It’s common for commercial property owners to require business tenants to carry commercial insurance policies. It’s a way of ensuring the tenant can pay rent even during an economic downturn. The tenant’s rental insurance also pays for accidents or injuries on the property. Here are reasons why a commercial rental or lease agreement often requires tenants to carry liability insurance.
Commercial Rental Insurance Protects Landlords from Business Tenant Disasters
Part of being a commercial property owner involves insuring against accidents and other mishaps that occur to third parties while visiting the property. Standard business or landlord insurance policy does not cover this protection. Commercial property management companies usually require tenants to carry their coverage to protect against losses.
It’s likely the landlord carries the right insurance to cover damage to the structure of an apartment complex but doesn’t cover the contents within the units. A business that rents or leases space can purchase business liability insurance to protect against lawsuits that might arise from neighboring tenants.
The tenant’s insurance also protects the property owner against tenant errors that lead to losses. The business renting or leasing space might cause a fire that harms other businesses as well as the commercial property owner.
Liability Insurance Policies Your Landlord May Require
A landlord at a commercial property might require tenants to carry various types of insurance. Each state mandates requirements for workers’ compensation, which many commercial property owners need as well. That way, if a worker suffers an injury on the job, it’s covered by their employer’s workers comp coverage instead of the property owner.
The landlord might require a restaurant that serves alcohol to carry liquor liability insurance. This coverage pays for damage caused by drunk patrons. It’s a good idea to be clear with the landlord in the beginning as to what types of coverage are required. The landlord might ask for a certificate of liability insurance as proof a business carries sufficient coverage. Otherwise, the landlord might not approve the application.
Another example of a commercial landlord requiring tenants to carry certain coverage is if the commercial property owner only leases space to certain types of businesses. It might be an industrial complex, for example, that only rents to manufacturers. Each manufacturer may have to agree to certain types of insurance that protect against losses related to production waste. In other words, each tenant may need coverage that pays for complaints about pollution and damage to the property due to production processes.
General liability insurance covers bodily injury and medical expenses, property damage, and various lawsuits. But this coverage alone may not be enough for certain commercial landlords. A broader type of coverage is called a Business Owner’s Policy (BOP), which combines commercial property insurance with commercial general liability coverage.
Get the Right Business Insurance with Scautub Insurance!
If your business rents or leases space from a commercial landlord, make sure you have the right coverage that pays for damage to your possessions. Contact us at Scautub Agency if you need help securing rental or other commercial insurance policies for your business. We’ll help you understand the risks involved with renting or leasing from a commercial landlord.