claims can be evidenced quickly if needed.

Alternatives and related protections

1. Commercial combined insurance for owner-occupiers - covers buildings, stock, and business activities when you trade from the premises.
2. Construction or contractors’ all risks - for refurbishments, extensions, and structural works before the property is let.
3. Professional indemnity - useful if you provide design, surveying, or advisory services alongside ownership.
4. Cyber insurance - relevant where landlord systems hold tenant data or operate smart building controls.
5. Directors’ and officers’ liability - for property companies and RTMs managing multiple assets.

Frequently asked questions

Q: Do I need business interruption if tenants insure their own contents? A: Yes, if you rely on rental income. Business interruption for loss of rent protects your income when the building is unusable after insured damage, regardless of tenants’ contents cover.

Q: How often should I update my rebuild value? A: Review annually and obtain a professional valuation every few years or after significant alterations. Index-linking helps, but it does not replace a proper assessment of current costs.

Q: Are premiums going up or down in 2025? A: Overall, UK property rates have been trending downward due to increased insurer capacity. Even so, individual premiums still depend on your risk features and claims history.

Q: What are common reasons claims are reduced? A: Underinsurance, failure to maintain the property, unreported material changes, and non-compliance with policy conditions. Accurate declarations and timely maintenance help protect claim outcomes.

Q: Should I require tenants to hold their own insurance? A: It is prudent for tenants to insure their contents and liabilities. Landlords should also verify compliance to reduce downtime and protect rental income in the event of a loss.

Q: Can I pass insurance costs to tenants? A: Only as permitted by the lease and subject to clear disclosure. Recent UK rulings emphasise transparency on commissions and charges to avoid disputes and potential repayments.

Q: Is flood cover always included? A: Not always. In higher-risk zones, cover may be limited, cost more, or require higher excesses. Discuss local flood data and defences with the insurer.

What to do next

Take stock of your property details, confirm an accurate rebuild value, and list tenant activities. Compare like-for-like quotes with the same sums insured and indemnity period, focusing on wording quality. Keep the process measured and transparent so you can buy cover that fits your property and your risk appetite.

Next step: gather your documents, confirm valuations, and request comparable quotes from reputable providers.

Important information

This guide is general information for UK readers and not personal financial advice. Policy terms, cover limits, and pricing vary by insurer. Always read the schedule, endorsements, and policy wording carefully and seek professional advice if you are unsure.