Business Insurance And The Credit Crunch
The global economic crisis has hit everyone and businesses everywhere are finding it difficult to keep their heads above water
. The credit crunch has also affected insurance for commercial properties. The property market in general has suffered in difficult economic times as property prices have dropped considerably.
There is a direct link between the value of a property and property insurance, as the demand for commercial properties falls so investors are selling their portfolios and this further upsets the insurance market. In spite of the credit crunch, people still own commercial property and therefore still need commercial property insurance.
The type of insurance that people need for commercial prosperities depends on whether the property is being let to a business or whether it is residential property let to a tenant. If you have tenants living in your properties then you should have landlord insurance. As a landlord you will have to take out building insurance on properties that you rent out as this is your responsibility and not the responsibility of the tenant.
Your insurance should be enough to cover the potential rebuilding of the property should something untoward happen and this should include any site clearance and professional fees that might be involved. Because the cost of rebuilding a property is not the same as its market value, you may need professional help in calculating this.
Tenants should have their own personal and contents insurance, but damage to and maintenance of the property is the responsibility of the landlord. You should have insurance for your fixtures and fitting, unless you choose to have them replaced as new, then wear and tear will be taken into consideration when assessing any claims.
Although property insurance is linked to property prices, you should not expect your premium payments to be lowered just because the value of your property has fallen. Damage to your property can mean the interruption of your property letting business and you should have a policy that will cover you for this type of financial loss. When you are working this out you may need some professional estimates on how long it would be before your business was operational again should the property need to be rebuilt.
When you take out insurance on a property that you rent to tenants you need to make sure that you have all the cover you need. Not all landlords' insurance will cover you for things like loss of rental income or damage that may be caused by the tenants to the inside of your property. You should have the most comprehensive landlord and property insurance that you can find if you want to be covered in most eventualities.
It may be expensive but all risk insurance is the most sensible option when you own commercial property because it is intended to cover anything that is not specifically mentioned in the policy. Owning and renting out commercial property is a risk and it makes common and financial sense to have as much commercial insurance cover as possible, especially when there is a credit crunch.
by: Tom Jones
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