What kind of insurance for a business?

Question

We are leasing a space to open a restaurant. We are aware that we need insurance for our actual business. But the owner wants us to carry insurance on the actual building. Is this typical business practice for the tenant to carry the insurance on the building for the owner?

Answer 1

You can't insure the building, because you are not the owner. That is the owner's responsibility.

What the owner can do is insure the building, then add the amount of the premium to your annual lease payment.

Evidently, the building is not insured. If it was, the owner would not be asking you to insure it.

I can think of one reason he wants you to carry the insurance instead of himself. He possibly has had a claim, or claims, was canceled or nonrenewed, and insurance companies don't want to insure his commercial property because of the risk of having to pay another claim.

Best wishes, and God bless.

Answer 2

I hope my suggestion might be helpful,though you need to make the judgement yourself.I have tried this good resource.

http://insurance.online-assistant.info/i...

Answer 3

You can take out coverage of improvements that you have done and also for personal effect and liability.  The last would afford him coverage if your actions set the place on fire.  I think that is probably what he means,  He is probably no insurance expert and just said what sounded right to him.  You will be covering the building in a sense if you actions did damage to it through your liability policy ( general Liability or Business Owners Policy)  Good Luck with the restaurant.

Answer 4

Yes, it's called a triple net lease - you carry the insurance, and name them additional named insured.  You CAN insure the building, because it's being required by the lease contract.  You'll have to provide a copy of the lease to the insurer.  That's what proves your insurable interest.

It's stupid of them, because they can't control the insurance, and if you let it lapse and the place burns down, they're screwed.

But a lot of commercial leases do this.  I see it in about 25% of the commercial policies that involve leases.

Answer 5

I would have to read the insurance requirements portion of your lease to see if that is what they are actually requiring.  They should be requiring you to have a business owners policy that covers your business property and tenant improvements to the building, plus, of course, the commercial general liability coverage, etc.  They will want to be included as an Additional Insured as the landlord for your building which is standard.  If you have an insurance broker, send her or him your insurance requirements and let them review them for you and provide you with the exact quotations you need to meet those requirements.