On the surface, both policies provide cover to protect a property owner’s buildings, but there are two key differences between commercial and domestic landlord insurance - the nature of the building, and the type of tenant.
Building types: Whereas many domestic properties are of standard brick and tile construction, commercial premises can vary widely in their construction.
This means premiums can also vary significantly to reflect the nature of the risk of covering buildings that could be constructed from timber, brick, or steel, or feature large flat-roofed areas, asbestos, or cladding. This will be reflected in the sum insured, which represents the full rebuild cost of the property.
Commercial buildings can also have a greater variety and complexity of heating and electrical systems which, again, affect premium rates.
Tenant types: Other than working from a home office, domestic tenants do not, generally, undertake business from their property.
But the risks to insurers increase for commercial premises, where all sorts of industrial equipment could be used, including potentially hazardous activities like welding, or the use of flammable chemicals.
Insurers need to provide the right cover at the right premium to cater to the individual needs of the property owner, depending on the type of building and the nature of the work undertaken.