Commercial property insurance

A straightforward guide to protecting your premises and income

Commercial property insurance is designed to protect the fabric of your building, its fixtures, and your income if the property becomes unusable after an insured event. For many UK landlords and owner-occupiers, it is a core part of financial resilience. Floods, storms, fires and accidental damage can create sudden repair bills and lost rental income. Having the right cover in place helps you manage these risks with clarity and control.

Across the UK, policies usually include building cover, property owners’ liability and business interruption. Liability can extend up to £10 million, which protects you if a visitor or third party is injured or their property is damaged in connection with your building. Business interruption can replace lost rental income while repairs are underway. Some policies also cover engineering damage to on-site machinery, which matters for lifts, boilers or plant rooms.

Prices vary. As a guide, properties with a £200,000 rebuild cost may see average annual premiums around £218, while £1 million rebuilds can average around £758. Market conditions change, and rates have softened recently due to increased insurer capacity, so it may be a good time to review terms. Even so, the priority should be adequate cover, not just the cheapest price.

Severe weather is a growing reality in the UK and is driving more claims, with average business property claims around £17,400. This guide explains how the cover works, where limits apply and the steps you can take to avoid underinsurance. Our aim is simple: clear, practical information so you can make a safe, informed decision.

Insurance should match the true cost to rebuild, not the market value.

What is covered in practice - and where limits apply

At its core, cover includes damage to the structure of the building from insured perils such as fire, storm, flood, escape of water, and accidental damage. Policies often extend to outbuildings, forecourts and car parks, plus fixtures like lifts or built-in systems. Property owners’ liability protects against injury or property damage claims from third parties. Business interruption can replace lost rental income and some increased costs of working while you restore the property after an insured event. Engineering damage cover can protect against sudden mechanical or electrical breakdown of site equipment.

There are important boundaries. Wear and tear, gradual deterioration and poor maintenance are usually excluded. Flood cover may have conditions in high-risk zones. Subsidence often carries a higher excess and may require prior surveys. If the building is unoccupied for extended periods, cover can be restricted unless you follow specific security and inspection requirements. Business interruption typically pays for a defined indemnity period - for example 12, 24 or 36 months - and that period must be realistic for planning approval, materials and contractor availability.

Claims generally involve notifying your insurer quickly, taking reasonable steps to prevent further damage and supplying estimates or invoices for repairs. Loss adjusters may be appointed for larger claims. If your sum insured is too low compared with the true rebuild cost, an average clause can reduce your payout proportionally. For example, if the property is insured for only two thirds of its true rebuild value, any claim payment could be reduced by one third. This is why accurate valuations are essential.

Who gains most from this cover

This insurance is well suited to commercial landlords, property investors and owner-occupiers with premises such as offices, retail units, warehouses, light industrial sites, hospitality venues and mixed-use buildings. If you rely on rental income or need the site operational to earn revenue, the combination of building cover and business interruption helps protect cash flow during repairs.

It can also suit lenders’ requirements, satisfy lease obligations, and protect directors against avoidable financial losses linked to property damage or liability claims. If you hold a long lease with responsibility for structural repairs, you may also need this cover.

It may be less essential where a tenant is fully responsible for the building insurance under the lease and you have confirmed adequate sums insured, indemnity periods and liability limits. Equally, very small holdings with low rebuild values and minimal public exposure may decide to self-insure some risks, but only after understanding the potential impact of severe weather, fires or third-party injury claims.

Choosing cover levels with confidence

1. Basic - Buildings only

   • Covers the structure against insured perils with a fixed excess. Limited or no business interruption. Liability may be capped at lower limits. Suitable for properties with low footfall and simple risks, where rental income exposure is minimal and you can tolerate some downtime.

2. Standard - Buildings plus liability

   • Adds property owners’ liability, typically up to £10 million, alongside accidental damage. May include limited business interruption for rental income with a 12-month indemnity period. Suits most straightforward risks where you need balanced protection without complex plant or higher catastrophe exposure.

3. Enhanced - Comprehensive with business interruption

   • Buildings, accidental damage, property owners’ liability and broader business interruption cover with 24-36 months indemnity. May include non-damage denial of access, loss of metered utilities and tenants’ improvements. Helps where planning approvals, supply chains or specialist materials could extend repair times.

4. Engineering and plant

   • Optional inspection and breakdown cover for lifts, boilers, HVAC and pressure systems. Useful for multi-storey or plant-heavy premises where mechanical failure could halt operations or access.

5. Flood and storm strengthening

   • Optional enhancements for high-risk areas, including higher limits, resilience measures and lower excess options where available. Consider if your postcode shows elevated flood risk.

