
Is your commercial premises insurance cover still correct?
February 5, 2025In recent years, significant changes have been seen in the number of shops along the typical British high street. In response to those changes, now might be the time to review whether your commercial insurance cover is just as you need it. Have you made any alterations to the premises? Are there any renovations or even use conversions in the pipeline? And so on.
And whether you own – or are continuing to lease – a shop that now stands empty, there may be serious implications for your business buildings insurance cover.
1. Why keeping your insurance up-to-date is critical
Your commercial property insurance needs to accurately reflect the most up-to-date state, condition, and use of your commercial premises. Things change over time and your insurance must keep abreast of all those changes – at risk of essential cover falling short when you need it the most.
2. Renovations and improvements: are you covered?
If any structural changes have been carried out; if you’ve upgraded your commercial premises; or, you made any other improvements, these are all likely to have an impact on your insurance cover. Your commercial buildings insurance must reflect the extent of any changes that have been made – and, of course, any increase in the value of your property will need to be reflected in the total building sum insured.
If you are uncertain of the impact any changes are likely to have made, don’t hesitate to ask your insurance broker or insurer.
3. Change of use: when your shop isn’t a shop anymore
Probably one of the most frequent changes of use these days results from the conversion of what were once shops and other retail spaces into residential use – whether as flats above the premises or the whole building itself.
In either case, the change of use will bring significant changes in the risks and perils faced by the structure and fabric of the building along with any of its contents. Changes to those risks, of course, are of critical interest to your insurer. Where once there was commercial property insurance, there must now be the appropriate kind of residential insurance.
4. Unoccupied properties: the hidden risks
We have noted that any insurer has a direct interest in how your property is being used. It is one thing if the doors open to welcome staff and customers every day; it’s quite another if your premises stands empty and unused.
An empty building can attract all manner of unwelcome attention – from burglars, squatters, vandals, and arsonists. An unnoticed or unreported maintenance issue can also develop into a full-blown disaster if there is no one regularly using the premises.
For those reasons, many insurers typically restrict the nature and extent of any cover if the premises have been unoccupied for longer than a month or so. Instead, you may typically need unoccupied commercial property insurance.
5. The high street shake-up: a changing insurance landscape
During 2024, 38 shops in Britain were closing every day – in just the first nine months of last year, a total of almost 7,000 retail establishments had shut down in town centres alone, according to a recent report.
This represents more than 3% of the total 324,995 retail businesses recorded by a parliamentary briefing paper, published on the 17th of January, on the Retail Sector in the UK.
The result has been a growing number of shuttered and empty shops and business premises – the likes of which you’ll see on any high street. A story in the Express newspaper recently predicted that there is worse to come as more and more shops close.
6. What your insurer needs to know (and when)
Whether it’s in response to the changing landscape of the high street; whether the shop you own has been converted to other uses; or whether you have made alterations, extensions, or structural changes to your premises, it is important that you keep your insurer firmly and clearly in the picture.
If you are uncertain whether any changes will affect your insurance cover, don’t hesitate to contact your broker or insurer.