What are typical commercial tenant insurance requirements? A landlord will generally require a lessee at the minimum to have a premise general liability policy & often require to be listed as additional insured.
Commercial Tenant Insurance Requirements
If you are renting a commercial building for business use, chances are that your landlord is going to require you to get an insurance policy before allowing you to sign the lease.
If this is the first time you are renting a commercial building, you are might not have the first clue about what type of insurance you need.
To help make things easier for you, here's a look at some important information you should know about commercial tenant insurance requirements.
Commercial Insurance Types That Lessors Typically Require
The landlord of your commercial building will likely require that you maintain the following types of commercial property insurance policies:
- General Liability. This type of insurance policy (sometimes called public liability or premises liability) will cover any personal injury or property damage that you may cause and be held legally liable for. For example, if someone slips and falls in the building you are renting as a result of a wet floor that you didn't maintain and you are found negligent, public liability insurance will cover the legal expenses associated with the incident, as well as any compensation that you are required to pay.
- Industrial Special Risk. This specialty insurance provides coverage for any physical losses, any destruction, or any damage that may happen to any tangible assets that have a high value. This includes the building and the property, as well as any equipment and supplies. Additionally, it can also cover any losses that you may sustain as the result of the interruption to your business that may occur after damage has taken place.
- Plate Glass Replacement. If the building you are renting has large panes of plate glass windows, your landlord may also require you to have a plate glass replacement policy. This type of insurance covers the accidental breakage of plate glass windows, including the cost associated with repairing or replacing the windows.
- Workers' Compensation. Some landlords may also require you to take out a workers' compensation insurance policy. However, if you are an employer, this type of coverage is already a requirement, as mandated by the Workers' Compensation Act of 1987.
The amount of commercial tenant insurance requirements coverage you will need for each policy will be dependent on the specific requirements that are set forth by your landlord. Additionally, you may not need all of the mentioned policies, or you may need additional coverage, which is also dependent on the requirements of your landlord.
Coverage for Your Landlord
Most landlords commercial tenant insurance requirements will require that your insurance policies cover them, as well as you. By doing so, the lessor will ensure that he or she is properly protected in the event that any mishaps occur on the property that you are renting. You can extend the coverage of your insurance policies in one of the following ways:
- Include your landlord as an "additional insured" on your insurance policies.
- Include your landlord as "named insured" on your insurance policies.
- Include your landlord as an "interested party" on your insurance policies.
- Note the interests of your landlord on your insurance policies.
By extending coverage to your landlord, he or she will be afforded a certain amount of protection under your insurance policies.
Insurance Requirements That Are Often Included In Commercial Property Leases
The following insurance requirements are commonly included in a lease for a commercial property:
- Cross liability. This offers protection that is related to a claim that may be brought against you by someone else that is also insured under the same policy.
- Notice of cancellation. You may be required to state that your insurance policies cannot be canceled until you notify your landlord.
- A rise in premiums. As a way to protect him or herself, your landlord may keep his or her own insurance coverage for things like personal injuries, property damage, general liability, and loss of rent.
If the use of the leased building has the potential to increase your landlord's risks, and as such, requires additional coverage, you may be required to cover the additional costs for his or her insurance. Commercial tenant property insurance, commercial lease agreement insurance requirements, commercial lease insurance provisions, who is responsible for building insurance landlord or tenant, commercial lease insurance clause, standard commercial lease insurance requirements, commercial property insurance requirements & tenant as additional insured.
Commercial Tenant Insurance Requirements - The Bottom Line
We hope this article on commercial tenant insurance requirements was informative. Insurance coverage is the best way you and your landlord can protect yourselves from any potential perils that could occur. Make sure you read your lease thoroughly to find out exactly what type of insurance requirements it includes.