While it may not be your primary concern when signing a lease on a new property for your business, you should always examine the insurance requirements present in the contract. If your company doesnt have the policies named, your landlord can hold your company liable for damages or injuries that occur on the premises. Below are three types of insurance that your lease might require.
Commercial General Liability Insurance
Lease agreements and insurance considerations are often complex, but almost all contracts require a CGL policy. This product covers claims of property damage and bodily or personal injury that occur on your companys premises or as a result of its operations and products. It will pay the legal defense costs, medical costs and any awards or settlements.
Business Interruption Insurance
Your lease agreement can also specify that you have a business interruption policy. The plan will replace lost income and cover your payroll, tax, and rent payments. It will do so in the event that your business is disrupted due to:
- Natural disaster
- Government action
Commercial Auto Insurance
Finally, if your company is engaged in transportation or distribution, you may also need to have commercial auto insurance. The coverage offered by these plans varies. Typically, they pay the costs incurred when a company vehicle is: stolen, involved in a collision, damaged or causes damage.
Your main consideration when renting a new commercial property may be negotiating the rent payments. However, you shouldnt neglect reviewing your lessors insurance requirements. This may put your business at risk for paying costly claims.