Over the last year, I’ve noticed a worrying trend when we are asked to quote
Commercial Building Insurance. The landlord starts to give us the
information, and I can almost sense by the tone in their voice that when we get
to the occupation and use questions, it’s going to be bad news. Insurance for an
empty commercial building is of course a lot harder to place and in most cases
the range of perils covered under the policy is limited, and of course, there
will be warranties and conditions that apply.
A typical scenario we are presented with is a landlord with a shop that is
occupied upstairs (typically rented to a tenant on an assured short hold tenancy
agreement) but, the shop below has become vacant. “ I’m actively looking for a
new tenant says the landlord, it should only be a couple of months, but you know
from your own experience that it is often much longer than this as the demand
for commercial buildings of all descriptions is reduced in almost all locations.
Insurance for commercial buildings, whether they be: shops, office factories
or warehouses can always be placed at a premium, a premium of course that has to
be paid by a landlord who is receiving no rental income for his property. From
an insurance perspective, it is possible to obtain insurance for a vacant
commercial property, but in all probability, the premiums will be considerably
higher than that which could be obtained for a building in use.
These are worrying times, as I walked to work this morning I scanned up and
down the high street and noticed more than enough empty shops alongside a
disproportionate number of charity shops, where there once stood good quality
shops serving the local community.
I thought back on the time that we have lived in this town and the number of
small, specialised shops that have disappeared and how local shopping has
changed probably forever and in my opinion, not for the better. It seems to me
that local high streets are places reserved for charity shops, (I admit that
they do a good job) places to have your haircut, buy a house (if you can get a
mortgage) or buy a mobile phone. There was a time when the local high street
could support a whole range of businesses offering a wide range of services.
Although, in our town, we do not have too many boarded up properties, I know
from travelling around the United Kingdom that many areas are now becoming
blighted by them, and there is nothing sadder than a high street with lots of
Some empty property seems to be a magnet for vandalism or certainly the
ubiquitous fly poster which seems to appear on empty shop with a few days of a
business closing down.
As an owner of an
empty commercial building, there will be certain requirements or warranties
imposed to ensure that insurance can be obtained: these usually relate to the up
keep and maintenance of the property and these could involve making sure all the
gas and electricity is switched off; the water tanks are drained down and that
the building is also secure. Most require all waste and combustible material to
be removed from the property and that it is checked on a regular basis.
From a building insurance perspective, it’s important that combustible
material is not allowed to build up, an office building next to ours become
empty a couple of months ago, and within a week, there was a large build-up of
post, free newspapers, pizza delivery cards etc. etc.. Most insurance will
require a certain amount of diligence on the part of the landlord to ensure that
this material is removed. I would also add that, in my opinion, nothing looks
more unattractive than an empty building that is neglected and full of rubbish,
first impressions count and if you are intending to obtain a new tenant, they
are more likely to be interested in a property that does not look too run down.
As a landlord, it may be as well to check with your local authority if they
have any special requirements for
commercial property, it is known in certain areas that the police frown on
commercial buildings that are not secure as they can attract a criminal element.
In a time of social change, if we have any desire to protect our communities,
we need to start putting shops back on our high streets (even a few more
insurance brokers wouldn’t go amiss) But in these harsh economic times, many
possible business start-ups are put off from renting buildings due the high
ingoing costs associated with it.
One piece of good news came recently from Eric Pickles, the Community
Secretary who discussed the government’s proposals, which should help, overcome
hurdles that put off start up business from temporarily being able to use high
street premises. Hopefully these will help tempt new business people back to the
high street. I have spoken to a few local retailers, and they all say the same
thing, they dread it when a shop closes as it means one more reason, not to go
shopping locally. It’s surprising the number of retailers who rely on other
local shops to help bring them trade.
These temporary or pop-up shops often use vacant premises until a long term
tenant can be found ( this seems more and more unlikely). The new government
proposals seek to cut down on the amount of red tape which surround the change
of use of a business premises and this should enable landlords to find tenants
for their properties a lot quicker. Occupied shops make the high street more
attractive, puts money in to the pocket of landlords and also enables them to
obtain commercial building insurance without a whole load of restrictions.
Footfall on our high streets is continuing to drop, and we desperately need to
tempt the small, local, independent trader back. A high street full of busy
shops will do wonders for local morale and stop our towns becoming havens for
If you are interested in a quotation for commercial building insurance,
please contact our office.