Proof of business liability insurance is a common requirement of commercial leases, and some landlords will even check for specific coverage items. If you are a solo legal practitioner renting a small office just for yourself and an assistant, the coverage requirements that apply in your situation will be different than those required of a jeweler, a fitness center, a convenience store, or a manufacturer of explosives. Here are a few reasons commercial landlords require general liability insurance in San Diego.
Landlords Assume Significant Risks
A commercial lease is a business contract that determines the rights, duties, and responsibilities of landlords and tenants. The risks landlords assume tend to be significant, and thus their responsibilities are substantial. If you lease retail space, and one day the store ceiling collapses, the landlord is responsible for the cost of repairs as well as for damage and perhaps injuries caused by this structural accident. If, on the other hand, the ceiling was brought down because you hung a heavy display, your landlord will be hoping your liability insurance covers the issues caused by this loss.
Financial Solvency Needs to Be Achieved to Make Rent Payments
Commercial landlords know businesses may run into cash flow issues at any time, and some are willing to work with their tenants to a certain extent. If you run a laboratory and your technicians are filing workers’ compensation claims due to intoxication, your landlord has reason to be concerned about whether you will be able to make rent payments while your productivity has been halted. Business interruption coverage might cover rent payments in this situation, and thus this is something your landlord may require.
Liability Insurance Offers Mutual Benefits
Your landlord wants your business to thrive, and he or she may even go easy on rent increases if your company is doing well at a time when other units are not being leased. If you rent industrial space to operate a woodworking shop that one day burns down due to employee negligence, most lease agreements will state you have to bear the cost of fire remediation and reconstruction, which you will more than likely be unable to cover. However, this may not be an issue if you have adequate coverage.
Types of Insurance Landlords Seek
As explained in the examples above, general liability, workers’ compensation, and business interruption insurance are essential policies many commercial landlords will look for. If you have one or more company vehicles driven to and from the leased space, your landlord may also ask for San Diego commercial auto insurance, particularly if the vehicles come and go while making deliveries. An experienced insurance agent will recommend adding your landlord as an insured party in the policy, which will rarely increase the cost of premiums.
To learn more about the importance of obtaining commercial liability insurance, reach out to the insurance experts at American Tri-Star. In addition to business insurance, we also offer affordable health, homeowners, RV, and car insurance in San Diego. Call 619-272-2100 today to speak with one of our friendly agents and receive a free quote.