AT A GLANCE
How the cover works
Commercial Property insurance protects the physical foundation of a business. The schedule may include buildings, tenants’ improvements, machinery, contents, stock and other assets at one or more locations.
Accurate values are essential. A building is normally insured on its reinstatement basis rather than market value, while stock, plant and contents may each require a different valuation method.
COVER
What may be covered
- Buildings, outbuildings, walls, gates, services and landlords’ fixtures where declared.
- Machinery, office contents, computers, furniture, records and tenants’ improvements.
- Stock, raw materials, work in progress and finished goods on the stated valuation basis.
- Fire, flood, escape of water, storm, theft and other events selected in the wording.
- Debris removal, professional fees, temporary removal and other extensions where included.
Cover varies by insurer and applies only as stated in the schedule and policy wording.
BOUNDARIES
Common exclusions and limitations
- Wear and tear, corrosion, gradual deterioration, vermin and defective maintenance.
- Unoccupied premises beyond the period or conditions allowed by the policy.
- Theft without the required evidence of forcible entry where that condition applies.
- Underinsurance caused by inadequate declared values or failure to include all property.
- Flood, subsidence, accidental damage, terrorism or other events where not selected or specifically excluded.
This is not a complete list. The quotation, schedule and full wording determine the actual cover.
CLAIMS IN PRACTICE
How a claim might arise
01. Fire damages a warehouse, stock and racking, requiring reinstatement and debris removal.
02. A storm damages a commercial roof and water enters, affecting equipment and contents.
03. Thieves force entry and remove specialist machinery, while physical damage is caused to the premises.
These scenarios are illustrative only and do not confirm that a particular claim would be covered.
CHOOSING COVER
Questions worth resolving
- Obtain professional rebuilding valuations and include demolition, debris removal, professional fees and current construction costs.
- Separate buildings, machinery, contents and stock values correctly for each location.
- Disclose construction, heating, security, occupancy and hazardous processes.
- Coordinate property cover with an adequate Business Interruption indemnity period.
- Review values after inflation, acquisitions, refurbishment, new machinery or changes in stock levels.
CONNECTED RISKS
Related protection to consider
- Business Interruption to protect income and additional costs after insured damage.
- Engineering insurance and inspection for machinery, pressure systems and lifting equipment.
- Cyber Insurance for non-physical disruption to systems and data.
- Terrorism, legal expenses or environmental cover where the exposure warrants separate treatment.
QUESTIONS
Frequently asked questions
Should buildings be insured for market value?
Usually no. The relevant figure is commonly the full cost of reinstatement, including associated fees and expenses.
What is average?
Where the wording applies average, an inadequate sum insured can proportionately reduce a claim.
Is accidental damage automatic?
Not always. It may be optional, restricted or subject to specific exclusions.
Can stock values fluctuate?
Yes. Peak-season adjustments or declaration arrangements may be needed when stock levels vary materially.
Australian insurance context
For Australian organisations, Commercial Property Insurance Guide should be considered against the actual activities, location, scale, contracts, assets and risk controls of the business. Insurance requirements and insurer appetite can vary by state or territory and by the way the risk is presented.
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