Commercial Property Insurance for Business Owners, Landlords, and Investors Across Australia
Specialist commercial property cover for retail, office, industrial, hospitality, mixed-use, and residential investment properties, including underinsurance review and flood cover confirmation for South East Queensland
Commercial property insurance for business owners, landlords, and investors across Australia
Commercial property insurance covers the building, fit-out, and contents of your business premises against fire, storm, flood, hail, theft, and malicious damage — and, critically, the loss of rental or business income if an insured event forces the property to close. It is not the same as home and contents insurance, and it is not the same as public liability. It is a standalone policy that protects the physical asset and the income that asset generates — and the gap between what most commercial properties are insured for and what they would actually cost to rebuild today is one of the most common and most expensive insurance mistakes in Australian business.
Whether you own the building you operate from, lease commercial premises as a tenant, or hold investment property with commercial tenants, your commercial property insurance needs are different — and the cover that applies to one situation does not automatically apply to another. A broker who understands commercial property assesses your specific position — owner, investor, or tenant — and structures a policy that reflects your actual exposure rather than a generic product designed for all three simultaneously.
Most commercial properties in Australia are significantly underinsured — and owners find out at the worst possible moment
Underinsurance occurs when the sum insured on your commercial property policy is lower than the actual cost of rebuilding the property at current construction prices. It is not a niche problem. Industry data consistently shows that the majority of Australian commercial properties are insured for less than their true replacement value — often materially less. The gap has widened significantly since 2020 as construction costs have increased by between 30 and 50 percent in most Australian markets. A sum insured set in 2019 that was accurate at the time may now represent 60 to 70 cents in the dollar of what a rebuild would actually cost today.
The consequence is not simply that the payout is smaller than expected. Most commercial property policies contain an averaging clause — also called a co-insurance clause — that reduces the payout proportionally when the property is underinsured. If your building is insured for $1M but would cost $1.5M to rebuild, and a fire causes $500,000 of damage, the averaging clause means you receive approximately $333,000 — two thirds of the actual loss — rather than the full $500,000. You bear the difference personally even though you held insurance and paid every premium. A broker conducts a replacement cost assessment before placing cover, not after a claim reveals the gap.
Estimated proportion of Australian commercial properties that are underinsured to some degree — CoreLogic research 2023
Average construction cost increase in Australian commercial building from 2019 to 2024 — ACIF Building Activity Report
The averaging clause most commercial property policies contain — reduces your payout proportionally when underinsured, not just the excess
Commercial property insurance for every property type
Commercial property insurance is not a single product — the cover that is appropriate for a retail shop is materially different to the cover needed for an industrial warehouse or a mixed-use residential and commercial building. Here are the main property types and the specific insurance considerations that apply to each.
Retail shops and shopfronts
Retail tenancies, strip shopping, and standalone retail premises. Cover for fit-out, fixtures, stock, and plate glass. Lease requirements typically mandate $10M to $20M public liability alongside the property policy. Stock sum insured must reflect peak seasonal inventory values — not average.
Office buildings and commercial premises
Single and multi-tenancy office buildings, professional suites, and commercial premises. Building sum insured, tenant fit-out separation, loss of rent during reinstatement, and landlord liability for common areas all require specific policy structuring.
Hospitality venues
Restaurants, cafes, bars, hotels, and entertainment venues. Specific coverage requirements for kitchen equipment, refrigeration, liquor stock, fit-out replacement, and loss of trade during forced closure. Contamination and spoilage for food businesses. See our hospitality insurance page for the full picture.
Industrial and warehouse properties
Factories, workshops, warehouses, distribution centres, and trade premises. Higher replacement cost per square metre than office or retail due to industrial fit-out, plant, and equipment. Specific cover for industrial machinery, racking systems, goods in storage, and hazardous materials storage where applicable.
Mixed-use residential and commercial
Buildings that combine commercial tenancies on the ground floor with residential apartments above — common in inner-city and suburban high streets. Standard commercial policies and standard home policies were not designed for mixed-use buildings. A specialist mixed-use policy covers the building under one policy that addresses both the commercial and residential components correctly, including the specific public liability position for common areas used by both commercial and residential occupants.
Residential investment properties — commercial landlords
Residential properties held as investment assets and managed through commercial property ownership structures. Landlord insurance covers the building, loss of rent from tenant default or uninhabitable events, and legal liability as the property owner. Different to standard home insurance — specifically structured for investment properties with tenants.
