Top 10 Office Building Insurance Mistakes (And How to Avoid Them)

Office building insurance is one of those things that feels “sorted” once the policy is in place—until a claim happens. Then the details matter: sums insured, the basis of cover, who’s responsible for what in the lease, and whether the insurer will accept the evidence you can provide.

Below are the 10 most common office building insurance mistakes we see in the UK, why they cause problems, and the practical steps you can take to avoid them.

1) Insuring the wrong amount (or using market value instead of rebuild cost)

A classic mistake is setting the building sum insured based on the property’s market value or a rough estimate. Buildings insurance is usually based on reinstatement (rebuild) cost, not what you paid for the building.

Why it hurts: If the sum insured is too low, you can end up underinsured and face an “average” clause reduction on claims.

How to avoid it:

• Use a professional reinstatement valuation (ideally from a chartered surveyor) and keep it updated.

• Make sure the figure includes demolition, debris removal, professional fees and compliance upgrades.

• Review sums insured annually and after any works.

2) Forgetting professional fees, debris removal and inflation

Even when the rebuild cost is roughly right, policies can still fall short if you forget the “extras” that come with a major loss.

Why it hurts: A large claim often includes architect/surveyor fees, structural engineers, planning, asbestos surveys, and significant debris removal.

How to avoid it:

• Confirm the policy includes professional fees and debris removal within the sum insured (or as an additional benefit).

• Add index linking (inflation protection) where available.

• If your building has any non-standard features, flag them early.

3) Not understanding who should insure: landlord vs tenant responsibilities

Office buildings often involve leases, service charges, and shared responsibilities. It’s easy to assume “the other party” has it covered.

Why it hurts: Gaps appear when the lease says the tenant must insure certain fixtures, or the landlord must insure the structure, but the policy doesn’t match the actual obligations.

How to avoid it:

• Check the lease wording: who insures the structure, common parts, glass, plant, and tenant improvements?

• Align the insurance schedule with the lease and service charge arrangements.

• If you manage multiple tenants, keep a simple responsibility matrix.

4) Overlooking business interruption (loss of rent, alternative accommodation, increased costs)

Buildings cover pays to repair the damage. It doesn’t automatically cover the cashflow impact.

Why it hurts: A fire or escape of water can make parts of the building unusable for months. Without the right business interruption extensions, landlords can lose rental income and face extra costs.

How to avoid it:

• Consider loss of rent (for landlords) and alternative accommodation or increased cost of working (for occupiers).

• Choose an adequate indemnity period (often 12–24 months for larger properties).

• Make sure the trigger aligns with your risk (damage-based vs non-damage extensions).

5) Assuming “all risks” means everything is covered

“All risks” is a common phrase, but it doesn’t mean “no exclusions.”

Why it hurts: Claims can be declined due to wear and tear, gradual deterioration, faulty workmanship, or specific exclusions like certain flood scenarios.

How to avoid it:

• Read the key exclusions and conditions—especially around maintenance, gradual damage, and defective design/workmanship.

• Ask for a clear summary of what is and isn’t covered.

• Keep evidence of maintenance and inspections.

6) Missing key perils and extensions (flood, subsidence, terrorism, accidental damage)

Office buildings can have risk factors that aren’t obvious until you map them properly.

Why it hurts: Flood and subsidence can be excluded or restricted, and terrorism cover is often separate. Accidental damage can be essential in multi-tenant buildings.

How to avoid it:

• Check your exposure: proximity to water, history of subsidence, building age, ground conditions.

• Consider terrorism insurance (Pool Re-backed) where appropriate.

• Add accidental damage if the building use and footfall justify it.

7) Ignoring escape of water and trace & access limits

Escape of water is one of the most frequent causes of office property claims.

Why it hurts: Even if the damage is covered, the cost to locate the leak (trace & access) can be limited. Repeated water losses can also affect renewal terms.

How to avoid it:

• Confirm trace & access is included and the limit is realistic.

• Implement basic controls: regular inspections, isolation valves labelled, leak detection for higher-risk areas.

• If the building is unoccupied at times, ensure you can comply with any inspection conditions.

8) Poor unoccupied property management (and breaching policy conditions)

Many office buildings have periods of partial or full unoccupancy—during refurbishments, tenant changes, or market downturns.

Why it hurts: Policies often impose strict conditions when a building is unoccupied (e.g., weekly inspections, draining down water systems, isolating utilities, securing letterboxes).

How to avoid it:

• Tell your broker/insurer as soon as occupancy changes.

• Put a written unoccupied building checklist in place (inspections, security, utilities, housekeeping).

• Keep inspection logs with dates, photos and notes.

9) Not listing the right stakeholders (mortgagee, freeholder, managing agent) and getting claims delayed

Claims can stall when the insurer needs confirmation of interests or authority to proceed.

Why it hurts: If a lender’s interest isn’t noted, or the policyholder isn’t the party with authority to instruct repairs, you can lose time when you need it most.

How to avoid it:

• Ensure the policy correctly names the legal entity that owns the building.

• Note any mortgagee/lender interest and relevant parties.

• Clarify who can authorise works and who receives claim payments.

10) Treating insurance as a once-a-year renewal task (instead of a risk management process)

Office buildings change: refurbishments, new tenants, new uses, new security measures, and new compliance requirements.

Why it hurts: If the insurer isn’t told about material changes, cover can be restricted or claims disputed.

How to avoid it:

• Review the policy after any material change: works, occupancy, use, security, or claims.

• Keep a simple “insurance file”: valuation, schedules, leases, maintenance records, alarm certificates.

• Run a mid-term review with your broker, not just at renewal.

Quick checklist: what to review this week

• Building sum insured is based on reinstatement, not market value

• Professional fees, debris removal and index linking are included

• Lease responsibilities match the policy schedule

• Loss of rent/BI and indemnity period are adequate

• Flood/subsidence/terrorism and accidental damage are considered

• Trace & access limit is realistic

• Unoccupied conditions are understood and documented

• Correct legal entity and lender interests are noted

• Maintenance and inspection records are kept

Need a second opinion on your office building insurance?

If you want a quick gap-check, gather your current schedule, last valuation and a copy of the lease (if applicable). We can review the key risk areas—sum insured, extensions, occupancy conditions and claims practicality—so you can renew with confidence.