7 Things You Cannot Ignore When It Comes to Your Commercial Building Insurance

The cost of being underinsured as a business owner can be dire. When running a tight annual budget, you can’t afford to lose any money (even small sums) due to destruction to your business property.

Yet, so many insurance providers and consumers underestimate the total cost of rebuilding and replacing valuable business assets.

For example…

Say you insure your commercial building for the total value of your original purchase price…

One day, an electrical fire breaks out in the mail room, and you lose the great majority of your business assets across the office, including the structure itself.

You make a claim to your insurance provider, and they pay-out the contracted amount.

But then…

You find that architects have raised their fees by 35%...

You can’t find a contractor who’s willing to rebuild quickly, so you’re forced to pay an additional ‘RUSH FEE’ just to get your business back on its feet…

And then… you realize that you’ll have to pay GST on every piece of material, and hour of labour, that goes into the rebuild.

All of those additional expenses come AFTER you’re forced to pay demolition and debris removal companies to clear your property for the rebuild.

Suddenly, you’re out hundreds of thousands of dollars… and you THOUGHT that you were completely covered.

With the help of your Insurance Broker, make sure to factor in these 7 additional expenses:

  • Debris Removal – This is often overlooked, but you WILL have to remove the damaged assets at your business location before you can start to rebuild and replace. Plan accordingly.
  • Architects, Engineers, etc. – Before you can start the rebuild, you’ll need to hire a variety of people to get the project underway. This includes, but is not limited to, surveyors, architects, and (in some cases) engineers.
  • Government Regulations – If your business currently occupies an area that’s governed by local building regulations, you’ll need to factor compliance with those standards into the final cost. Example: Accessibility, Fire Safety, Etc.…
  • Goods & Services Tax (GST) – As you already know, end-consumers are required to pay a 10% GST on most sales. After calculating the total expected costs of a full rebuild, add 10% of that total to ensure that your GST is covered.
  • Business Improvements and Essential Equipment – Be sure to update your coverage on a regular basis to account for additions and improvements to your original business location.

  • Legal Expenses – Legal disputes are an unfortunate reality when building, or rebuilding, your business. Be sure to factor in possible disputes with your local government, or with the contractors, architects, and engineers that you pay to complete the project.
  • Material and Labour Costs – If you’ve been operating your business from the same location for many years, the building expenses in your area have almost certainly changed over time. It’s essential that you account for those rising prices before you settle on your total Building Sum Insured.

Don’t Be Afraid to Ask for Help

When you’re running a business you probably don’t have a lot of time to think about all of the expenses that could befall your business.

You need a trusted insurance expert who you can trust to provide you with the exact coverage that you need to protect your business assets. No more. No less.

With over 30 years of experience in the Australian Insurance Industry, Insurance House is ready and willing to assess your business and advise you on the proper plan to protect it.

To learn more about Commercial Building Insurance, please feel free to reach out to a member of our broking team on 1300 305 834. Or, you can email us on: ih@ihgroup.com.au.

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