Medical and allied health premises
Medical centres, specialist suites, dental practices, physio and allied health clinics. Specific cover for medical equipment, patient records, and the elevated public liability exposure from patient interactions. Loss of income during forced closure has significant financial impact for sole practitioner practices — indemnity period must reflect recovery time.
Vacant commercial properties
Vacant commercial properties — between tenants, under renovation, or awaiting sale — require specialist cover because standard commercial property policies impose conditions or exclusions on properties that have been unoccupied for more than 30 to 60 days. Commercial vacant property insurance provides cover specifically for unoccupied premises including increased vandalism and malicious damage risk. The moment a commercial property becomes vacant, notify your broker — do not assume your existing policy continues to cover it unchanged.
Home-based businesses
Standard home and contents insurance does not cover business activities, stock, or equipment used for commercial purposes at a residential property. If you run a business from home — whether that is a consulting practice, a product business, a beauty therapy studio, or any other commercial activity — you need specific cover for the business component. See our home-based business insurance page for what standard home policies exclude and what you need to protect the business operating from your home.
What you need to insure depends on whether you own or lease
One of the most common commercial property insurance mistakes is assuming the other party has covered something that is actually your responsibility. Building owners and tenants have different insurance obligations and different exposures — and the boundary between them is defined by your lease, not by assumption.
If you own the building
Your insurance covers the physical structure and your exposure as the property owner
If you lease the premises
Your insurance covers your fit-out, your assets, and your liability as the occupier
What commercial property insurance covers — and what it does not
Building and structure
Fire, storm, flood, hail, impactThe physical building — walls, roof, floors, windows, and fixed infrastructure — is covered against fire, lightning, storm, hail, flood (where specifically included), impact, malicious damage, and escape of liquid. The sum insured must reflect the full cost of demolishing the existing structure and rebuilding it from the ground up at current construction costs — not the market value of the property, not the purchase price, and not what it cost to build when it was originally constructed. A broker conducts a replacement cost assessment before placing cover, comparing your sum insured against current per-square-metre construction cost benchmarks for your property type and location.
Business interruption
Lost income during reinstatementBusiness interruption insurance is the most financially significant cover in a commercial property program — and the most frequently undervalued. It replaces the revenue your business loses, or the rent you stop receiving as a landlord, during the period the property is being reinstated following an insured event. The indemnity period — how many months the policy pays — is where most underinsurance occurs in business interruption. Most businesses choose 12 months because it sounds adequate. In reality, a significant commercial property loss can take 18 to 30 months to fully reinstate once demolition, approvals, construction, and fit-out are complete. When the policy runs out before the business reopens, the remaining income loss is uninsured.
Contents and fit-out
Equipment, stock, furniture, and tenant improvementsContents insurance covers the moveable assets within your premises — equipment, furniture, stock, computers, tools, and business assets — against the same insured events as the building. Fit-out insurance covers the permanent improvements the tenant has made to the premises — partitioning, joinery, flooring, lighting, kitchen and bathroom installations, and anything else that is fixed to the structure. Fit-out is neither building nor contents under most standard policy definitions — it requires a specific declaration and a correct sum insured based on the current cost of reinstating the fit-out, not its depreciated book value. Many tenants under-declare their fit-out sum insured because they use accounting book value rather than replacement cost.
Loss of rent — landlords
Rental income during reinstatementIf you own a commercial property and lease it to tenants, loss of rent cover replaces the rental income you stop receiving while the property is being reinstated after an insured event. This is distinct from business interruption for an owner-occupier — it covers your income as a landlord rather than your income as a business operator. The loss of rent sum insured should reflect the gross annual rent receivable multiplied by the indemnity period — if your property generates $120,000 per year in rent and your policy has an 18-month indemnity period, the loss of rent sum insured should be $180,000. Many landlords set the loss of rent figure based on a single year's rent without considering how long a full reinstatement would actually take.
Machinery breakdown
Plant, equipment, and building servicesMachinery breakdown insurance covers the repair or replacement of mechanical and electrical plant and equipment — including HVAC systems, lifts, escalators, commercial kitchen equipment, refrigeration, and building services infrastructure — when they fail due to mechanical or electrical breakdown. This cause of loss is specifically excluded from standard commercial property policies, which cover sudden and accidental physical damage from external events but not internally-caused equipment failure. For buildings with significant plant — large HVAC systems, commercial refrigeration, industrial equipment — machinery breakdown is not optional. A chiller failure in summer or a boiler failure in winter represents a significant repair cost and an extended loss of amenity that affects tenants and rental income.
