Do You Have the Right Type of Insurance for Your Property?

Last month, we covered BWOFs and how to ensure your commercial property was complying with New Zealand legislation. In the coming months, we will continue to breakdown all the key steps to make sure you have a healthy commercial property. Everyone has heard the term 'peace of mind,' and it usually has to do with insurance. It might be a tired expression, but it still is truthful. Having the right type of insurance and cover for your property means you can rest easy knowing your property is protected. However, unlike with other types of property insurance, there are a few things you should be aware of when considering insurance for your commercial property.

‍Body Corporates

‍If you are a part of a Body Corporate, you will not be able to individually insure yourself as you must all be insured under one policy. The Body Corporate's appointed Secretary is responsible for arranging the insurance, obtaining valuations, and paying invoices from the Body Corporate account.

‍Insurance for building

‍No matter how big or sturdy your building is, it can still be prone to damage. Your policy can include cover for:

- Signage

- Fencing

- Parking areas

Contents insurance is typically the responsibility of the tenant. However, there are still assets within the building that need to be covered under the owner's policy, which can include:

- Lifts

- Air-conditioning

- Heat pumps

In New Zealand, insurance companies require commercial properties to have Total Sum Insured, which is how they measure the maximum amount to be paid out to rebuild the property. The Total Sum Insured estimates the cost to rebuild the building in the event of a total loss due to disaster. This will include demolition costs, re-design, and architecture costs.

Natural disasters

‍While natural disasters like earthquakes are covered under New Zealand insurance policies, they will only cover up to the sum insured. The cost of rebuilding your property will become your financial responsibility if your property isn't adequately insured. This can have an even more disastrous impact on your finances. If you are covered, and disaster does strike, you will receive up to the maximum amount stated in your Total Sum Insured.

Rent cover

When the property itself becomes damaged to the point of needing to be rebuilt, your rental income will also take a hit. Bills, management fees, and mortgage payments will continue, but as the building might not be usable, you will be left without your usual rent income stream. Make sure your policy includes Adequate Loss of Rents cover.

Insurance Valuation

‍Having your property assessed is critical when it comes to insurance. This is called an Insurance Valuation. This is an independently assessed estimate that both insurance companies and owners can rely on and is arranged by the Body Corporate Secretary and is typically carried out by a Registered Valuer. Having an insurance valuation can help quantify your claim exposure, lower your premium, and often is a cost that can be delegated to the tenant. It is vital that you get this done regularly, at least every two years, in order to ensure that you have sufficient cover. Have insufficient cover or not having the right policy for your property can have serious financial consequences. And it's best to have someone by your side that knows how to best protect your assets. The team at Azure can assist you in understanding what kind of policy and what cover your property needs. Get in contact with us today to discuss your property.