Commercial home insurance: are you properly covered?
- RebuildCostASSESSMENT.com
- 2 days ago
- 7 min read
Updated: 1 day ago
Understanding commercial property insurance: more than just a policy
Whether you run a busy shop or work from a spare room at home, having the right type of insurance is your first layer of protection.
Commercial property insurance is a broad term. It covers buildings and business contents from risks like fire, flood, theft, and accidental damage.
Within this, commercial buildings insurance protects the structure – including walls, roofs, and wiring. Business contents insurance covers what's inside, such as tools, stock, furniture, and equipment.
If you work from home, don’t assume your standard home insurance is enough. Many insurers ask for an extra or separate policy, often called commercial home insurance or business home insurance. These policies cover business items and extra risks, like customer visits, that home insurance may not include.
Who needs commercial property insurance?
Owners of shops, offices, or workshops
Landlords of commercial or mixed-use buildings
People running a business from home
Any small business with a physical space or equipment
Getting the right cover starts with knowing what type of property you have — and what risks you need to protect against.
What does commercial property insurance cover (and crucially, what it doesn't)?
It’s important to know what your insurance covers. But it’s just as important to understand what it doesn’t. Many claims fail because of exclusions that the property owner didn’t know about.
What’s usually covered
A strong commercial property insurance policy typically protects against:
Fire, flood, and storm damage
Theft and vandalism
Escape of water (e.g., burst pipes)
Fixtures and fittings
Business contents like stock, tools, and equipment
These types of insurance help your business recover from sudden, unexpected events. But not all damage is included.
What’s often excluded
Some of the most common exclusions are:
Wear and tear: Insurance doesn’t cover ageing parts or general upkeep.
Unoccupied properties (30-day rule): If a building is empty for over 30 days and the insurer isn’t told, cover could be reduced or lost.
Poor repairs: DIY or low-quality work might not be covered.
Pests and animals: Damage from vermin or infestations is usually excluded.
Accidental damage: Often not included as standard — this may need to be added as optional cover.
Other exclusions: These can include war, terrorism, mould, rot, or damage caused by the policyholder.
Every policy is different. But one thing is clear: an accurate rebuild cost assessment helps make sure your building is insured for the right amount, and protects against costly mistakes.
Not sure if your policy covers what it should? We’re here to help.
The hidden risk: why underinsurance threatens your business (and how to avoid it)
Underinsurance is a common and costly mistake. It happens when the amount on your policy is lower than the true cost to rebuild your property. If disaster strikes, the shortfall can leave your business facing serious financial loss.
Insurers use something called the average clause. This means your payout is reduced if you're underinsured. For example, if your building should be insured for £500,000 but it’s only covered for £375,000, any claim could be cut by 25% even if the damage is far less than the full rebuild.
Want to see how this works? Read our guide on What is the average clause in insurance?
Often, the problem comes from misunderstanding rebuild costs.
Why market value is NOT rebuild cost
Market value includes the land – rebuild cost does not
Property prices go up and down – rebuild costs depend on materials and labour
The purchase price often misses key rebuild elements
Market value doesn’t include demolition, site clearance, or professional fees
A professional rebuild cost assessment gives you the full picture. It calculates the real cost to demolish and rebuild, including materials, labour, planning permissions, and specialist work for older or non-standard buildings.
Our expert assessors use trusted industry methods to give you a reliable, up-to-date valuation, so your commercial property insurance can do what it’s meant to: fully protect your property.
Don't risk underinsurance. Read our full guide to commercial building insurance and make sure you're properly protected.
Beyond buildings: other insurance covers you may need
Protecting your building is important. But a strong business also protects its income and legal risks.
Some may think only about buildings and contents insurance. But there are other types of cover that can help if things go wrong.
Key insurance covers to consider
Business interruption insurance: Covers lost income and extra costs if your building is damaged and your business can’t run. It’s useful for landlords and businesses that rely on being open to the public.
Public liability insurance: Covers claims if someone is hurt or their property is damaged while visiting your site.
Property owner’s liability insurance: Helps landlords if a tenant or visitor is injured because of the building.
Employers’ liability insurance: A legal must if you have staff. It covers claims from employees hurt or made ill at work.
Other useful add-ons
Accidental damage cover: Helps with damage caused by tenants.
Landlord contents insurance: Covers furniture in rented spaces.
Equipment cover: For tools and machines used on or off-site.
Good insurance protects more than just your building – it protects your whole business.
Navigating the numbers: factors influencing your commercial insurance cost
Knowing what affects your insurance cost helps you make better decisions and could save you money.
Premiums can vary, but insurers tend to look at the same key factors. Here’s what they consider when setting the price for your commercial property insurance:
Rebuild cost: This is the most important factor. The more it costs to rebuild your property, the higher your sum insured and your premium.
Location: Buildings in flood zones or high-crime areas usually cost more to insure.
Age of the building: Older properties may need more repairs or special materials.
Business type: Some uses carry more risk than others. A café is different to an office.
Security: Good locks, alarms and CCTV can help lower your premium.
Construction: Non-standard builds or flat roofs may need extra cover.
Claims history: Past claims can push your costs up.
Level of cover: More cover and add-ons mean a higher price.
Excess: A higher excess can reduce your premium.
When comparing quotes, always start with an accurate rebuild cost. It gives you a fair base for choosing the right cover. For more information on how to get the right commercial property insurance at the right price for you, see our guide ‘Low cost commercial insurance: are you properly covered?’
Want help getting a fair quote? A professional rebuild cost assessment makes all the difference.
Tailoring commercial home insurance for your unique property
Every commercial property is different and the right insurance should reflect that. Understanding how your property’s features affect your cover is key to protecting it fully.
Business from Home
Standard home insurance often excludes business risks. You may need extra cover for tools, stock, or customer visits.
Mixed-Use Property
If your property combines business and living space – like a shop with a flat above – each part may need separate cover. Insurers often treat them as two risks, each with its own rebuild cost.
Unoccupied Properties
If your property is empty for more than 30 days, your cover could change. Insurers may require unoccupied property insurance, regular checks, or alarm systems.
Leasehold vs. Freehold
Leaseholders often rely on the freeholder’s buildings cover. But this might not reflect your unit’s true rebuild cost. Always check what’s included.
Flat Roofs
Flat roofs carry more risk of water damage. Insurers may set special terms or raise premiums. Accurate details help make sure you get the right cover.
Need help insuring a mixed-use or complex property? We’ll ensure your rebuild assessment matches your unique setup.
Secure your business's future with confidence
Your commercial property insurance is only as strong as the number it’s based on – your rebuild cost. Having a policy is not enough. If your rebuild cost is wrong, you could be underinsured. That means lower payouts and more costs for you if something goes wrong.
RebuildCostASSESSMENT.com gives you a trusted, regulated by RICS, professional valuation. We help make sure your insurance reflects what your property would really cost to rebuild.
Key takeaways for safer cover
Know your cover: Understand what is included — and what isn’t.
Avoid underinsurance: Make sure the sum insured is right.
Cover more than the building: Think about income and liability, too.
Use expert help: A professional assessment gives insurers the right numbers.
Want better protection for your business? Get your rebuild cost assessed by RebuildCostASSESSMENT.com today.
Other helpful resources
Looking to deepen your understanding of commercial property insurance? These guides can help:
Important disclaimer: The information provided here is for general informational purposes only and is not intended as professional advice. While we strive to ensure all information is accurate and up-to-date, the content may not reflect the most current legal or regulatory developments, standards, or practices. No representations or warranties are made (express or implied) about the accuracy of the information provided, and reliance on this information is strictly at your own risk.
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