Commercial landlords may rent space in a variety of properties, from shopping centers to office buildings and manufacturing facilities, and they face a variety of risk exposures that can vary depending on the activities of your tenants. Dealing with a lawsuit or recovering from a disaster such as a fire could be financially devastating. With the right range of insurance coverage, you will feel confident knowing that you would have financial protection to help you cope with any unforeseen incidents and keep your business afloat.

What insurance coverage do I need as a commercial landlord?

There are many types of insurance available, but the following types of coverage are particularly important for commercial landlords:

Commercial Property Insurance

As a commercial landlord, it is essential that you protect the value of the property you rent out. If a disaster such as a fire or a windstorm damages your property, the cost of repairs could be financially devastating. Commercial property insurance will provide funds to help you recover after property is damaged. Coverage typically includes damage from common perils like fire, storms, hail, wind, explosion, water damage, and vandalism. 

Example:

• During a windstorm, a power line falls onto a retail property you own, setting it on fire. Your commercial property insurance would cover the costs to rebuild the property. 

General Liability Insurance

General liability insurance covers your business if you are held liable for third-party bodily injury, property damage, personal injury, or advertising injury. This is a key coverage for commercial landlords since they often rent properties that are visited by many people. Although it’s common for commercial leases to require tenants to obtain their own general liability insurance and list the landlord as an additional insured on their policy, being listed as an additional insured does not completely protect you from potential liability. 

There’s no guarantee that a tenant’s policy would have sufficient coverage to handle a large claim. Plus, there’s always the chance that a visitor could be injured in areas that are not under your tenants’ control, such as common areas, walkways, and parking lots—and any resulting lawsuits would likely only name the property owner. 

If someone else’s property is damaged or they suffer an injury on your property, general liability insurance will cover medical fees, legal expenses, and damages. In addition to bodily injury and property damage, general liability insurance includes a personal and advertising injury component, which covers risks including libel, slander, and copyright infringement.

Examples:

• Bodily injury: You own a shopping mall where you rent out retail space. One of your shopping mall’s escalators malfunctions and suddenly speeds up, causing a shopper to fall. She twists her knee and suffers lacerations requiring medical attention. Your insurer would pay for medical costs as well as legal fees if the shopper sues.
• Property damage: An improperly attached sign at your office building falls and damages a parked car. General liability insurance would cover the damages. 
• Personal and advertising injury: An advertisement for your shopping center shows an image of a local celebrity shopping at your location. The celebrity did not consent to her image being used and sues for violation of privacy. Your general liability insurance would cover the lawsuit. 

Business Interruption Insurance

As a commercial landlord, your income comes from the rent paid by your tenants. In the event of a major disaster, your ability to collect payment could be limited. Some leases have an abatement clause releasing tenants from the obligation to pay rent if a disaster occurs and makes it impossible for them to continue operating on the property. This would severely reduce your income while you work to recover from the disaster. A business interruption insurance policy can step in to reimburse you for lost rental income. This coverage can be also be obtained through a rental value coverage form. 

Example:

• A major fire destroys a building you own. Your tenant’s lease has an abatement clause allowing the tenant to vacate the premises and cease paying rent. Your rent loss insurance would cover the rental income you would lose. 

Errors and Omissions Insurance

Errors and omissions insurance is a key coverage that can provide your company with financial support if you are sued for mistakes or negligence in your professional work. As a commercial landlord, tenants could sue you if they feel that a property was misrepresented to them or mistakes were made in a lease. Whether a lawsuit has merit or not, legal proceedings are costly and time consuming. Errors and omissions insurance can step in to cover your legal fees, settlements, and any judgments against your company. 

Example:

• A recording company leases space from you but discovers that other businesses in the building cause large amounts of noise, making it difficult for the recording studio to operate. They sue for misrepresentation, claiming that the landlord did not disclose that the other businesses would be moving into the building. Your errors and omissions insurance would cover the lawsuit and any resulting settlements.

Workers’ Compensation Insurance

Workers’ compensation insurance is legally required for companies with employees in almost all states. It covers the medical expenses and lost income of employees who are injured or fall ill while working. It can also provide benefits for an employee’s dependents in the case of an employee death. 

For commercial landlords, maintenance and janitorial staff are at risk of injuries from working with heavy equipment, working at heights, and exposures to chemicals, while office staff may develop repetitive strain injuries. This makes workers’ compensation coverage a particularly important consideration. Since regulation can vary by state, it’s a good idea to check your state’s regulations—penalties for non-compliance can be severe. 

Example:

• A maintenance worker falls off a ladder while repairing a fluorescent light fixture in the ceiling. The worker’s back is injured and he is unable to work for several weeks. Your workers’ compensation insurance would pay for the employee’s medical expenses and a portion of lost income while he is recovering.

Commercial Auto Insurance

As a commercial landlord, you may own service vehicles titled under your business’s name, or your employees may use their personal vehicles for work purposes. You will need commercial auto insurance to cover any vehicles you own. This coverage can pay for any third-party bodily injury, property damage, or pollution cleanup that occurs if one of your employees causes an accident while driving a company vehicle. In addition, commercial auto insurance can cover the value of your vehicles if they’re damaged by perils such as collision, theft, or falling objects.

If your employees run errands or perform work activities using their own cars, it’s important to be aware that your company could be held liable if employees are at fault in an accident while driving their personal vehicles for work purposes. Hired and non-owned auto insurance can be added to your commercial auto insurance policy or purchased separately to cover these incidents.

Example:

• One of your employees is driving to a pharmaceutical production facility you own to evaluate whether the building is being maintained correctly. On the way there, he changes lanes without checking his blind spot adequately and knocks a cyclist off her bicycle. The cyclist suffers broken ribs and a head injury. Your commercial auto insurance would cover medical expenses. 

Additional Coverages

• Small or midsize businesses may choose to purchase a business owner’s policy (BOP), which can be a cost-effective way to achieve a broad range of coverage. A BOP combines general liability, property, business income, and extra expense coverage into a single package. BOPs are typically less expensive for small businesses than buying each insurance policy separately.
• Employment practices liability insurance protects your business against lawsuits by employees accusing your business of wrongful treatment such as discrimination, harassment, wrongful termination, or other employment-related issues.
• Since most commercial property insurance policies exclude coverage for flood damage, commercial flood insurance is a crucial coverage for commercial landlords with property in areas that are prone to flooding. Available from the National Flood Insurance Program, this insurance will reimburse you for losses caused by flooding. 

Pricing and Quotes

Pricing for commercial property business insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:

• Business size
• Industry
• Location
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, a commercial landlord with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for commercial landlords:

Provider	General Liability	Professional Liability	Business Owner's Policy
Embroker	??	??	??
CoverageSmith	??	??	??
CoverWallet	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Final Word

When you own and rent commercial property, there are many unpredictable events that could cause you significant financial losses, from a disaster that damages your property to an injured visitor bringing a major lawsuit. As you plan your business insurance coverage, it’s important to be aware of the risks you face and prepare yourself for unexpected disasters. Ensuring that you have a wide range of business insurance can provide the financial protection you need to keep operating even after a catastrophe.