Glass insurance
Plate glass, shopfronts, and internal glazingGlass insurance covers the accidental breakage and malicious damage of plate glass — shopfront windows, internal partitioning, display cabinets, signage glass, and mirrors. Most commercial property policies exclude glass breakage or sublimit it significantly — a standalone glass policy or specific glass extension covers the full replacement cost including framing and signage. Commercial lease terms almost universally make the tenant responsible for glass in their tenancy — including the shopfront — which means the building owner's policy and the tenant's contents policy both need to address glass separately. Confirm with your broker who is responsible for glass under your specific lease and ensure your policy covers that obligation.
Why commercial property insurance in Brisbane and South East Queensland has specific considerations that the rest of Australia does not face in the same way
South East Queensland's climate, geography, and current economic environment create a specific commercial property insurance context that differs from Sydney, Melbourne, or Perth. Three factors matter most for Brisbane commercial property owners and tenants.
Flood and storm — the most underappreciated exclusion in Brisbane
The January 2011 and February 2022 Brisbane flood events demonstrated that flood exposure in South East Queensland is not confined to the obvious riverside suburbs. Many commercial properties across inner Brisbane, Ipswich, and the Lockyer Valley carry significant flood exposure that their owners did not realise until they made a claim. Flood is not automatically included in most commercial property policies — it must be specifically confirmed. In high-risk flood areas, flood cover may be limited, sublimited, or subject to conditions that require your property to have active flood mitigation in place. Storm surge, stormwater inundation, and riverine flood are treated differently under most policies — confirm which events your policy covers and in what circumstances. A broker who understands the Brisbane flood mapping and the insurer positions on specific postcodes is critical for any commercial property in a flood-affected area of South East Queensland.
Olympic infrastructure and construction cost inflation
Brisbane's preparation for the 2032 Olympic Games has driven significant infrastructure investment and construction activity across South East Queensland. The downstream effect on commercial property owners is twofold — construction costs have risen sharply as contractor capacity is absorbed by major infrastructure projects, and the time required to obtain skilled trades and materials has extended significantly. A sum insured that reflected 2021 or 2022 construction costs may be 25 to 40 percent below what the same building would cost to reinstate today. Business interruption indemnity periods that assumed 12 to 18 months for reinstatement may need to be extended to 24 to 30 months in the current Brisbane market where contractor availability and approval timelines have lengthened. Both the sum insured and the indemnity period on every Brisbane commercial property policy should be reviewed against current market conditions.
Hail and severe storm events
South East Queensland experiences some of Australia's most damaging hailstorms — the October 2019 Brisbane hailstorm caused over $1 billion in insured losses across residential and commercial properties in a single event. Commercial buildings with large roof areas, roof-mounted plant and equipment, skylights, and solar installations are particularly exposed. Following major storm events, insurer response times, contractor availability, and temporary accommodation costs all increase significantly. Businesses without adequate business interruption cover during this period face an extended income gap that the property damage payout alone does not address. Morgan Insurance Brokers is based in Brisbane at Level 38, 71 Eagle Street — we understand the specific storm, hail, and flood risks that South East Queensland commercial properties face and structure policies that reflect actual local conditions rather than national averages.
Lauren Spice is the Director of Morgan Insurance Brokers and works with commercial property owners, investors, and business tenants across Australia — from single retail tenants needing their first commercial property policy through to landlords managing mixed-use portfolios across multiple states. She understands both sides of the landlord-tenant insurance relationship and identifies the gaps that arise when each party assumes the other has covered something.
The most consistent finding when Lauren reviews existing commercial property policies is underinsurance — a sum insured that was set years ago and has never been benchmarked against current construction costs, or a business interruption indemnity period that is shorter than the realistic reinstatement time for the specific property. The second most common issue in South East Queensland specifically is flood cover that is either absent or sublimited to an amount that would not cover even partial damage to a flood-affected commercial building. Both gaps are invisible on the policy schedule and only become visible when a claim is made. A policy review takes less than an hour and costs nothing — finding the gap before a claim costs you nothing at all.
Commercial property insurance FAQs
What is the difference between commercial property insurance and home insurance?
Home insurance covers a residential dwelling used as your primary place of residence. Commercial property insurance covers buildings and premises used for business purposes — retail, office, industrial, hospitality, and investment properties with commercial or residential tenants. The two products are not interchangeable. Using a home policy to insure a property being used for business purposes — including a home-based business — creates coverage gaps that the insurer can use to limit or decline a claim. If you operate any business activity from a residential property, or if you lease a residential property to tenants as an investment, you need to confirm with your broker which product is appropriate and whether your current policy covers the actual use of the property.
Does my commercial property policy cover flood?
