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Commercial Mall Insurance

Owners of large commercial properties, especially those frequented by the public such as shopping malls, should ensure that they have realistic levels of public liability cover; usually upwards of R10 million.

Many major property owners undervalue the costs that could arise should members of the public become injured in are involved in an accident on their premises – or at worst, even die. All-important commercial mall insurance may be incorrectly calculated and limited to levels that are more appropriate to much smaller businesses and business premises.

Owners can get peace of mind if the level of public liability insurance fits the peril profile of, for example, a major shopping centre. This can protect against hypothetically expensive lawsuit by injured parties.

As a general rule of thumb, public liability insurance will cover all public areas such as parking lots, foyers, walkways and passages while the individual tenants are responsible for incidents that could happen on their own premises.

When thinking of taking out short-term commercial mall insurance, owners need to consider a couple of important aspects:

  • Always check that the insured value of the premises is recent and truthful.
  • This needs to be based on the existing replacement costs and not on the original purchase price or market value.
  • Ideally, this exercise should be undertaken at least every three years by the insurance company or your commercial broker.
  • Ensure that the replacement costs of the property are realistic; otherwise in the event of a major catastrophe, the building or buildings might not be rebuilt to the original value.
  • Changes in the surroundings could also happen over time – this could mean that services and amenities such as electricity and water would need amendment, making this a major expense to your existing premises.
  • Managing the risk of insurance by monitoring the mix of tenants in a shopping centre in commercial properties is important when considering short-term insurance for commercial property owners.
  • Obviously, when the mix of tenants includes those that make use of flammable materials – particularly in the case of industrial premises, the insurance could be loaded.
  • It makes sense that a restaurant, for example, being placed next door to a flammable paint store could impact negatively on your short-term commercial insurance.
  • Business interruption insurance for loss of revenue when something does happen is a good idea, as serious loss of income could prove to be devastating if a building is damaged, and requires lengthy repair work undertaken.

If you are considering taking out short-term commercial mall insurance it is a good idea to ensure that relationships between tenants and owner are amicable at all times and kept that way by clearly defining exactly where the responsibilities of the owner end and those of the tenant begin.

The tenant’s contract needs to stipulate exactly what is and what is not expected from the tenant as far as his or her insurance is concerned.

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