Does business insurance cover my office rental?

Last updated: April 2022

If you're renting office space for your company, having your own business insurance policy is a must. Even though the property owner or landlord is responsible for having insurance on the physical building, business insurance helps protect belongings and mishaps that are your responsibility.

In most cases, landlords won't rent to you unless you carry business insurance. A standard business owners policy (BOP) typically includes property, liability and business interruption insurance.

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Typical coverages in a business owners policy

Property coverage: for your business's belongings

Business property insurance could help pay to replace material goods that are damaged from covered incidents, such as theft or a fire. While your landlord's policy may cover fire damage to the building itself, your insurer could step in to cover your company's damaged computers, furniture, phone systems, employees' belongings and more.

If your office was the target of a break-in, belongings that were stolen or damaged would typically be covered by your business insurance. The building owner's insurance would only cover damage to the physical building, such as broken windows, doors, or locks.

Check your lease to see what you might be responsible for with regards to building damage. Some landlords require you to be responsible for building glass, any modifications you make to the inside of your space and even the heating or air conditioning units. For instance, the building owner would be responsible for hail damage to the roof or windows.

Liability coverage: for your business's legal protection

Liability coverage is the traditional "slip and fall" insurance with which most business owners are familiar.

If a visiting customer tripped and broke their ankle in your office, rather than a common area of the building, the liability coverage on your BOP may reimburse your customer for their medical bills.

Liability coverage could also pay for legal costs or damages from a lawsuit if you’re held liable for the injury. Since the fall occurred in your rental office, your landlord’s insurance likely wouldn’t step in.

Your liability insurance may also reimburse you if you or your employees damage the space you're renting and are found financially responsible for repairs.

Business interruption coverage: for your business's earnings after a loss

Business interruption coverage helps pay for lost income and additional expenses due to a covered risk. Suppose a fire seriously damages your rented office and you need to temporarily relocate. Fewer clients go to your temporary office, and your profits drop as a result.

Business interruption coverage typically reimburses you for lost income after you deduct ongoing business expenses you would’ve had to pay anyway. Depending on your policy, business interruption coverage could also help you recoup costs like additional rent. It could also cover the difference between your utility costs at your new office if they’re higher.

The basic coverages in your business owners policy are a good start to helping protect your business.

Depending on the kind of business you run, you may want to consider additional coverages. Your insurer should be able to suggest coverage to help protect your business and its specific needs.