If you own a building for commercial use, either you or your tenants will have in place a commercial property owners insurance. This will either be a policy that you arrange yourself (and then bill the tenant) or the tenant arranges this under a full insuring and repairing lease.
If the property is not occupied, then you can’t really have anyone else insure the structure for you. It is amazing though, how many people choose not to insure buildings when they are empty. Every commercial insurance underwriter in the land will tell you that empty properties present a significantly higher risk. In these cases, it is up to you to arrange insurance for the building. Please do not be fooled into thinking because it is empty, the risk of damage is reduced.
If you have a tenant, then a getting them to insure the building under an insuring and repairing lease occurs in the minority of cases. Mostly, in our experience, in excess of 70% of the time, it will be the ultimate landlord that arranges the cover and then bills the tenant either annually, six monthly or quarterly.
If you are asking the tenant to do this for you, they will either get a separate policy, or add this to their standard business insurance. In most cases it is cheaper to stick the buildings in their standard package policy, than to take out a totally separate, stand alone, cover.
The lease will specify the type and level of cover, but do you actually check this? Our advice is to ask your tenant to get an emailed copy of the policy from their broker and get this sent to you on an annual basis. You are doing as much as you possibly can to check that cover is in place. Don’t forget, they could take out a policy on a Monday, get it emailed on the Tuesday (to you) and then cancelled on the Wednesday. You will be none the wiser but at least by checking once a year your tenant knows that this is something you want to make sure is in force.
To make sure it is not cancelled without you at least having a chance to do something about it, you can ask the tenant to have your financial interest noted on the policy. A policy normally runs for one calendar year. All insurers agree that if there is a formal request to note a financial interest on a policy, then they will do two things. Firstly, it will be added to the policy documentation records. Your name and details will appear on the insurance schedule, noting that you are the beneficial owner of the property insured.
Secondly, they will notify you if the policy is to be cancelled. For example, the tenant may default on their premiums and the insurers will have no option but to cancel. But, if they do this, your asset could be uninsured. So, as you are the noted interest, they will contact you and advise that either the policy has been cancelled, or (more likely) that it will be cancelled in a specified period, say 14 days, unless they are contacted.
You can then speak to the insurers and sort out the outstanding payments to keep the policy going, then you can bill the tenant, at least this way the insurance never ceases.