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What Commercial Property Insurance Covers
Commercial property insurance covers the building, lost rent and owner's liability, whether the premises are owner-occupied or leased to tenants.
It protects the building, the rental income and the legal liabilities of ownership. Residential investment properties fall under landlord insurance instead. Buildings inside a strata-titled complex are covered by strata insurance. It sits within our business insurance range at Fortis Risk Solutions.
Commercial Property Owner Insurance: Cover Sections and Benefits
What Commercial Property Owner Insurance does not cover
The policy follows the building and the owner’s liability, not the tenant’s business. That line causes most of the surprises at claim time. Typical exclusions under commercial property insurance:
- The tenant’s stock, fit-out and equipment, which the tenant insures
- Wear and tear, defective building work and rot found once repairs begin
- Loss of rent where no loss of rent or interruption section was taken
- Damage from a tenant process the insurer was never told about, such as commercial cooking or spraying
- Common property in a strata scheme, insured instead by the owners corporation under strata cover
- Buildings left unoccupied beyond the period allowed after a tenant moves out
- Gradual water damage from failed waterproofing or blocked gutters
FRS checks the lease, the permitted use and who insures what before placing the policy, so the wording lines up with the tenancy schedule.
How Commercial Property Owner Insurance premiums are set
Underwriters price the building and the trade going on inside it. An office block and a strip of food tenancies at the same value are not the same risk. The main factors behind commercial property insurance:
- Sum insured for the building, including removal of debris and professional fees
- Construction and age, with older wiring, timber framing and combustible cladding rated harder
- Tenant activities, since kitchens, workshops and chemical storage lift the fire load
- Fire protection and security, including sprinklers, hydrants, alarms, lighting and fencing
- Location and natural hazard exposure, particularly flood and bushfire
- Occupancy, and how long any tenancy has sat vacant
- The excess accepted, and whether loss of rent is insured and for how long
Keep the sum insured current. FRS reviews replacement values at every renewal and can arrange a valuation, since underinsurance remains the most common problem we find on commercial buildings.
How to claim on Commercial Property Owner Insurance
Owners often hear about damage second hand, from a tenant or a property manager, which costs days. Call us at the first report rather than after the repair quote arrives. The FRS process:
- Call FRS as soon as the damage is reported to you, even when the tenant found it
- Make the building safe and arrange emergency repairs to stop further loss, keeping the invoices
- Report break-ins, vandalism or arson to police and record the report number
- Do not admit liability to a tenant or visitor who says the building caused their loss
- Send us photos, the lease, repair quotes and the rent record if income is affected
- FRS lodges the claim, manages the assessor and follows the repair through to settlement
The steps and contacts are set out on our make a claim page.
Commercial Property Owner Insurance compared with Landlord Insurance
| Question | Commercial property owner | Residential landlord |
|---|---|---|
| What it covers | Commercial building, owner’s liability, loss of rent and often glass | House or unit, contents you supply, tenant damage and rent default |
| Who buys it | Owners of shops, offices, factories and mixed use buildings | Owners of houses, units and apartments let to tenants |
| Typical trigger | Fire, storm, impact, water damage or a claim by someone injured at the property | Storm or fire damage, malicious damage by a tenant, or unpaid rent |
| Sits with | Business insurance held by the tenant | Home and contents cover on the owner’s own residence |
Mixed use buildings need care, because a shop downstairs and flats upstairs can fall between the two wordings. FRS places the whole building on one policy where possible, or arranges landlord cover alongside it where the residential part is better insured separately.
Commercial Property Owner Insurance FAQs
Buildings should be insured for full replacement cost, not market value. Underinsurance can cut a claim payout sharply. We give clients valuation guidance and review sums insured regularly, so the figure keeps pace with building costs.
It depends on the lease. Landlords usually insure the building and the liabilities that come with owning it, including property owner's public liability insurance. Tenants insure their own contents, fit-out and business activities. We read the lease and check the split is right.
Yes, though vacancy changes the cover. Unoccupied buildings often attract special terms, higher excesses or extra risk controls. We arrange suitable cover, handle the vacancy disclosure and check how business interruption insurance responds while the space is empty.
Building values, lease obligations and liability limits sit in different documents, and a gap between them only shows up at claim time. As your broker, FRS helps you disclose the property and its use accurately, set sums insured and limits that match, compare specialist property insurers and act as your advocate when you claim.