June 19, 2017

Insurance - Are you adequately covered?

‘It would never happen to me!’ – famous last words of a commercial property owner 

Fire, flood, storm, car accident or vandalism – what would happen if your commercial property is suddenly damaged? Or worse, destroyed? How confident are you that your current building insurance policy would give you the financial compensation you’re entitled to?

Sure, the likelihood of these types of accidents may be small. But if they do occur – and your insurance policy is either inadequate or non-existent – you could experience serious financial loss (not to mention stress).

So let us help you sort fact from fiction with some simple answers to your most common questions.

What’s the true value of my property?

Did you know that the cost of rebuilding your property following a catastrophic event is much greater than your property’s formal ‘market value’ (or real estate value)?

That’s because the costs of brand-new building materials (of equivalent quality) continue to rise with each passing year.

So be sure to ask your insurer the basis for your property’s current valuation. And if it’s nothing more than market value, it’s time for a review.

And whatever you do, don’t try to estimate your new-for-old replacement value yourself. This can lead to all sorts of problems. Instead, seek the expertise of a professional such as:

  • A qualified property valuer  
  • A qualified quantity surveyor  
  • A qualified builder 


What’s included in my policy, exactly?

How comprehensive is your building insurance policy?

Any quality building insurance policy will cover a long list of items – most of which are listed below. So it’s worth a quick review to be sure you’re getting maximum value from your current provider.


Foundations                       Exterior lights                    Fixed external signs

Storage tanks                     Masts                                    Walls

Awnings                               Antennae & aerials          Gates

Fencing                                 Pavements                         Fixtures & fitting


How else will I be financially impacted?

If your property is destroyed or severely damaged, you need to ensure that you’re also covered for loss of rental income. 

This is generally defined as the annual rental income derived from the property – exclusive of GST but inclusive of all reimbursable outgoings (e.g. insurance, council rates, water rates). 

Most policies provide a 12 months’ benefit, however 18 and 24 months are becoming more common. 


Does your lease agreement specify other types of insurance cover?

Your lease agreement should clearly outline which party is obliged to take out the following insurance covers:  

  • Machinery Breakdown (covers breakdown of air-conditioning, heating, plant and equipment) 
  • Plate Glass Breakage (covers all fixed plate window glass plus toilet bowls and sinks made of vitreous china) 

So if either or both of the above are your legal responsibility, be sure to have these covers in place too.

Don’t forget about Public Liability

Our clients often ask us if they need Public Liability insurance too. And the answer is always a resounding YES – even if your tenant already has it!

Here’s the thing. Your tenant’s Public Liability insurance protects them if they have negligently caused injury to other people or to other property arising from their business activities and/or occupancy of your premises.

On the other hand, your Public Liability cover protects you if you have negligently caused injury to other persons or damage to other property arising from your responsibilities as owner.


To learn more about commercial property insurance or for a review of your leasing agreement, contact AXIS Property today – or call us on (03) 9523 7888.