Before you can move into a new office space or storefront, you’ll probably need to purchase commercial rental insurance. Most landlords require liability insurance so they won’t have to cover the cost of an accident or injury at your business.
Let’s look at why your commercial lease probably requires you to carry insurance, and the types of business insurance that you may need.
Commercial insurance protects landlords from costly lawsuits and property damage
Commercial landlords have a legal duty to maintain their property and keep it safe for renters and visitors. For instance, your landlord is obligated to spread salt on icy sidewalks, repair broken stairs, and maintain common areas.
Property owners often purchase business property insurance to help pay for damage to their real estate and other property. They typically carry several policies to protect their commercial buildings, including the following building coverage options:
- Lessor’s risk only (LRO) insurance, also known as landlord insurance - protects commercial landlords from tenant lawsuits over property loss or damage and injuries.
- Building insurance - offers financial protection against property damage, and can help cover costs from a fire, natural disaster, windstorm, or other incidents that damage or destroy their building.
Why do I need insurance if my landlord already has property coverage?
Keep in mind that landlord insurance will only pay to repair or replace your landlord’s physical assets. It does not cover your damaged property, or the property of your customers. That’s why you should consider business insurance coverage to protect your own business from risks, such as general liability insurance, which can cover accidents that injure someone or damage their property.
Landlord insurance doesn’t protect property owners from potential liability for an accident, injury, or other incident that happens at a commercial tenant’s business. That’s why there may be business insurance requirements in your commercial lease.
For example, let’s say that you run a welding company and a fire breaks out in the workspace you’re renting. In this case, your landlord would want you to carry enough insurance to cover any type of property damage, plus the costs of treating injuries for anyone in the building.
If the building owner didn’t require your welding business to carry business liability insurance, they might be on the hook for the cost of repairs and medical bills.
