Commercial Property

Investors hoping to make their fortune in the property market have been warned that the right insurance cover is essential to protect their most valuable assets.

With increasing numbers of commercial premises being held as investments and a booming buy-to-let market, experts have highlighted the importance of guarding against all eventualities.

Darlington-based BiB Insurance, one of the region’s biggest independent brokers, issued the serious warning.

Corporate Business Director Brian Jackson said: “Many businesses have chosen to own property in the directors’ names, transfer it to trusts or a pension scheme, or enter into sale and leaseback arrangements."

“Some have sub-tenants or rent out space which is surplus to requirements. Many clients have also invested in property through buy-to-let, seeing this as an excellent long-term asset and there are large numbers of companies whose business is to own and develop property.”

Mr Jackson said having the right cover in place was of paramount importance, particularly when it came to the costs involved in rebuilding premises if they were destroyed or badly damaged.

“In most cases the cost of cover is passed on to the tenants, who often have a full repairing lease, so they also have a vested interest in ensuring the cover is correct,” he said.

“With material costs rising rapidly and planning controls becoming ever more stringent, rebuilding can be delayed and the costs far more than anticipated."

“Buildings may have to be demolished and professional advisers employed. It is most likely that higher standards of construction will be required and green, environmental and climate issues recognised."

“Delays in rebuilding in a period of higher inflation will increase costs. It is always advisable to have regular rebuilding cost valuations done to ensure sums insured keep in line.”

Other crucial cover includes that for loss of rent, which will cover any rental income drop while property is rebuilt and property owners’ liability, protecting someone from claims made by tenants, as well as employers’ liability, plant and contents insurance.

Mr Jackson added: “Many other insurance covers are also available such as tenants’ defaults and rent guarantees, and we can advise any business on all the options applicable."

“We would suggest that anyone with concerns contacts a professional insurance broker and seeks advice immediately.”

BiB Insurance can be contacted on (01325) 353888.