If you’ll be leasing space in a commercial building or complex for your business, it’s crucial to know what areas are covered by the property owner’s insurance and what areas you’re responsible for if there’s a natural disaster, fire or other damage or if one of your employees or customers is injured.
Typically, the property owner is responsible for common areas like the parking lot, walkways and roofing. However, they’re generally not responsible for damage that occurs within your space because of your or your customers’ actions. For example, if you’re pushing a large piece of furniture or equipment against the wall and you create a huge hole, that’s going to be on you.
Commercial rental insurance
Landlords should notify you of what insurance coverage you need to have to lease a space, and it should be in your lease agreement. Generally, you’ll need commercial rental insurance. It works similarly to residential rental or condo insurance in that it covers damage within your space (unless caused by the occupant of a neighboring space or a larger defect in the property).
Business liability and workers’ comp insurance
Landlords are also not responsible for injuries that occur to your employees or your customers within your space. If a customer trips over an errant cord you have running across the floor, you’re likely the one who will be held liable for injuries suffered by the customer. That’s why you should have business liability insurance, even if your landlord doesn’t require you to have it. Workers’ compensation insurance would come into play if an employee is injured.
Business interruption insurance
Whether your landlord requires it or not, it’s usually wise to have business interruption insurance. That can help you cover your losses if you have to close your business for a time after a hurricane, flood, fire or another event that makes your space unsafe and/or unusable.
Before you sign a lease agreement, it’s crucial to determine what insurance your landlord carries that can help protect your business and what insurance they require you to have (and any other insurance you should have). Having legal guidance as you review and negotiate your agreement can help you avoid costly problems later.