Are you aware that when a commercial property becomes vacant for an extended period of time, your policy could almost become worthless? Potentially cover for your building and cash flow could be compromised. Finding a new tenant for a commercial property, which becomes vacant, can take quite some time. While the absence of rental income can be a financial burden, you should take additional precautions to avoid even greater losses. By talking to us, we can negotiate with your insurer to ensure cover is maintained. If you are acquiring a property which is already vacant…make sure you let us know prior to making an offer.
Traditionally many property owners have Cash Flow Cover for a 12 month period. As projects have become larger and more complex, unless the building is quite small and basic, it is evident that 12 months is very unlikely to be enough. Consider if your building was required to be demolished, new plans approved by council, construction completed and new tenants in and paying rent. Is 12 months enough? We can arrange for longer periods of time to ensure you are covered.
The first part is to get the values right and that’s not an easy job, unless you use the services of a professional property valuer. It is anticipated that up to 75% of properties are not covered for the correct amount. Our experience is that many property owners mistakenly use the purchase price of the property, minus the value of the land, as the sum insured. Virtually all polices currently in the market require you to insure for replacement cost i.e. buildings completely rebuilt but using new materials plus the cost of complying with current building regulations.
Similar problems occur if the tenancy of your premises changes, as the insurers calculate their terms on the perceived risk introduced by that tenant. Changes of tenancy from a fabricating business to a kitchen manufacturer will have significant consequences.
