Office equipment being moved into a business rental property

Do You Need Commercial Property Insurance as a Renter?

Apr 11 2021

One of the most common questions that we get asked regarding business property insurance is whether or not it is still needed or will benefit a business that is “just leasing” their space. To this question, we usually answer a resounding yes for three reasons:

  1. Even if your landlord has landlord insurance for their business rental property, it will NOT cover your equipment, documents, products, or furniture.  
  2. Even if your landlord has landlord insurance for their business property rental, that won’t cover your lost income in the case where property damage (or external forces) leads to business interruption.
  3. Some landlords DO NOT have landlord insurance at all because they are not legally required to have it. Therefore, in the event of property damage, your business’s survival will depend on when the landlord has the means to have repairs done. The alternative scenario is you cover these costs yourself.

In this article, we will discuss commercial property insurance in-depth and how it will benefit you as you set up your business rental property. We will cover:

Let’s get started. 

Business owners assess their new office space and insurance policies

What is Commercial or Business Property Insurance?

Commercial property insurance, also known as business property insurance, is a type of insurance policy that protects you from financial loss in the event that external factors cause damage to the business rental property that you are occupying. 

This type of insurance will also cover repair/replacement costs for damaged or lost equipment, inventory, or documents within your business premises. 

If business interruption results from the above two reasons or because of another external force, commercial property insurance will also reimburse your lost income. Commercial property insurance allows your business to survive and thrive, even in the midst of unforeseen events that cause property damage and/or loss of income.

What Kind of Business Rental Property Needs Commercial Property Insurance?

Whether you operate your business on owned property or rental property, commercial property insurance can still benefit you. It doesn’t matter if your commercial space is defined as a store, restaurant, an office, or storage space for inventory. 

At the end of the day, the key question to ask yourself is: “Do I have a physical location with documents, equipment, or inventory that my business relies on for its operations?” If you answered yes to this, then commercial property insurance is definitely recommended for your business.  

Commercial or Business Property Insurance Coverage

Business property insurance covers the following:

  • Damage to the business rental property itself by a listed cause or peril. 
  • Damage inflicted or loss of equipment, inventory, and physical documents due to covered external forces.
  • The loss of income from business interruption due to the above damage/loss or because of a listed peril. 

In the above points, you will notice that we always used the qualifier “caused by a covered cause, peril, or external force.” This is because business property insurance, like any insurance policy, has a scope of coverage. The most commonly included causes or perils for business property insurance include the following:

  • Vandalism
  • Robbery
  • Fire
  • Natural calamities, such as hurricanes, earthquakes, or floods. 

Not all commercial property insurance or business property insurance policies are alike. Some may have more exclusions than others. This is why having a customized commercial property insurance policy that covers your risks fully is very important. A skilled insurance broker, like our experts at KASE Insurance, will be able to set this up for you. Furthermore, we can remove any unnecessary riders so that you can save more in the long run. 

How Does a Business Property Rental’s Landlord Insurance Compare With My Commercial Property Insurance?

The insurance that your landlord has (assuming that there is a landlord insurance in place) is solely for their interests.

Landlord insurance will protect the business rental property in the event that covered external forces damage the property itself or if the tenant accidentally inflicts damage to the business rental property. To see how landlord insurance differs from your commercial property insurance, see the table below:

Points to Consider:

The Landlord’s Insurance

Your Commercial Property Insurance

Is it required? 

No.

It could be stipulated as a requirement in the lease agreement by the landlord. 

Who does it protect?

Mainly the landlord’s business.

Your business.

What is covered?

  • The business rental property
  • Any of the landlord’s possessions
  • The business property along with your equipment, documents, or inventory stored inside
  • Business interruption

Considering the above matrix, these are a few possible implications on your business if you do not secure commercial property insurance: 

  1. In the case where extensive property damage is inflicted on the property and your landlord does NOT have landlord insurance; the landlord tells you they need time to raise funds to repair the business property rental space. Your options in the matter include: (1) work out a deal wherein you would shoulder the repairs for now so that they are done faster, (2) wait and lose business during the wait, (3) vacate the business rental property and find a new one. 
  2. The office is burglarized and your computers are stolen. Landlord insurance will not cover YOUR property. The same applies for situations like fire accidents and other natural disasters. 
  3. The road going to the rented commercial space becomes blocked by a landslide. Landlord insurance will not cover your lost income due to business interruption the way that commercial property insurance could have done. 

    A rented business office space that has been burglarized

    Customized Business Property Insurance for Leased Commercial Space

    Are you renting a business rental property or looking to do so? If you already have a commercial space in mind, one of the first steps is to find out if your landlord has insurance for their business property rental or if this type of insurance is required from you by the landlord.

    Get other details about the business rental property such as its square footage, the type of construction of the property, the fire rating and so on.

    Furthermore, if you’re still looking for an office space or workplace, we can help! By talking to a KASE Insurance broker, you can be guided to choose a safe business rental property that will also allow you to have a lower premium. 

    At KASE Insurance, we offer nothing but the highest calibre of service. We can assist you with all your insurance needs and we will be there for you every step of the way – from the moment you search for a business rental property, to negotiating premiums as you set up your insurance, to filing business property insurance claims. 

    Ready for more business security and added peace of mind? Contact KASE Insurance now!

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