If you own a business and rent your business premises, you’ve probably wondered what kind of responsibility you have for keeping those premises in good shape – and what your liability exposure is if damage to the property affects your inventory or equipment.
Here’s an overview of how renter’s insurance works and what to look for when purchasing a renter’s policy.
What Is a Renter’s Policy?
In the insurance industry, a renter’s policy is a type of coverage officially called “Damage to Premises Rented to You.” In the past, this kind of coverage was known as “Fire Legal Liability Coverage” – but whatever name you know this coverage by, the protection it offers is the same. (Related: "Steps to Eliminate Uncertainty for Small Business.")
In most cases, a renter’s policy…
- Is included in your General Liability Insurance policy. While it’s an essential protection for most small businesses, renter’s insurance doesn’t exist as a standalone policy. Instead, it’s most often included in the General Liability policy tailored to your business. To determine whether your GLI policy offers protections for damages to your rented premises, read through it carefully or consult with your agent.
- Offers protection for fire and other types of damage. One of the biggest threats to businesses that rent property is the threat of damage from fire. Particularly if you rent property in a multi-unit building and don’t have control over every unit, the wellbeing of your merchandise and equipment is dependent on how well other people manage their fire risk. One key way a renter’s policy protects your business is to cover damages caused by fires, explosions, and lightning.
- Is necessary if you don’t own your business premises. There’s a good chance your landlord carries Property Insurance for his or her building – and there’s an equally good chance that that insurance doesn’t provide any coverage for the losses you sustain while renting your unit. In many cases, landlords require commercial tenants to carry specific types of insurance (including, frequently, a renter’s policy) in order to rent space in their building.
What Are the Limits of Damage to Premises Rented to You Coverage?
Like most kinds of insurance coverage, Damage to Premises Rented to You renter’s coverage usually comes with specific coverage limits. Most often, limits outline how much a policy will pay for a single event of property damage caused by fire, explosions, or lightning.
For a better idea of what specific types of coverage are provided by a General Liability Insurance policy, check out our page on General Liability Insurance.