Office Building Insurance
An office is a low hazard building with a high value fit out. There is little in the way of process risk, so common claims and exposures include water, fire from electrical origin, and damage during the fit outs that happen every time a tenant moves in or out.
Escape of water is a significant exposure for office buildings. Pipework runs above suspended ceilings through floors full of desks, servers and cabling, and a leak on the fourth floor on a Friday evening is found on Monday morning three floors further down.
Occupancy patterns have changed and insurers ask about it. Floors let but rarely used, tenants on flexible terms and whole buildings running at part capacity all raise the unoccupancy question, and the answer affects both terms and conditions.
We can advise owners, managing agents and residents' companies on insuring office buildings, from a single suite above a shop to a multi let block with its own plant, lifts and common parts.
Common claims and risk exposures
The exposures that produce claims in this trade, rather than a generic list.
Water above a ceiling full of equipment
Chilled water, heating and sprinkler pipework runs through the ceiling void above the working floor. When it fails the damage is to ceilings, lighting, cabling, IT and the floor below, and the resulting reinstatement and business interruption costs can significantly exceed the cost of repairing the original leak.
Fit out churn between tenancies
Offices are refitted constantly. Contractors cut into walls and ceilings, isolate alarms and sprinklers, and leave hot works and temporary electrics behind them. A large share of office fires and floods start during somebody's fit out rather than during ordinary occupation.
Electrical fire and equipment load
Server rooms, comms cabinets, chargers and kitchen appliances concentrate electrical load in areas that are unattended overnight. Insurers expect a current electrical installation condition report and increasingly ask about thermographic surveys on larger buildings.
Common parts and the people in them
Reception, lifts, stairs, car parks and plant rooms remain the owner's responsibility in a multi let office. Falls on stairs and in car parks are the routine liability claim, and lift entrapment the one that generates complaints even when nobody is hurt.
Floors that are let but empty
A floor under lease that nobody attends is not obviously unoccupied, but it behaves like it: no one notices a leak, a failed alarm or a propped fire door. This is the gap between what the lease says and what the building is actually doing.
The cover we arrange
We arrange insurance around the property, its use, construction, occupancy and ownership structure. The cover available will depend on the individual risk and the terms offered by insurers.
Buildings
The structure, landlord's fixtures and the base build services on a reinstatement basis. On an office the plant is a meaningful part of the sum insured: lifts, air conditioning, boilers, switchgear and the building management system.
- Structure, common parts and landlord's fixtures
- Lifts, air conditioning and building services
- Professional fees and debris removal
- Compliance with current building regulations
Property owners liability
Liability arising from ownership of the building and its common parts. Limits of £5m or £10m may be appropriate depending on the building, occupancy and contractual requirements, including larger multi let buildings and those with underground parking.
- Falls in reception, stairs and car parks
- Lift entrapment and door mechanisms
- Limits typically £5m or £10m
- Contractors working in common parts
Loss of rent and service charge
Rent and, where insured, service charge income lost while the building cannot be occupied. On a multi let office this needs to reflect that a single incident can put several tenancies out of use at once.
- Rent across all affected lettings
- Service charge income where insured
- Indemnity period of 24 months or more
- Alternative premises for tenants where required
Engineering inspection
Lifts, air conditioning pressure systems and any lifting equipment require statutory thorough examination. In a multi let office the duty usually sits with the owner because the plant serves the whole building.
- Statutory lift inspection
- Pressure systems in air conditioning plant
- Inspection separate from breakdown cover
- Records kept for the managing agent
Plant breakdown
Sudden failure of lifts, chillers, boilers and switchgear. Not damage in the ordinary sense, which is why it is a separate section, and on an office it is cover that can help address the financial impact of equipment breakdown.
- Breakdown of lifts and chillers
- Boilers and switchgear
- Resulting damage where included
- Hire of temporary plant
What an underwriter will ask
Having these to hand shortens the process considerably, and usually improves the terms.
- Number of floors, net lettable area and the year of construction
- Occupancy: fully let, part let, and how much of the let space is genuinely in use
- Tenant mix and whether any occupier is other than ordinary office use
- Presence of a server room, its suppression and its power arrangements
- Lifts, air conditioning, boilers and who holds the maintenance contracts
- Fire detection and any sprinkler protection, and their certification
- Date of the last electrical installation condition report
- Escape of water claims over the last five years, in particular repeat incidents
What affects the cost of your insurance?
The main factors insurers consider when assessing the premium.
Occupancy and tenant mix
A fully let building of ordinary office tenants is the keenest risk on this class. Part occupancy, flexible or serviced occupation, and any non office use in the building all move the rate.
Age and condition of services
Modern plant with current inspection records and a recent electrical report rates better. Ageing pipework and switchgear are what sit behind the two claim types that dominate this class.
Escape of water history
Repeat water claims affect office terms more than anything else, and insurers respond with a separate, higher escape of water excess rather than simply increasing the premium.
Sprinklers and detection
Sprinkler protection materially improves terms on a larger office, and addressable detection with a monitored connection helps on any of them, because it shortens the time between a leak or a fire starting and somebody attending.
Conditions and exclusions to consider
Terms vary between insurers, so treat these as the questions to ask rather than a description of any one policy.
Tenant's contents, IT and fit out
The owner's policy covers the base building and landlord's fixtures. Desks, servers, cabling and the tenant's fit out are theirs to insure, and after a flood the argument is usually about which side of that line the flooring and ceiling tiles fall.
Damage during tenant works
Where a tenant's contractor causes the damage, the claim generally belongs to that contractor's liability insurer. The owner's policy may respond in the first instance, but expect the insurer to pursue recovery, and expect questions about what was required of the contractor.
Unoccupancy where a floor is empty
Conditions can apply to a part of a building as well as the whole. A vacant floor beyond the stated period usually brings inspection requirements and a narrower set of perils for that part.
Gradual failure of plant
Wear in a chiller, a boiler at the end of its life or corrosion in pipework is maintenance. The sudden consequence may be insured while the cause is not, which is why the age and service history of plant is asked about.
Common questions
Does the policy cover our tenants' computers?
No. The owner's policy covers the building, the common parts and the landlord's fixtures. Tenants insure their own contents, IT and fit out, and should also carry their own business interruption because your loss of rent cover protects your income, not theirs.
What counts as unoccupied in a part let office?
It varies by insurer, and it can apply floor by floor rather than only to a whole building. If a floor is empty, or let but genuinely not attended, tell the insurer: most will keep cover broadly intact given inspections and isolation of services.
Do we need engineering inspection as well as insurance?
If the building has a lift or pressure systems, yes. Thorough examination is a statutory duty separate from insuring the plant against damage, and in a multi let office it usually falls to the owner because the plant serves everyone.
Is plant breakdown worth adding?
On a building where a failed lift or chiller would stop tenants working, generally yes. Damage cover responds to a fire or a flood, not to a chiller simply failing, and the cost of hiring temporary plant is often the part that stings.
How do I get a quote from True Risk Solutions?
Call 01304 262880 and speak to a broker, or email info@truerisksolutions.co.uk with what you do, what you need cover for and a phone number with the best time to call, and a broker will call you back. We need a phone number to quote, because the cover and the price depend on questions that are quicker to answer on a call than by email.
Related trades
Speak to a specialist who understands your industry
Tell us about your business and the work you undertake, and we will come back to you with cover options built around it. Call 01304 262880, or email us with a phone number and the best time to call and a broker will ring you back.