Do you own a commercial property? Are you renting out your property to business owners or professionals?
If so, you must be well aware that commercial spaces or properties are costlier than residential properties. In residential properties, the only factors that landlords need to worry about are the number of tenants who wish to occupy a specific unit, and the occupation of people renting their spaces (e.g., students, freelancers, families, people working full-time, office-based jobs, etc.).
But, in a commercial space, there are bigger risks involved. For example, accidental fires are common in restaurants and cafes. Warehouses and storage units tend to store heavy-duty equipment.
Different businesses also entail a varying number of employees and involve a specific set of activities. Commercial landlord insurance plays a vital role in protecting property owners and leveraging the benefits of renting out a property between the landlord and their tenants.
Commercial landlord insurance is specifically designed for property owners of commercial spaces who are renting out units to other businesses or third-party individuals.
The insurance enables flexibility in how landlords wish to utilize their property while ensuring they are given the protection they need in case of disputes, accidents, or unforeseen damages to their properties. Landlords can have their property shared among different tenants or rent each unit or space exclusively for each occupant.
When a commercial unit is rented out and demised to a tenant, it means they are granted rights over the property. At times, additional amenities may be requested by tenants for their operations or workforce. With insurance, property owners maintain control over how their property is maximized, renovated, or enhanced by the business entities renting it.
Commercial landlord insurance covers the following costs
- Renovations or modifications on the property as requested or needed by the tenants (also called Builder’s Insurance)
- Income losses or sudden delays in rental payments due to natural calamities or accidents
- Routine inspections and repairs that arise while a unit is rented or used
- Additional maintenance and repairs left by previous tenants
- Legal responsibilities in case the property owners are caught in a dispute with third-party individuals or groups
- Increased risks if a tenant’s business entails the storage of hazardous chemicals or high-risk equipment
- Loss of properties and income due to robbery
- Injuries, accidents, or health risks acquired by a business’ employees (Workers Compensation Coverage)
If the tenant desires to cancel the policy covering their rights and use of the property or unit, the insurance makes it a prerequisite for them to inform the landlord ahead of time before the dissolution is in effect.
While tenants have rights to the property or unit they are renting, it comes with a set of responsibilities, too. Their rights make them liable for preserving the quality of fixtures and units rented to them. In other words, the insurance that protects the commercial property serves as a “bond” or a mutual acknowledgment of the shared liability between the tenant and the landlord over the property.
A commercial unit can be an office space, clinic, factory, storage house, boutique, or restaurant. It is to be expected that customers availing the services of each enterprise or business are subject to increase or undergo an unpredictable course of action.
An increase in the demand for in-house staff compels tenants to expand the space they are renting. An unsatisfied customer decides to file a lawsuit or complaint against the tenant or business renting the unit. A clinic or shop plans on investing in additional equipment to extend the breadth and enhance the quality of their services.
A pandemic as deadly as the coronavirus outbreak jeopardizes the regular operations and flow of income within the entire property.
Without commercial landlord insurance, property owners will struggle to recover from inevitable property damages or unforeseen losses. More importantly, the insurance sets limitations on how far tenants can exercise their legal claims over the unit they rent.