Insuring Commercial Property Held in a SIPP or SSAS

When a pension scheme owns the building and the member’s own business occupies it, the insurance has to reflect who actually owns what. Getting the names wrong is the classic mistake — and it surfaces at claim time.

Who actually owns the building

A SIPP or SSAS that holds commercial property holds it through trustees: typically a professional trustee company, often alongside the member or members as co-trustees, with the legal title registered in the trustees’ names for the benefit of the scheme. The member’s trading business does not own the building — even if the member founded the company, funded the pension and works in the premises every day. The business is simply the occupier, normally under a formal lease granted by the trustees.

That structural point drives everything about the insurance. The policyholder for the buildings cover should be the party with the insurable interest in the buildings — the trustees as owners — and the occupying company’s own insurance should deal with what the occupier is responsible for: its contents, stock, liability and business interruption. One important caveat before going further: how the property came to sit inside the pension, and whether that structure suits you, is a matter for your financial adviser. This page is only about insuring a property that is already held that way — nothing here is pensions or tax advice.

Why the insured names matter so much

The most common fault we see with pension-held property is a buildings policy taken out in the name of the trading company, because that is who pays the premium and who dealt with the broker historically. It feels administratively tidy and it is structurally wrong: the trading company does not own the buildings.

Why does it matter? Insurance pays the party named on the policy for loss to their insured interest. If the named insured does not own the damaged building, awkward questions follow a serious loss: whether the policyholder had an insurable interest in the buildings at all, whether the insurer was given a fair presentation of who owned what, and how indemnity for the trustees’ asset can properly be paid to a company that never owned it. Wordings and insurer practice vary, and many situations get resolved — but a large claim is the worst possible moment to be renegotiating who the policy should have named. The clean approach is to get the names right at placement: the trustees (and the scheme) identified as insured for the buildings, with other interested parties noted where appropriate.

A genuine landlord-and-tenant relationship

Because the trustees own the building and the member’s company occupies it, there is a real landlord and a real tenant — and the arrangement should behave like one, not like a family arrangement where nobody reads the lease. The lease will typically set out insuring obligations in a familiar commercial pattern: the landlord (the trustees) insures the buildings, and the tenant reimburses the premium as insurance rent alongside the ordinary rent. Leases in this setting are often drafted on full repairing and insuring lines, in general terms, with the tenant responsible for repair and the insurance arrangements defined in the lease.

The tenant company still needs its own insurance programme — contents, tenant’s improvements where the lease makes them the tenant’s responsibility, liability and business interruption — because the trustees’ buildings policy does not protect the trading business’s own interests. The trustees, for their part, will usually want loss of rent cover and property owners’ liability, because a landlord’s liability to visitors and neighbours exists even when the tenant is the owner’s own company.

What professional trustees typically require

Professional trustee firms take the insurance of scheme assets seriously, and their requirements — which vary from firm to firm — tend to follow a recognisable pattern: the policy in the correct names with the scheme’s interest recorded; buildings insured on a full reinstatement basis with the sum insured kept current; property owners’ liability in place; and evidence of cover provided at inception and renewal. Many also expect to be told promptly about anything that changes the risk — the tenant leaving, works at the property, or a period of unoccupancy — because as owners they carry the consequences of a gap in cover.

Treat those requirements as an ally rather than an administrative burden. They exist because the building is a pension asset, and a poorly insured pension asset is a problem for the member above all.

How a broker arranges it

Placing cover for pension-held property is mostly about getting the structure right before getting quotations. A broker will confirm the legal ownership from the title and the lease, establish exactly which trustees and scheme should be named, check what the lease says about insurance and insurance rent, and then arrange buildings, loss of rent and property owners’ liability for the trustees — with the tenant’s separate covers reviewed alongside so nothing falls between the two programmes.

An illustrative example, simplified for the shape of it: a member’s SSAS buys the industrial unit the member’s engineering company trades from. The old buildings policy, still in the company’s name, is replaced at the next renewal with a policy naming the SSAS trustees, insurance rent is dealt with under the lease, and the company keeps its own commercial combined policy for contents, liability and interruption. When a storm damages the roof, the claim proceeds in the owners’ names without any argument about who should have been insured.

Frequently asked questions

Can the tenant company insure the building, since it pays for everything anyway?

Paying the premium and being the policyholder are different things. The usual arrangement is that the trustees insure as owners and the tenant reimburses the cost as insurance rent under the lease. If the tenant company is the named insured on the buildings, the ownership position and the policy do not match — which is exactly the mismatch that causes difficulty after a loss.

Does the pension scheme really need liability cover when the tenant runs the site day to day?

Generally, yes. Owners can face claims in their own right — from visitors, neighbours or passers-by — independent of the tenant’s operations, and professional trustees commonly require property owners’ liability for that reason. The tenant’s public liability protects the tenant; it does not stand in for the owner’s.

What if the member’s company leaves and the unit is let to an outside tenant?

Tell the broker and the trustees before it happens. A new tenant means a new trade at the premises and possibly a period of unoccupancy in between — both are changes insurers expect to hear about, and both may affect terms. Wordings vary, and the disclosure is straightforward when made in good time.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952).