Commercial Property Insurance on Your Leased Building: Who Needs the Coverage?
Many businesses do not own the structure in which they operate. Rather, you may lease that space from another company or individual. This may be a large building with multiple tenant locations. It could be a single structure that your company occupies fully.
In these situations, your company still needs commercial property insurance. How much, and what it covers, can differ from one organization to the next.
What Is Commercial Property Insurance?
This business insurance helps protect the company from losses related to damage to the structure. It pays to protect the structure, contents, and other assets your company owns. If you were to own the building outright, the business would require comprehensive commercial property coverage to protect the entire structure, parking lot, signage, and any other component of real property attached to the structure.
When you lease real property, though, who pays for the commercial property insurance? In most cases, tenants are responsible for obtaining their own commercial property insurance. This property insurance should usually cover:
- The tenant’s portion of the building. This should include things such as structural walls and fixtures within your area
- Your company’s inventory
- Your company’s assets such as furnishings
- Computer equipment
Commercial property insurance for leased properties usually does not cover the actual structure itself. Rather, it is generally the property owner’s job to have insurance on the structure. This type of insurance will not usually protect the tenant from losses related to perils. Rather, it provides protection for the owner’s investment (the building and its equipment). For this reason, all tenants should have their own coverage in place to minimize the risks associated with loss.
If you are moving into a new structure, speak to the owner about the type of commercial property insurance in place. Learn what it covers and what it does not. Ask for a copy of the policy to know what type of business insurance you need to safeguard your investment. Without this coverage, a fire could destroy the building, including your business, and you would not have the protection you need to replace what you lost.
Commercial property insurance is necessary for nearly all types of businesses. Without it, your company could suffer losses after a fire, storm, theft or vandalism. This is one of the most valuable and key types of business insurance available.