Medical Office Buildings: Unique Risks and Insurance Requirements

Why medical office buildings are different

Medical office buildings (MOBs) sit in a unique space between “standard commercial property” and “healthcare premises”. Even when the building owner is not delivering care, the site is designed for clinical use, attracts vulnerable visitors, and often houses higher-value fit-outs and specialist equipment.

That combination changes the risk profile. Footfall is often steady, appointments are time-sensitive, and tenants may include GP surgeries, dentists, physiotherapists, diagnostic clinics, private consultants, pharmacies, or allied health services. A single incident can trigger multiple claim types at once: property damage, injury, business interruption, regulatory scrutiny, and reputational impact.

For UK owners, landlords, and managing agents, the goal is simple: protect the building, protect income, and reduce the chance that a tenant incident becomes a landlord liability.

Common occupiers and how they shape risk

Different occupiers bring different hazards:

• GP practices and private clinics: high public footfall, clinical waste, medication storage, infection control expectations.

• Dental practices: waterline hygiene, sharps, small lab areas, X-ray equipment.

• Physio/rehab: slips and trips, manual handling, treatment couches, higher frequency of minor injuries.

• Imaging/diagnostics: expensive equipment, electrical load, cooling requirements, potential radiation controls.

• Pharmacies: controlled drugs, robbery risk, stock value, temperature-sensitive products.

• Aesthetic clinics: higher allegation frequency (treatment outcomes), potential for dissatisfied customers and complaints.

Even if you are “just the landlord”, your building design, maintenance, and lease wording can be pulled into a claim.

The unique risk categories for MOBs

1) Higher public and patient liability exposure

Medical sites typically welcome patients who may be elderly, in pain, disabled, or otherwise vulnerable. That increases the likelihood and severity of injury claims.

Key exposures include:

• Slips/trips on entrance mats, wet floors, uneven paving, ramps, and steps

• Lift failures or poor lift maintenance

• Poor lighting in corridors and car parks

• Inadequate handrails, signage, or access routes

• Car park incidents (pedestrian vs vehicle)

Insurance impact: Public liability limits often need to be higher than a typical office building, and insurers will look closely at risk management and maintenance records.

2) Infection control and hygiene expectations

Even where clinical services are tenant-controlled, the building environment matters. Poorly maintained washrooms, ventilation issues, damp/mould, or inadequate cleaning standards in common areas can become a flashpoint.

Examples:

• Allegations that a building issue contributed to illness

• Legionella concerns in hot/cold water systems

• Poor ventilation causing odours, humidity, or mould

Insurance impact: Property insurers may require evidence of planned preventative maintenance. Liability insurers may ask about cleaning regimes, water testing, and contractor controls.

3) Fire risk and electrical load

MOBs often have:

• Higher electrical demand (diagnostic devices, sterilisation equipment, IT)

• More compartmentation requirements

• Oxygen cylinders or flammable substances (tenant-controlled but building-wide impact)

Fire risk is also affected by:

• Old wiring or overloaded circuits

• Poor housekeeping in plant rooms

• Inadequate fire doors or alarm maintenance

Insurance impact: Fire safety compliance and documentation (alarm servicing, emergency lighting tests, fire risk assessments) can directly affect terms, excesses, and claims outcomes.

4) Specialist fit-out and reinstatement complexity

Medical tenants frequently invest heavily in fit-out:

• Clinical rooms, partitions, cabinetry

• Lead-lined walls (imaging)

• Enhanced HVAC

• Sterilisation rooms

• Reception and waiting areas designed for patient flow

After a loss (fire, escape of water), reinstatement can be slower and more expensive than a standard office.

Insurance impact: Sum insured accuracy is critical. Underinsurance can reduce claims payments. Consider whether the landlord policy should include tenant improvements (depending on lease responsibilities).

5) Escape of water and building services

Water damage is one of the most common and costly property claims. MOBs can be vulnerable due to:

• Multiple sinks and treatment rooms

• Ageing pipework

• Out-of-hours occupancy patterns

• Complex HVAC and chilled water systems

Insurance impact: Insurers may require leak detection, isolation valves, and clear procedures for shutting off water.

6) Business interruption and rental income risk

If a building becomes unusable, the landlord’s primary exposure is often loss of rent. Medical tenants may also have strict continuity needs and may relocate quickly.

Key issues:

• Indemnity period too short (repairs and approvals can take longer)

• Rent-free periods after a loss

• Service charge shortfalls

Insurance impact: Loss of rent cover and the right indemnity period (often 24–36 months for complex sites) can be crucial.

7) Security, theft, and malicious damage

Medical buildings can be targets for:

• Theft of controlled drugs (pharmacies)

• Theft of laptops and patient devices n- Vandalism or malicious damage

• Out-of-hours break-ins

Even if the tenant owns the items, a break-in can damage doors, glazing, and locks.

Insurance impact: Property policies may include security conditions (alarms, locks, CCTV). Breach of conditions can affect claims.

8) Cyber and data-related exposures (building owner angle)

Clinical data is typically the tenant’s responsibility, but landlords and managing agents may still hold:

• Tenant contact and billing data

• CCTV footage

• Access control logs

• Building management system (BMS) data

If you manage the site, a cyber incident can disrupt operations, compromise data, or lock building systems.

Insurance impact: Consider cyber insurance for the landlord/managing agent, especially if you operate access control, CCTV, or smart building systems.

9) Contractors, maintenance, and “non-delegable” duties

Landlords rely on contractors for lifts, fire alarms, electrical works, cleaning, and grounds maintenance. Poor contractor management can create liability.

