Commercial premises insurance: what it covers and why it is important

Your business is part of you, so your peace of mind depends on its protection. commercial premises insurance is the most effective way to keep you safe. Find out how this type of policy can help you here.

When you consider insuring your business, you always have questions. Is it mandatory to have insurance on a commercial premises? What exactly does this policy consist of? Do I need a multi-risk trade insuranceAs insurance advisors in Tenerife, in Euroteide Seguros has been in business for over 29 years resolving such doubts for entrepreneurs and self-employed workers.

En Euroteide Insurance We advise businesses like yours about which insurance is best for them. That is why we have developed extensive experience in everything related to commercial premises insurance and today we are going to share it with you.

What is commercial premises insurance?

Tenerife is characterised by its intense commercial life. In the capital alone there are 2656 businesses run by both Spaniards and foreigners. Keeping these establishments going poses many challenges, especially if we take into account that certain dangers are beyond our control (short circuits, vandalism, weather phenomena, etc.). This is where commercial premises insurance comes into play.

Commercial premises insurance is a policy that protects against various risks. establishments where commercial activities take place. Therefore, it refers to businesses that have a physical headquarters. Its coverage includes the premises (building), its assets (contents) and the operations carried out there (civil liability).

Is it mandatory to hire it? 

Spanish legislation does not impose a general obligation to take out business insurance. However, there are two special cases in which the law requires taking out this type of policy:

• If you pretend mortgage the establishment, The financial institution will require you to take out commercial premises insurance in order to grant you the loan. This obligation (referring to any mortgaged property) is included in art. 17.3 of Law 5/2019, of March 15.
• If you develop certain activities In the premises, the law imposes the obligation to subscribe to a civil liability policy (one of the coverages of commercial insurance). This is established for law offices, health clinics, recreational halls and gastronomic establishments.

In other cases, the subscription to commercial insurance is voluntary. However, Its convenience is undeniable. After all, not having it contracted means being unprotected against risks that could compromise the continuity of your business.

What does commercial premises insurance cover?

As with any other policy, we must distinguish between main and optional coverage (which we will devote the last section to). Remember that the best insurance for a commercial premises is the one that adapts to your real needs, Hence, it is essential to have the advice of a specialized consultancy.

Damage 

Commercial premises insurance covers the material damage caused to the establishment or to the goods contained therein. In particular, compensation covers damage caused by:

• Fire (including explosion, lightning strike and fire extinguishing damage).
• Smoke leaks.
• Water (breakages, leaks, blockages, accidental leaks, etc.).
• Electricity (voltage spikes, abnormal currents, short circuits, etc.).
• Intense meteorological phenomena (wind, rain, hail, etc.).

Breakage

This category covers the protection of those installations susceptible to breakage. You can configure it according to your needs. Here are some examples of the assets that can be included in this coverage:

• Moons, glass and mirrors.
• Signs, labels and advertisements.
• Marbles and stones.
• Fixed toilets.
• Ceramic hobs.
• Glass of photovoltaic panels.

Theft

This coverage entitles you to receive compensation if you suffer a robbery in your premises. The value of this will cover both the price of the stolen goods and the damage caused by the thieves. It is possible to extend it with additional guarantees.

Third-party insurance 

Civil liability coverage comes to the forefront of the damages experienced by third parties in your establishment. Thanks to it, medical and legal expenses arising from such incidents will be covered. Commercial premises insurance covers various types civil liability:

• Exploitation (damages caused by the development of business activity).
• Management (accidents suffered by employees).
• Real Estate (damage caused to another property).

If your premises are rented, you may be interested in hiring a rental civil liability clauseBy doing so, your insurer will compensate for any damage suffered by third parties within the establishment.

Optional contracting coverage

• Lost profit: compensates for the income you lose if you have to close your business due to a covered loss.
• Legal defense: covers the costs incurred by legal disputes related to your business (e.g. claiming breach of contract from a supplier).
• All accidental risk: covers unforeseen and unavoidable accidents that have damaged your establishment.

Key factors for choosing commercial premises insurance

1. Type of business. Insuring a restaurant is not the same as insuring a jewelry store. Each location and activity faces specific risks and circumstances. Identify what they are and include coverages that are appropriate for them.
2. Please review the exclusions. Thoroughly review the policy to identify any preconditions and exceptions. Given the complexity of this type of contract, it is helpful to have an impartial advisor who can clarify the less understandable terms.
3. Price isn't everything. Low prices are tempting, but they can end up being expensive. A premium that is too low can hide insufficient coverage or high deductibles.
4. Value flexibility. Modular policies and review clauses offer customized and scalable solutions.
5. Correctly calculate the insured value. Underinsurance reduces compensation and overinsurance increases premiums. Set the capital according to the current replacement cost and not the purchase price.
6. Examine competitive advantages. Not all insurance companies offer the same technologies and additional services to their clients. Consider which of these are the most suitable for your business (mobile apps, 24-hour assistance, IoT sensors, etc.).

Commercial premises insurance is definitely a powerful ally for your business. From Euroteide Insurance, we provide you the advice and support you need to get the most out of your policy. Contact us today.