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You've just accidentally burned your office down: coverage for when it's not the landlord's problem.

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This story appears in the July 2001 issue of Entrepreneur. Subscribe »

It's a scary scenario you probably haven't thought much about: As a tenant in a commercial building, you or one of your employees does something that either damages your landlord's property or causes injury to someone, and you're found liable. Who has to pay? You do, unless you own tenant's legal liability insurance, which would pick up the expense for you.

Although some smaller landlords may overlook it, chances are, your lease requires you to have this coverage, says Gary D. Brooks, managing director for Grubb & Ellis/Beffort Brooks Hogan, a commercial real estate firm in Oklahoma City. "Typically, what we see is a $1 million policy," he says, adding that the landlord could require more or less, or you might opt to have greater coverage than the lease requires if your business is in a higher-risk category. Restaurants, for example, have to concern themselves about everything from fires to food poisoning. Also, any tenant who has a lot of human traffic entering his or her commercial space, like a doctor maybe, would be a candidate for a higher premium. Although premiums vary based on circumstances, expect to pay $250 to $500 per year for $1 million in coverage.

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