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Whose Responsibility Is It to Buy Commercial Property Insurance?

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Who Is Responsible for Commercial Property Insurance in San Diego, CA

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Commercial property owners and business owners—who aren’t always one and the same—need some degree of insurance to be better prepared for unexpected occurrences. If you’re in the process of weighing your options with property insurance for a commercial building or space, you may have questions about who’s responsible for this type of coverage. Here’s what you need to know when it comes to making this determination.

Building Owners Acting as Owner/Operators

If a business owns and operates an entire commercial property, such as what may be the case with a manufacturing plant or corporate headquarters, the owner of that business is typically responsible for insurance. A policy for an entire commercial structure usually covers all physical assets. Such protection typically extends to:

• Fires and explosions
• Theft and vandalism
• Damage from burst pipes and similar plumbing issues
• Storm-related damage
• Damage stemming from natural disasters

Lease-Holding Tenants

It’s common for businesses to only lease certain parts of a commercial property, as may be the case with a commercial office complex that houses different businesses. With situations like this, it’s often the tenants who pay for commercial property insurance. When this is the case, each tenant would be responsible for business insurance as well as property insurance specific to his or her portion of the building. Property insurance pertaining to a certain commercial space often covers:

• Fixtures and structural walls within the tenant’s area
• The inventory for the business that’s housed in the leased space
• Furnishings and other business-related assets, such as computer equipment, within the leased space

If you purchase commercial property insurance as a tenant for a specific part of the building, it doesn’t apply to the entire structure. In this instance, the property owner would be responsible for the building as a whole. Coverage for the owner of the building typically applies to any investments the owner made in the building. For example, this list could include the roof for the entire building along with equipment the owner purchased and surrounding areas part of the property (e.g., landscaped areas, parking lots, etc.).

Insurance for a commercial property purchased by the owner usually doesn’t protect the tenants. In other words, if damage occurs to your leased space, you would likely be responsible for it. This is why tenants are encouraged to obtain separate commercial property insurance.

Preparing to Move into a Commercial Property

If you have plans to move into a commercial structure you don’t own, talk to the owner about insurance as you consider your own insurance options. Doing so gives you a chance to learn more about what type of coverage the owner already has for the property. Gather insurance-related information specific to:

• What’s covered by the owner’s policy and what isn’t
• Whether or not the owner’s coverage has been updated to reflect any changes to the property
• Which areas of the building your tenant lease applies to

Lastly, it can be helpful to ask for a copy of the owner’s insurance policy. This can come in handy if property damage extends from your portion of the property to other parts.

It’s vital to protect your business from dangers, and commercial insurance is one of the most valuable tools you can buy to safeguard your business’s financial health. When it comes to commercial property insurance, look to the professionals at Altra Insurance Services for sound advice based on years of experience in the insurance industry. We also offer reliable homeowners, renters, and car insurance. San Diego residents can call one of our knowledgeable agents today at (800) 719-9972 to discuss their insurance needs. 

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