If you’re a landlord with a commercial property, whether it’s a retail shopfront, an office block, or a small industrial shed, insurance probably isn’t something you think about every day. Until something goes wrong, that is. 

Commercial property insurance is the backbone of your investment’s protection. But here’s the thing, most landlords underestimate what it really covers, and more importantly, what it doesn’t. 

Understanding Commercial Property Insurance

At its core, commercial property insurance is designed to appropriately protect your physical assets, your building, fixtures, and fittings, all from damage caused by unexpected events like fires, storms, vandalism, or theft. It acts as a safety net that keeps your investment from turning into a liability overnight. 

But in practice, the policy does more than just replace damaged walls or windows. It keeps your tenants trading safely, your rental income flowing, and your own costs under control while repairs are being made. In other words, it keeps your property viable.

Still, not every policy is made equal. Some landlords take out the bare minimum, only to find out later that the minimum doesn’t stretch as far as they thought.

What Does Standard Commercial Property Insurance Cover?

A basic commercial property insurance policy will usually cover:

• Building structure, such as the bones of the property, including walls, roofs, floors, and fixed installations like plumbing or air-conditioning systems.
• Fixtures and fittings, like things permanently attached to the building (think built-in counters, lighting, or kitchen units).
• Accidental or malicious damage due to fire, storms, or vandalism.
• Theft or attempted theft, provided there’s evidence of forced entry.

That’s the foundation. However, for most landlords, especially those leasing to multiple tenants or operating high-value spaces, such coverage is no longer sufficient. 

Additional Coverages Landlords Should Consider

This is where some landlords separate themselves from others. Because if you’re only insuring the structure, you’re leaving yourself exposed to a long list of potential losses that standard cover won’t touch. A few key extras to consider include: 

• Rent default insurance protects landlords if a tenant fails to pay rent, helping to cover lost rental income and associated legal costs to recover rent or evict tenants. 
• Public liability insurance, which covers legal costs and compensation if someone is injured on the property due to maintenance issues of negligence. This protects you from costly lawsuits down the road. 
• Machinery and equipment breakdown insurance; if you own or supply plant, lifts, or HVAC systems, a breakdown can halt operations. This type of cover helps get things promptly repaired. 
• Theft and burglary insurance, which covers losses due to theft or burglary of fixtures, fittings, and landlord-owned contents of the premises. 
• Other optional coverages include cover for weather-related damage, vandalism, accidental damage to the building, employee dishonesty, and more. 

Essentially, “beyond the building” cover is about protecting the income stream tied to your property, not just the physical structure. 

Common Mistakes Landlords Make

Even experienced landlords slip up when it comes to insurance. Here are a few traps to avoid:

1. Underinsuring the property. Many owners underestimate rebuild costs. Between labour shortages and material inflation, today’s construction costs can easily outstrip older valuations.
2. Forgetting loss of rent cover. If your tenant can’t trade, they can’t pay rent. Too many landlords skip this, assuming their property will bounce back quickly.
3. Assuming the tenant’s insurance covers everything. Tenants usually cover their own fit-out and liability, not your structure or your rental income.
4. Not updating policies after renovations or tenant changes. If you’ve improved the building or changed the tenancy layout, your policy needs to reflect that.
5. Choosing price over quality. The cheapest premium often means the thinnest coverage. Saving a few hundred dollars now can cost you thousands later.

Partner with Morgan Insurance Brokers Today

At Morgan Insurance Brokers, we partner with landlords across Australia, from small retail property owners to large commercial investors, to design insurance solutions that accurately reflect their unique risks.

Before the next storm hits or a tenant vacates, take the time to ensure your policy provides the protection it should. When unforeseen events occur, that’s not the moment to discover your cover is incomplete.

Start with us today.