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Insuring Serviced Offices and Managed Workspaces

As the owner of a serviced office, you are insuring a building, a business and a workspace shared by many other businesses. Serviced office insurance for owners usually combines buildings insurance, contents and equipment cover, public and employers liability, and business interruption insurance to protect your licence income. Your occupiers still need their own insurance for their equipment, staff and professional risks.

Owning a serviced office or managed workspace brings together the risks of a landlord and a hospitality business. You provide the furniture, the internet, the meeting rooms and the reception desk, and dozens of people come and go every day. A standard office insurance policy built for a single firm in a single office may not reflect that.

This guide sets out the cover serviced office owners usually need, where the gaps tend to appear and what to ask of the businesses using your space.

Key Takeaways

  • Serviced office owners face a different risk profile from a single-occupier office building, with more visitors, more shared equipment and income that depends on members staying.
  • Your buildings and contents sums insured should, between them, cover the full rebuild cost and the fit-out you have added, with nothing falling between the two.
  • Employers liability insurance is legally required for most businesses employing staff, with cover of at least £5 million.
  • Business interruption insurance can protect licence income if an insured event makes the workspace unusable.
  • Your licence agreements should require occupiers to insure their own equipment and liability, and you should check they do.
  • Cyber risks grow with shared networks, booking systems and member data.

Why Serviced Office Insurance Differs From Standard Office Cover

A conventional office building is usually let to one or two tenants on long leases. A serviced office works differently, and insurers look at it differently.

The main differences are:

  • Licences rather than leases. Occupiers often sign short-term licences, so the mix of businesses in the building changes regularly.
  • High footfall. Members, their clients, visitors, couriers and contractors are on site every day, which increases the liability exposure.
  • Shared equipment. You own the desks, office furniture, phone systems, printers and meeting room technology.
  • Services as well as space. Reception, cleaning, events and IT support mean more staff and more business activities on the insured premises.
  • Income that depends on occupancy. If the building can't be used, members can move elsewhere quickly.

Each of these shapes the office insurance arrangements a serviced office needs.

Buildings Insurance

If you own the office building, buildings insurance for office premises protects the physical structure against insured events such as fire, storm and escape of water, with flood cover depending on location. The sum insured should be the full cost of rebuilding, not the market value of the property.

Serviced offices often carry significant fit-out: glass partitions, kitchens, breakout spaces, phone booths and upgraded heating and cooling. Make sure your insurer knows whether these are insured as part of the building or as contents, so nothing falls between the two. If you have refurbished recently, the rebuild cost may need updating.

If part of the building has a different use, such as a ground-floor café or retail unit, tell your insurer. A different commercial use in one part of the building can change the risk for the whole.

Contents, Fit-Out and Business Equipment

Owners typically hold a large amount of business equipment across the workspace. Office contents insurance can cover desks, chairs, phone systems, printers, screens, kitchen appliances and networking equipment against theft and damage, usually on a replacement cost basis. Theft cover often applies only where someone has broken into or out of the premises, so theft by a person who was allowed in, such as a member or visitor, may not be covered unless the policy is extended. Check this with your broker.

Theft cover deserves particular attention. In a serviced office, many people have access to the building, sometimes outside normal working hours. Insurers will want to know about your security measures, such as access control, CCTV, visitor sign-in and how keys and passes are managed. Policy terms may set conditions for these.

Remember that your contents cover protects your own equipment, not the laptops and belongings that occupiers bring in.

Liability Cover

Public Liability Insurance

Public liability insurance covers legal claims if a visitor, member or member of the public is injured, or their property is damaged, because of your business activities or the condition of your premises. A trip on a loose carpet, a fall on a wet floor or an injury at a networking event could all lead to a claim.

The level of cover you need depends on the size of the building, the number of people using it and whether you host events. Many owners combine public liability with property owners liability within their wider liability insurance, so the risks of owning the building and running the business are considered together.

Employers Liability Insurance

If you employ reception, community, cleaning or maintenance staff, employers liability insurance is compulsory insurance in most cases. GOV.UK guidance states that cover must be for at least £5 million, and that employers can be fined £2,500 for every day they aren't properly insured. It covers claims if employees are injured or become ill because of their work.

The number of employees you have, and the work they do, will affect the cost.

Business Interruption Insurance

For a serviced office owner, income comes from licence fees, meeting room bookings and services. If a fire, flood or burst pipe makes the workspace unusable, that income can stop almost overnight, while costs such as staff wages and loan repayments carry on.

Business interruption insurance can cover loss of income and the extra costs of getting back to normal after an insured event. That can help with cash flow while the workspace is out of action.

The indemnity period matters. It should allow time not only to repair the premises, but also to win back members who moved elsewhere while the building was closed. For a serviced office, that may take longer than the repairs themselves.

Cyber Risks in a Managed Workspace

Many serviced offices rely on technology: booking systems, access control, shared Wi-Fi, payment systems and member databases holding personal details. That creates cyber risks, including data breaches and ransomware attacks that could stop the building operating.

The ICO explains that personal data breaches meeting the reporting threshold must be reported without undue delay and within 72 hours of becoming aware of them. Responding to a breach can involve forensic investigation, legal advice and notifying members. Because shared networks connect so many businesses, cyber liability insurance is often worth considering alongside your property and liability cover, to help with those costs and with claims from members affected by an incident.

