If you let a shop, office, warehouse or industrial unit, or a building with a shop downstairs and flats above, you need commercial property owners' insurance rather than a residential landlord policy. It covers the building for its rebuild cost, your liability as the property owner, and loss of rent if the premises can't be used after insured damage. What your tenant does inside the building is one of the biggest factors in what cover is available.
This guide explains how commercial and mixed-use landlord insurance works and what insurers ask. For residential lets, see our landlord insurance UK guide.
Residential landlord vs property owners' insurance
A residential landlord policy is designed for homes let to people living there. A commercial property owners' policy is designed for buildings used for business. The differences:
Trade-based underwriting. The insurer looks at the tenant's business: a takeaway with deep fat fryers, a hairdresser, an accountant's office and a car repair workshop are very different risks.
Lease-driven cover. Commercial leases often make the landlord insure the building and recover the premium from the tenant. The policy needs to match what the lease says.
Loss of rent may be calculated over a longer period, because commercial re-letting can take time.
Liability may need higher limits, depending on the use and footfall.
Mixed-use buildings: flats above shops
Mixed-use properties are common on high streets. The insurer needs to understand both parts:
the commercial tenant's trade, which affects fire risk for the whole building,
the residential flats, which bring residential tenancy duties, gas and electrical safety rules, and the Renters' Rights Act if they're let on assured tenancies in England,
whether the flats have a separate entrance and fire separation from the commercial unit,
who insures what, if the flats are sold on long leases.
Describe the building carefully. A flat above a fish and chip shop and a flat above a solicitor's office are different risks.
What property owners' insurance usually covers
Buildings for the reinstatement value, including landlord's fixtures and fittings.
Loss of rent if the premises become unusable after insured damage, for an indemnity period you choose.
Property owners' liability for injury or damage caused by the building.
Employers' liability, if you employ anyone at the property.
Terrorism, as an extension, often needed for city centre property or required by lenders.
Optional covers: glass, subsidence, accidental damage, unoccupied property, engineering inspection for lifts and plant.
The tenant usually needs their own insurance for their contents, stock, business interruption and their own liability.
How your tenant's trade affects cover
Insurers ask about:
heat and cooking: commercial kitchens, takeaways, fryers and extraction systems,
hot works: welding, cutting or other processes involving flames or sparks,
hazardous materials and storage,
late-night or licensed use: bars and venues,
vacant units and how often they're inspected.
If your tenant changes, or the same tenant changes what they do, tell your insurer. A change of use is one of the most common things landlords forget to declare.
Compliance points insurers ask about
Fire risk assessment. The Regulatory Reform (Fire Safety) Order 2005 applies to non-domestic premises and to the common parts of mixed-use buildings. Someone must be the responsible person.
Asbestos. Under the Control of Asbestos Regulations 2012, there's a duty to manage asbestos in non-domestic premises, which can fall on landlords depending on the lease.
Energy performance. Minimum energy efficiency standards apply to let commercial property in England and Wales, currently EPC band E as a minimum, with limited exemptions. The residential flats have their own planned target of band C by 1 October 2030, still to be set in regulations (see our EPC C 2030 guide).
Electrical and gas safety in residential parts, and good maintenance in commercial parts. See our landlord safety certificates checklist.
Vacant commercial units
Empty commercial units carry a higher risk of arson, vandalism, squatting and escape of water. Policies often restrict cover after a set unoccupied period. Tell your insurer as soon as a unit becomes vacant and agree inspection and security arrangements. See our void and unoccupied property page.
Questions to settle before you buy
Does the insurance obligation in the lease match the policy?
Is the reinstatement value up to date?
What indemnity period is right for loss of rent, given how long re-letting might take?
Is the tenant's trade fully and accurately described?
Is terrorism cover required by the lender or lease?
Are the residential parts insured on the right basis?
How are vacant periods handled?
How we can help
Commercial and mixed-use property is a specialist area. We'll check which insurers on our panel will write your building, based on the tenant's trade and the property, and come back with what's available.
Leases and insurance: who pays and who claims
Commercial leases usually make the landlord responsible for insuring the building, and allow the landlord to recover the premium from the tenant through the service charge or an insurance rent. Check your leases for:
The insured risks you must cover.
The sum insured you must maintain.
Rent cessation clauses, which let the tenant stop paying rent if the property can't be used after an insured event. Loss of rent cover should match that period.
Tenant obligations, such as notifying you of changes to their business or alterations.
Noting interests, where the tenant or lender asks to have their interest noted on the policy.
A mismatch between the lease and the policy can leave you paying for something you thought was covered. If you're unsure, ask your solicitor to review the insurance clauses alongside your policy.
Mixed portfolios
If you own residential and commercial properties, you may be able to put them on one property owners' policy or keep them separate. We'll check which insurers on our panel will write your mix and set out the options.
Frequently asked questions
Can I use residential landlord insurance for a shop with a flat above?
Usually not. A mixed-use building needs a policy that covers the commercial part and the tenant's trade, as well as the residential part.
Who insures a commercial building, the landlord or the tenant?
It depends on the lease. Often the landlord insures the building and recovers the cost from the tenant, while the tenant insures their own contents and business.
Does property owners' insurance cover my tenant's stock?
No. The tenant needs their own contents and stock insurance.
What is loss of rent cover for commercial property?
It pays the rent you lose if the premises can't be used after insured damage, for the indemnity period you choose.
Do I need to tell my insurer if my tenant changes?
Yes. A new tenant or a change in their trade can change the risk significantly.
Is terrorism cover necessary?
It isn't automatic. Lenders and leases sometimes require it, especially in town and city centres.
Get your commercial property reviewed
Send us your current property owners' or landlord policy, or your renewal, plus a summary of the lease, and we'll review it and come back with quotes from the insurers on our panel that will write it. Start here.
Meshed is a trading name of Mesh'd Limited, authorised and regulated by the Financial Conduct Authority (FRN 1033248). We charge a flat 10% broker fee. This guide is general information, not legal advice.
Vincent Liu
Co-founder & CTO
