As a business owner, you know that you need to protect yourself from any possible situation that could cause financial loss. If you rent your commercial space, you can protect your small business through business renters insurance. Similar to the type of insurance you’d use to protect your rented home or apartment, business renters insurance adds another layer of protection to the tools and inventory you need to keep operations going.
What is Business Renters Insurance?
Similar to how you would maintain a renter’s insurance policy when you rent an apartment, you should also invest in a renter’s insurance policy for your business space. Most landlords, especially ones who are renting you a space where you are conducting business, require you to have some level of business renter’s insurance. Also like renter’s insurance, your business renters insurance offers coverage for the damage and theft of items that you keep in your rented commercial space.
Best Business Renters Insurance
Have you been operating your business without business renters insurance? If you have, you might be unintentionally violating your lease agreement, and you could be held financially liable for any damage or theft that your business sees. Thankfully, you can begin your search for the best insurance provider right now. Consider starting off with a few of our favorite providers using the chart below.
Does Renters Insurance Cover Business Property?
Renter’s insurance is important for your business because landlord property insurance doesn’t cover any of your property contained within the commercial space. Instead, it only covers the property itself. For example, if you don’t have business renters insurance and a pipe bursts, then the landlord will not pay for any damage to your things. The landlord’s insurance will cover the damage to the pipe itself and the walls or flooring that are damaged, but you would not have coverage for any of your property.
In that case, you would be completely financially responsible for repairing or replacing everything within the commercial space. Since most renters don’t know the exact condition of the building they’re renting, business renters insurance becomes even more important.
Like most types of insurance, your business renters insurance policy will include a list of covered perils. If your things are damaged by a covered peril, your insurance will help compensate you for the damage. Some common examples of covered perils include fire, theft, vandalism and wind damage.
What Isn't Covered by Business Renters Insurance?
Business renters insurance generally does not cover flood, earthquakes and other natural disasters, nor damage as a result of negligence and damage due to pest problems. However, you can usually pay extra for add-ons that can cover these sorts of damages. If you live in an area where these types of natural disasters are common, you should seriously consider adding these protections to your insurance.
It’s important to connect with your landlord to understand what is specifically covered with their insurance policy and which coverages the property owner will require you to hold as a term of the lease. From there you can work to fill in any gaps with your own insurance. Even if your landlord requires you to maintain a low level of coverage, you might want to consider increasing your coverage based on the unique needs of your business. Remember — your landlord’s primary concern is their property, not the longevity of your business.
Can Business Renter’s Insurance Safeguard Your Income?
As a general rule, business renters insurance does not cover loss of income, so it cannot safeguard your revenue if your business needs to suddenly close. Your business renters insurance will only cover the cost of lost items after a covered peril — it doesn’t include potential lost income if the business must close.
Even a minor accident or incident can put a serious financial strain on your business. For example, if a pipe bursts in your commercial space, your business will likely need to remain closed for a period of time while the landlord makes repairs. When your business is closed, you won’t see your normal revenue coming in. However, bills that you regularly pay (including payroll, insurance expenses and more) will still be due regardless.
While a business renters policy does not cover income loss, you can add additional endorsements to your policy to safeguard your cash flow. Most business owners who want to protect their income choose to purchase business interruption insurance. Business income insurance can protect both your revenue during a period of time when your business is forced to close as well as additional expenses (for example, the cost of relocating your business to a new space after a major peril). You can even add a rider to your policy that covers the cost of training a new employee or finding a replacement for a crucial role in your company.
What is General Liability Coverage?
General liability is a type of small business insurance that protects your business against a variety of legal expenses. For example, if a customer visits your property, slips on an out-of-place product and sprains their ankle, they may sue you for the cost of medical bills. In this instance, your general liability insurance will help you pay for the cost of an attorney to represent yourself in court as well as any court-awarded judgments you’re ordered to pay. Most general liability insurance policies also include coverages for advertising injuries and defamation. Your landlord may require that you carry general liability insurance in addition to your business renters insurance policy.
Your business renters insurance will likely include an element of general liability coverage. However, this coverage is likely not enough on its own. When you calculate the total cost of even a minor lawsuit, it could be enough to bankrupt your business. Though no business owner wants to believe that they could be sued by a former customer or client, the truth is that anyone can sue anyone else for almost any reason. By maintaining a robust general liability insurance policy, you can have the peace of mind that comes with knowing that your business and your livelihood are protected.
Finding the Right Coverage for Your Business
Even if you have other types of business protections, you can see how important business renters insurance is. Many business owners believe that because their landlord has insurance, they are covered, but the landlord’s policy will not protect your inventory or the personal items inside of your business.
Your landlord might also require you to carry business insurance as a term of your lease. Be sure to review all your coverage options and consult with a licensed insurance agent in your area to learn more about local requirements and the level of coverage you should maintain.
Frequently Asked Questions
What insurance should a commercial tenant have?
If you’re renting your commercial space, you need renter’s insurance to cover your inventory and protect you from damage and theft. However, you should also invest in a general liability insurance policy as well, as you can be sued by a client or customer and incur legal fees at any time. You might also want to purchase business income coverage, which can protect your cash flow if your business needs to suddenly close for repairs.
Do you need renters insurance for business?
Yes. Remember that a renter’s insurance policy covers all the items that you keep in a rented space, ranging from inventory and products to specialized equipment that you need to complete jobs. Though the owner of your commercial space likely has some form of insurance that covers the structure of the building, this insurance doesn’t extend to things that you own inside of the commercial space.
About Sarah Horvath
Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.