Empty Floors and Void Space

Occupancy in a serviced office can rise and fall. A whole floor may sit empty while you look for members, or while it is being refitted. Many policies treat a building differently once it, or part of it, is unoccupied, and may apply conditions or restrict cover after a number of days set out in the policy wording.

If a significant part of your building is likely to stay empty, tell your insurer. For longer void periods, or a building you are preparing to open, unoccupied commercial property insurance can sit alongside or in place of your usual cover.

What to Require From Your Occupiers

Your insurance protects your business, but the businesses using your space have risks of their own. Your licence agreement is the place to set expectations. Consider requiring occupiers to:

  • Hold public liability insurance, with a minimum limit you are comfortable with.
  • Insure their own equipment and contents.
  • Hold employers liability insurance if they employ staff, as the law requires in most cases.
  • Hold professional indemnity cover where their work makes it appropriate, for example professional services firms.
  • Provide evidence of cover when they join and at each renewal.

Some owners include an indemnity in the licence, under which occupiers agree to cover certain losses they cause. Your broker can review how these clauses interact with your own insurance policies.

If You Let the Building to an Operator

Not every owner runs the workspace themselves. Some let the whole building to a serviced office operator on a lease. In that case, your role is closer to that of a traditional landlord.

You would usually insure the building, your loss of rent and your liability as owner, while the operator insures its own fit-out and improvements, contents, business interruption and liability for running the workspace. The insurance clause in the lease should set out who insures the fit-out, so that nothing falls between your policy and the operator's.

Your commercial landlord insurance needs to reflect the operator's use of the building, because a busy managed workspace is a different risk from a single office tenant.

Legal Duties for Serviced Office Owners

Some responsibilities sit with you as the person who controls the premises. GOV.UK guidance explains that the responsible person for fire safety includes the owner, landlord or anyone else in control of the premises, and that for common or shared areas the responsible person is the landlord, freeholder or managing agent. Duties include carrying out and regularly reviewing a fire risk assessment.

In a serviced office, where many businesses share the same space, this is especially important. Insurers may ask about your fire risk assessment, alarm systems and evacuation arrangements.

Legal expenses cover can help with the cost of some legal claims and contract disputes, such as disagreements with members over unpaid fees or damage, depending on the policy terms.

What Affects Office Insurance Cost for Serviced Office Owners

There is no standard price, because office insurance cost depends on the building and how it is run. The main factors are:

  • The rebuild cost of the building and the value of contents and fit-out.
  • The number of members, visitors and employees.
  • Opening hours, including any 24-hour access.
  • Whether you host events or offer other services on site.
  • The location of the premises and the security measures in place.
  • The limits you choose for liability and business interruption.
  • Your claims history.

The right insurance cover depends on the way your workspace actually operates, not just its size.

Making a Claim

When something goes wrong in a building used by many businesses, more than one policy may be involved. If a claim arises:

  1. Make the premises safe and protect members and visitors.
  2. Contact your broker or insurer as soon as possible.
  3. Record what happened, with photographs and the names of witnesses.
  4. Let affected occupiers know, so they can contact their own insurers if needed.
  5. Don't admit liability before speaking to your insurer.

A broker who understands how your policy and your occupiers' policies fit together can help the claim run more smoothly.

How Ellis David Can Help

Insuring a serviced office works best when your broker takes time to understand the building, the members and how the business runs day to day.

Ellis David has been arranging insurance for over 50 years, from our office on Essex Road in Islington, London. We're an FCA-regulated broker with a UK-based team that has 150+ years' combined experience, and access to 100+ UK insurers and MGAs and 1,000+ products.

There's no call-centre anonymity. You'll deal with people you can get to know by name, and the same team helps if you need to make a claim.

If you own a serviced office or managed workspace, we can review your existing cover and arrange serviced office insurance that fits how your building is used. Get in touch for an office insurance quote.

Frequently Asked Questions

What Insurance Does a Serviced Office Owner Need?

A serviced office owner typically needs buildings insurance, contents cover for furniture and equipment, public liability insurance, employers liability insurance for any staff, and business interruption insurance to protect licence income. Cyber insurance and legal expenses cover are also commonly considered. The exact mix depends on the building and how the workspace is run.

Does My Insurance Cover Occupiers' Equipment?

Usually not. A serviced office owner's contents insurance covers equipment the owner owns, such as desks, printers and meeting room technology. Occupiers' laptops and belongings are their own responsibility, so many owners require occupiers to hold their own insurance through the licence agreement.

Is Employers Liability Insurance a Legal Requirement for Serviced Office Owners?

Yes, for most owners who employ staff, such as reception, cleaning or community teams. Government guidance says cover must be for at least £5 million, and employers can be fined for every day they aren't properly insured. Owners with no employees would not normally need it.

Why Do Serviced Offices Need Business Interruption Insurance?

A serviced office's income depends on members being able to use the space. If an insured event such as a fire or flood closes the building, licence fees can stop while costs continue. Business interruption insurance can cover the loss of income, and the indemnity period should allow time to win members back as well as complete repairs.

How Much Does Insurance for a Serviced Office Cost?

There is no fixed price. The cost depends on the rebuild cost and contents value, the number of members and employees, opening hours, events, location, security measures, the limits chosen and your claims history. A broker can assess the building and look for cover that fits.

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