Best practice includes:

• Vetting contractors (competence, RAMS, insurance)

• Permit-to-work for higher-risk tasks

• Clear records of inspections and servicing

Insurance impact: Liability insurers may ask about contractor controls and maintenance schedules.

10) Regulatory and compliance pressures

While medical regulation (e.g., CQC) is usually tenant-led, the building must still meet:

• Fire safety requirements

• Health and safety duties for common parts

• Accessibility expectations

• Asbestos management (where applicable)

Insurance impact: Insurers expect evidence of compliance and may impose warranties or conditions.

Core insurance covers for medical office building owners (UK)

Buildings insurance (property)

This is the foundation. It typically covers the structure and landlord-owned fixtures against insured perils (fire, flood, storm, escape of water, impact, theft, malicious damage).

Key points to get right:

• Sum insured: based on full reinstatement cost (not market value)

• Index linking: helps keep pace with inflation

• Subsidence: consider location and building type

• Flood: check exposure and terms

• Trace and access: important for water leaks

Property owners’ liability (public liability)

Covers injury or property damage to third parties arising from the premises (common areas, car parks, entrances).

For MOBs, consider:

• Higher footfall and vulnerability of visitors

• Adequate limit of indemnity

• Inclusion of car parks and external areas

Employers’ liability (if you employ staff)

If you employ anyone (caretaker, cleaners directly employed, facilities staff), employers’ liability is a legal requirement in most cases.

Loss of rent / rental income

Covers loss of rent following insured damage that makes the premises untenantable.

Consider:

• Indemnity period (often 24–36 months)

• Alternative accommodation clauses

• Rent-free periods and service charge implications

Terrorism insurance

Depending on location and tenant profile, terrorism cover may be relevant. Many UK property owners consider Pool Re-backed options.

Legal expenses

Can help with:

• Contract disputes

• Property disputes

• Eviction proceedings

• Employment disputes (if you employ staff)

Engineering inspection (statutory inspections)

If the building has lifts, pressure systems, or other plant requiring inspection, engineering inspection cover can help manage compliance and reduce risk.

Cyber insurance (landlord/managing agent)

Useful if you:

• Store personal data

• Use building management systems

• Rely on IT for operations and billing

Optional and specialist covers to consider

• Equipment breakdown: for landlord-owned plant (HVAC, lifts)

• Environmental liability: if there is a realistic pollution exposure (fuel tanks, certain waste scenarios)

• Directors’ & officers’ (D&O): for property companies with directors exposed to management decisions

• Commercial combined policy: where you want property + liability + business interruption in one package

Lease structure: where many claims are won or lost

Insurance is only half the story. The lease determines who insures what, who maintains what, and who is responsible after an incident.

Key lease considerations:

• Repairing obligations: landlord vs tenant

• Fit-out responsibility: who insures tenant improvements?

• Alterations: consent process and evidence of contractor insurance

• Clinical waste: clearly tenant responsibility

• Fire safety cooperation: shared duties and access for inspections

• Subrogation waivers: can reduce disputes between landlord and tenant insurers

A well-structured lease reduces grey areas that lead to delayed claims and legal costs.

Risk management checklist for MOB owners

• Keep a documented maintenance plan for lifts, alarms, emergency lighting, HVAC, and water systems

• Carry out regular inspections of common parts and car parks

• Maintain a robust contractor management process (RAMS, permits, insurance checks)

• Review fire risk assessments and implement actions promptly

• Manage legionella risk with appropriate testing and records

• Ensure clear signage, lighting, and accessibility provisions

• Confirm tenants hold appropriate insurance (including their own public liability and professional indemnity where relevant)

• Keep accurate reinstatement valuations and review sums insured annually

How to buy the right cover (and avoid common mistakes)

Mistake 1: Using market value instead of reinstatement cost

Buildings insurance should reflect the cost to rebuild, including professional fees and debris removal.

Mistake 2: Underestimating the indemnity period

Complex reinstatement, planning, specialist contractors, and tenant requirements can extend timelines.

Mistake 3: Not declaring the true occupancy

Insurers need to know the tenant mix. “Office” is not the same as “medical clinic”.

Mistake 4: Ignoring policy conditions

Alarm requirements, unoccupancy clauses, and water shut-off procedures can affect claims.

Mistake 5: Assuming tenant insurance protects the landlord

Tenant policies rarely cover the landlord’s building or rental income exposure.

FAQs

Do medical office buildings need specialist insurance?

Often, yes. Even if the structure is similar to a standard office, the occupier profile, footfall, and fit-out complexity can require higher liability limits, more detailed underwriting, and stronger risk management.

Is professional indemnity insurance needed for the building owner?

Usually not for a passive landlord. However, if you provide professional services (property management, consultancy, design, or advice) you may need professional indemnity.

Who should insure the tenant’s fit-out?

It depends on the lease. Many tenants insure their own contents and improvements, but some leases require the landlord to insure certain fixtures. Clarify this early to avoid gaps.

What limit of public liability is typical?

There is no one-size-fits-all. Medical sites often choose higher limits due to vulnerable visitors and higher footfall. The right limit depends on size, occupancy, and contractual requirements.

What is “loss of rent” insurance?

It covers the rental income you lose if insured damage makes the building unusable, typically until repairs are complete or the indemnity period ends.

A practical next step

Medical office buildings can be excellent long-term assets, but they need insurance that reflects their real-world exposures. A quick review of your tenant mix, reinstatement valuation, maintenance records, and lease responsibilities can make a major difference to both premium and claims outcomes.

If you’d like, share the building type (single tenant vs multi-let), location, and the occupiers on site, and we can outline a sensible cover structure and the key underwriting details insurers will ask for.