Does Commercial Property Insurance Cover Your Tenants?

30 November 2021
 Categories: Insurance, Blog

If you're a commercial landlord, commercial property insurance is something that you need to have. Like all insurance, it's designed to protect you. However, you may be wondering if it also covers your tenants. Here's what you should know.

What Does Commercial Property Insurance Do?

The main point of commercial property insurance is to protect your building. If your building burns down, commercial property insurance is what pays to rebuild it.

Commercial property insurance also protects your property inside of the building. That includes things like your lobby desk and your janitor's cleaning supplies. In short, anything that you can touch or feel that belongs to you is covered by commercial property insurance unless you go over your policy limits or your policy has listed exclusions.

It's important to note that commercial property insurance doesn't cover lawsuits. If you want to be protected from someone suing you for something like a slip and fall, you need liability coverage.

What Happens if Your Tenant Causes Damage?

If your tenant causes damage, it will usually be covered under your commercial property insurance. The main exception would be small things like a tenant putting a hole in a wall while moving. The cost of that might be less than your insurance deductible, or you could decide it's too small to make a claim. In that case, you might bill the tenant directly.

It's important to understand that your property insurance coverage typically only covers your losses. For example, if your tenant burns down your building, your insurance company should reimburse you. However, your insurance company has the right to recover what they paid from the tenant or the tenant's insurance company. Your own property insurance policy doesn't protect your tenants from having to pay for the damage they cause. It also doesn't usually cover the tenant's own property.

Can You Add Your Tenants to Your Property Insurance Policy?

Many commercial leases require tenants to get their own insurance coverage, but it is possible to add your tenants to your insurance policy. For example, you might have only a few tenants or temporary tenants. You might decide that it's safer for you and more convenient for them to offer insurance that covers your tenants as a benefit for leasing with you. This is an option that you can discuss with your insurance company as part of a customized commercial property insurance policy.

To learn more about commercial property insurance, contact a local insurance company today, like Rafail Insurance Agency.