6. Terrorism cover

   • Optional protection for damage and business interruption caused by acts of terrorism. Often required in city centres or by lenders and some commercial tenants.

7. Cyber and data breach

   • Separate policy that complements property cover by addressing cyberattacks, business interruption from IT incidents and liability arising from data loss. Increasingly relevant even for property owners managing digital systems and tenant data.

What it costs - and the drivers of price

Pricing shown is indicative and not a guarantee. Always base sums insured on a professional rebuild valuation.

Who can apply and what insurers ask for

Most UK commercial landlords and owner-occupiers can apply, including limited companies, partnerships and sole traders. Insurers usually ask for the full address, year of construction, construction type, floor area, listed status, security features and the most recent rebuild valuation. They may request lease details, the nature of tenant activities and any unoccupied periods. If you have lifts, boilers or pressure systems, inspection certificates help. Prior claims information, risk improvements and photos can speed up underwriting.

Applications may be declined if there is ongoing structural damage, significant disrepair, unoccupied buildings without risk controls, unmanaged combustible materials, or if the declared rebuild value appears materially inaccurate. Properties in high flood or subsidence zones may require higher excesses or specific risk mitigation. Being transparent and precise reduces delays and helps achieve accurate pricing.

From quote to claim - a simple path

1. Gather property details and a current rebuild valuation from a reliable source.
2. Request quotes outlining sums insured, limits, excesses and indemnity periods.
3. Compare cover scope, not just price - check exclusions and conditions.
4. Select a realistic business interruption indemnity period based on rebuild timelines.
5. Confirm occupancy, security measures and any required inspections or warranties.
6. Buy the policy, store documents securely and calendar key renewal dates.
7. Report incidents quickly, prevent further damage and follow the claims guidance.
8. Review cover annually or after material changes to the building or tenancy.

Balanced view - benefits and trade-offs

Key checks before you commit

Confirm the rebuild sum insured reflects current costs, including professional fees and debris removal. With construction price pressures and labour shortages, reassess valuations regularly to avoid underinsurance. Review excesses, sub-limits and named exclusions such as flood terms, unoccupancy conditions and security requirements. Choose a business interruption indemnity period that realistically matches planning timeframes, materials lead times and contractor availability. Check how index linking applies at renewal and whether alternative accommodation or loss of rent is capped. Keep inspection certificates for lifts and boilers up to date. Ensure declarations are accurate and documents stored safely so any claim can be validated quickly.

Related options if your needs differ

1. Landlord contents insurance - For furnishings and appliances in let properties where the building is already insured elsewhere.
2. Terrorism insurance - For city centre or higher-profile sites where lenders or tenants require it.
3. Cyber insurance - If building operations rely on digital systems or you hold tenant data.
4. Public liability insurance - For businesses with significant public interaction away from the premises.
5. Contractors all risks - For active refurbishments or extensions where works increase exposure.

Your questions answered

Q: How often should I update my rebuild valuation? A: Annually is sensible, and always after refurbishments. Building costs have risen in recent years, so frequent reassessment reduces the risk of underinsurance and average clause deductions.

Q: What indemnity period should I choose for business interruption? A: Consider planning permissions, specialist materials and contractor availability. Many owners select 24-36 months for complex properties to cover realistic repair times and avoid income shortfalls.

Q: Are rates currently going up or down in the UK? A: Property rates fell around 6% in early 2025 amid strong competition, with some segments seeing larger reductions. Still, check coverage quality and limits rather than focusing solely on price.

Q: How common is underinsurance? A: Widespread. Many commercial buildings are insured at around two thirds of true value. This can reduce claim payments proportionally. A professional valuation helps ensure accurate sums insured.

Q: Does this cover flood damage? A: Often yes, but terms vary by postcode and prior flood history. Expect higher excesses or conditions in high-risk zones. Review flood maps and any specific policy endorsements before buying.

Q: What if my building is unoccupied? A: Insurers may require regular inspections, drained systems, secure entry and utilities isolation. Without agreed measures, cover can be restricted. Declare unoccupancy upfront to avoid issues at claim time.

Q: Do I need cyber insurance as a property owner? A: Property insurance does not address cyberattacks. If you use digital access systems or store tenant data, a standalone cyber policy can help cover related costs and liabilities.

What to do next

Take stock of your property details, confirm an up-to-date rebuild valuation and outline the indemnity period you truly need. Compare quotes on coverage, conditions and service, then choose a level that balances price with protection. Keep control by reviewing annually or whenever your property or tenancy changes.

Important note

This guide is general information, not personal financial advice. Policy terms, limits and exclusions vary by insurer. Always read your documents carefully and confirm sums insured, excesses and indemnity periods before you buy.