Property exposures include owned/rented/leased properties and also, possibly, office/administration accommodation, depending on the nature of the operation. For owned commercial properties, at any one time these may either be vacant or occupied by tenants. Risks in occupied properties will vary with the occupation(s) of the tenants, the stock and materials stored on the premises, the types of processes or services performed and machinery and equipment used. Since property owners/operators can own buildings used for agricultural, manufacturing, retail, accommodation, wholesale and office functions (amongst others), the range of potential property risks is extensive. In assessing the exposure, the underwriter/adviser will need to establish the types of building in the property portfolio and the occupants for each building. The risk will be most difficult to assess in multiple tenant buildings, shopping centres and the like, and in situations where the tenants change more frequently. Often the approach taken in rating or assessing risk is to take the most hazardous occupation, but this is only of value in rating; to understand the risk and consider appropriate risk management the underwriter/adviser will need to build a picture of all occupancies. Appropriately worded tenancy agreements, as well as the use of professional property management firms, help to control this exposure, but the company tenant base, maintenance and management of buildings and checks conducted on buildings and tenants are the key issues. At the insured’s office, property risks are identical to those in many other white collar occupations/office risks. Electrical equipment, personal portable heaters or desktop fans, faulty wiring and kitchen appliances are potential ignition sources. The presence of artwork and customer documents will increase the fire load/ hazard. The cost of reinstating records and data is a key element to consider.
As far as property damage is concerned factors to be considered under this occupation include:
The major risk for non-residential property operators are loss of rental income due to a total or partial loss in the rented property/ies. The amount of loss (rental income), in general, is proportionate to the building loss and number of tenants. After a major loss insured will lose the rental income until the property is reinstated and suitable replacement tenants are found. The extent of exposure will depend on the owned property portfolio size and nature. Losses are more likely to affect the business significantly where owned properties are adjacent or concentrated in a single area (e.g. a shopping centre, office building or block of commercial units), or where the size of the property portfolio is small (since the loss of one unit will comprise a more substantial amount of total income).
Landlord’s or Strata insurance will usually include a limited cover for loss of rent (or a payment equal to the amount of rent that the unit could have been rented for if the unit is occupied by the unit owner where property cannot be lived in, or due to prevention of access) following an insured event which causes the property to be uninhabitable. This benefit may be sublimited (e.g. to a percentage of the building sum insured, to a specified number of months etc). The adviser will need to carefully consider whether, for the insured under consideration, the sub-limit applicable and conditions are adequate. For example, the property damage section could exclude flood. Consequently, loss of rent following a flood event would not be payable, even though the premises cannot be used.
Loss of rent may also occur due to payment defaults of the tenant. In the event that a tenant defaults on rental payments, the landlord (or their agent) will generally issue them with the appropriate notices under State or Territory legislation e.g. a “Notice to Remedy Breach” or a “Notice to Leave”. In the event that the tenant continues to occupy the building without payment of rent, legal action will be required to evict the tenant. This can take some time, and recovery of rent due may not be possible. Cover for tenant default is therefore an important element of insurance for this occupation.
Important points in relation to Rent default cover include:
Commercial Property Insurance Broker Brisbane:
Hunter Broking Group can assist with Commercial Property Insurance & Property Machinery Insurance. Through industry specific insurers, your designated advisor has access to a comprehensive range of insurance products that can be tailored to suit most properties and developments. We can arrange insurance for various segments in the commercial property industry including:
Hunter Broking Group pride themselves on having a local presence with a national strength, our technical product experience allows us to manage and service property insurance products such as:
Machinery Insurance is a core focus for our advisors, whether we are looking after ducted aircon systems or lifts and elevators, Hunter Broking Group have the experience to provide the appropriate advice for your size and risk exposures.
Our experienced brokers can help you get the most appropriate insurance cover by assessing your specific needs and recommending the best value insurance solution for your business, whilst still maintaining the highest standard of cover.
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