Lack of Insurance Can be Costly

Sewer Damage (Small)Just look at the damage one plastic floor waste did when it blocked a sewer system and caused sewer to flow through (2) high class commercial properties, leaving the Landlord with a repair bill of around $6,800.  The cost of not having or having incorrect insurance can be immeasurable both personally and for business.

Fires and floods happen; people slip, fall, get sick and even die.  All of these things can happen in your business or on your property.  Does your insurance company know that your building is vacant, does your insurance policy cover people on property outside of the boundary of your premise, and are you covered for Public Liability when your Tenant moves out of your Strata?

There is a Commercial Property Insurance that covers all property types from warehouses, sheds, shops, shopping centres, factories and unit/apartment blocks, however you must make your insurer fully aware of the premise use.

Most leases that recover insurance as an outgoing through the rent stipulate that the Tenant must not increase or negate the insurance policy.  In many circumstances this is where it stops, the Landlord will take out insurance while not having an understanding of the processes occurring on their premise.  This is ok normally and leases often pass the liability back to the Tenant if things occur on the premise without the Landlords knowledge.  This is of little consequence if the Tenants business has been destroyed and they have no way of paying the liability.  The best form of insurance is making sure you have insurance and your insurer is fully informed.

Some common risks associated with commercial properties are:

–          Damage from fire, floods, storms, earthquakes etc
–          Theft
–          Malicious/accidental damage
–          Loss of rent
–          Personal injury/property damage
–          Machinery breakdown

Knowledgeable Tenants always insure themselves against liabilities that they may incur as the occupiers of leased premises.  They take out Public Liability Insurance to protect their assets if they do something that damages the premises or causes injury to a customer.  As a Landlord it is your responsibility to ensure that this is the case and asking for a Certificate of Currency each year is a must.

So now might be a good time to look at your insurance policies and those of your Tenants and to ask yourself have I fully informed my insurer and have I fully covered the properties true value.

Brett Ballantyne
Commercial/Industrial Specialist

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