Not automatically — and this is one of the most important questions to confirm for any commercial property in South East Queensland, northern New South Wales, Victoria, and other flood-exposed markets. Flood cover must be specifically included in your policy and confirmed in writing. Many standard commercial property policies exclude flood entirely, sublimit it to a fraction of the building sum insured, or impose conditions such as active flood mitigation that affect coverage in practice.
The distinction between flood, stormwater inundation, and storm surge also matters — these are treated differently under most policy wordings. Riverine flooding from an overflowing watercourse, stormwater inundation from overwhelmed drainage, and storm surge from coastal events can each be covered or excluded under different sections of the same policy. If you are in a flood-affected area or your property has flooded before, a broker reviews the specific flood provisions of any policy being considered and confirms what is and is not covered for your specific address.
I am a commercial tenant — does my landlord's insurance cover my fit-out?
No. Your landlord's commercial property policy covers the base building — the structure, roof, external walls, and landlord's fixtures. It does not cover any fit-out, improvements, or contents that you as the tenant have installed or own. Your custom joinery, flooring, partitioning, kitchen equipment, display systems, signage, furniture, stock, and business equipment are all your responsibility to insure under your own policy.
This is one of the most common and most expensive insurance misunderstandings in commercial tenancy. A retail tenant who has spent $400,000 fitting out their premises and believes they are covered by the landlord's policy has $400,000 of uninsured exposure. Your lease will specify your insurance obligations as a tenant — read the insurance clause carefully or have your broker review it. Most leases require you to insure your fit-out, your contents, your plate glass, and your public liability as a minimum.
What happens to my commercial property insurance when the property is vacant?
Most commercial property policies contain a vacancy clause — a condition that restricts or alters coverage once the property has been unoccupied for a specified period, typically 30 to 60 days. When a commercial property becomes vacant, the insurer's risk assessment changes significantly: unoccupied properties have higher rates of vandalism, arson, and undetected damage, and the absence of a regular occupant means incidents may go unnoticed for extended periods.
Once the vacancy period is exceeded, your existing policy may exclude claims for malicious damage and theft, restrict coverage to fire and perils only, or require you to notify the insurer and obtain a specific vacancy endorsement. Commercial vacant property insurance provides specialist cover for unoccupied premises — including the specific risks that vacancy creates. The moment a property becomes vacant — between tenants, during renovation, or while awaiting sale — contact your broker immediately rather than assuming your existing policy continues unchanged.
How do I know if my commercial property is underinsured?
The most reliable way is a professional replacement cost assessment — a quantity surveyor or specialist building valuer who assesses the current cost of demolishing and rebuilding your specific property at today's construction prices. This is different to a market valuation and different to an insurance valuation from previous years that has not been updated. A current replacement cost assessment tells you what the rebuild would actually cost today, which is the figure your policy sum insured should reflect.
As a quick benchmark without a formal assessment: if your building sum insured has not been reviewed or updated in the last two years, if you have made improvements or additions to the property since the last review, or if your sum insured reflects what you paid for the property rather than what it would cost to rebuild it, you are likely underinsured. Morgan Insurance Brokers compares your current sum insured against current per-square-metre construction cost benchmarks for your property type and region as part of a free policy review — contact Lauren to arrange this before renewal rather than after a claim reveals the gap.
What is a mixed-use property and how is it insured?
A mixed-use property is a building that combines commercial and residential use — typically retail or commercial tenancies on the ground floor with residential apartments or units above. Mixed-use properties that are not within a strata scheme — owned under a single title by one owner — cannot be insured adequately under either a standard commercial property policy or a standard landlord policy alone, because neither product was designed for a building with both commercial and residential occupancy.
A specialist mixed-use policy covers the building under a single policy that correctly addresses the commercial tenancy on the ground floor, the residential tenancies above, the shared common areas and building services, and the public liability position as the owner of a building used by both commercial and residential occupants. The policy must also address the different risk profiles of each occupancy type — commercial kitchen operations on the ground floor, for example, create a fire risk that affects the entire building including the residential floors above. Morgan Insurance Brokers arranges mixed-use property insurance through specialist insurers who understand this product category and structure the cover to reflect the actual occupancy of the building.
Get the right cover for your commercial property
Whether you own a commercial building, lease a retail or office tenancy, hold a mixed-use investment property, or need specialist cover for a vacant property, we review your current sum insured against today's replacement costs, confirm your flood and storm cover is adequate for your specific location, and structure your business interruption indemnity period to reflect a realistic reinstatement timeline — not just the standard 12 months.
