How Business Renters Insurance Works

An expert weighs in on buying business insurance

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If you’re a small business owner who rents space for business purposes, you'll want to understand business renters insurance. These are insurance policies created to safeguard businesses that rent commercial space.

Learn when your business needs renters insurance, what is covered by business renters insurance, what you can expect to pay for it, and how to get renters insurance for your small business.

Key Takeaways

  • Business renters insurance is designed to protect businesses that rent property.
  • Landlords will typically require that businesses have certain types of coverage.
  • Business insurance costs can vary depending on a number of factors, including location and value of the equipment.

When Your Business Needs Renters Insurance

Businesses that rent commercial space will likely need renters insurance, which can help protect their properties and operations.

There are two main types of insurance policies for businesses: a business owner’s policy (BOP) and a commercial package policy (CPP), Bernie Deuster, senior vice president of sales at WaFd Insurance Group, told The Balance in an email.

A BOP combines different coverage for businesses, such as general liability insurance, commercial property insurance, and business income insurance, into one policy. This bundled insurance is often ideal for average small- to medium-size businesses.

A CPP is more tailored to a business’s specific needs and risks. It’s typically more suited for larger businesses or unique small- to medium-size businesses.

Coverage From Residential Renters Insurance

If you have a home-based business, you may be wondering if your renters insurance policy offers protection for your business. Residential renters policies usually exclude business activity, but Deuster recommended calling your agent to ask if business coverage can be added to your policy.

Depending on the size and sales volume of the business, some insurers will add business coverage to your residential renters policy. However, the coverage would still not be as extensive as a commercial policy. In most cases, you will need business renters insurance to protect your business.

Which Businesses Need Renters Insurance

Many businesses that rent commercial space need renters insurance. They can range from small businesses like a local coffee shop to larger businesses such as a national manufacturer.

Businesses that rent commercial property will typically need insurance coverage because landlords require it. The landlord will determine which types of insurance are necessary, and will usually require at a minimum general liability and fire legal liability, Deuster said.

Even without a landlord’s requirement, a business can benefit from holding renters insurance, which can protect it from a variety of losses.

What Renters Insurance Covers for Businesses

Business renters insurance offers a variety of different protections for businesses:

  • General liability insurance: Covers claims regarding bodily injury or damages that were results of negligence that occured on your premises. For example, it would cover losses from a lawsuit by someone who slipped and fell on your icy sidewalk.
  • Commercial property insurance: Protects the rented building and equipment, tools, and furniture. For example, it would cover losses to property from a fire or theft.
  • Business income insurance: Replaces lost business income as a result of property damage. For example, it would cover lost income due to a fire or theft.

How Much Commercial Renters Insurance Costs

Costs for business insurance can vary considerably depending on the type of business and property value. Other factors in determining insurance rates include sales, claims history, employee payroll, and size of the rented property.

Renters policies typically start at $500 annually, with the average Main-Street-type business paying about $1,000 annually for minimal limits, Deuster said.

Be realistic about what it will cost to replace your business’s belongings when you’re setting replacement terms. Trying to save more by accepting less coverage than you need can cost you more in the long run. Depending on your business, you may want to add additional coverages.

How To Get Renters Insurance for Your Business

First, assess your business’s risk and coverage needs and determine what type of insurance you will need. Consider working with a broker because they can provide a number of benefits. Brokers have access to many carriers, and some carriers may have better rates for certain types of businesses than others.

Shop around when looking for business insurance because there can be a considerable range of rates and coverage. Look at prices, terms, and benefits on policies from multiple agents. Reassess your risks and coverage needs each year.

Frequently Asked Questions (FAQs)

Who offers renters insurance?

There are multiple ways to purchase business renters insurance. Local independent insurance agents can be good resources in your search for business insurance. Make sure you work with reputable, licensed agents who can help you find a policy that best meets your business’s needs.

How often should you shop around for better renters insurance?

The U.S. Small Business Administration recommends contacting your insurance agent and reassessing your insurance situation annually to stay on top of your business’s growing and changing liabilities.

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Article Sources

  1. New Hampshire Insurance Department. “Commercial FAQs.”

  2. Small Business Administration. “Get Business Insurance.”