In the case of commercial real estate, insurance costs can be quite expensive and a burden for both landlords and tenants. So, to answer the question who is responsible for buildings insurance on a commercial property I can say that tenants may be required by law to obtain one of the property's insurance policies. But occasionally, the landlord will have to shoulder part of the cost of insurance.
Who is Responsible for Commercial Building Insurance Landlord or Tenant?
To understand this, tenants should carefully go over the insurance provision in the leasing agreement. It is recommended that the tenant and landlord engage in a discussion and negotiation over matters concerning insurance needs and the allocation of insurance premiums between them. The following property types determine how the premium is divided between the two parties:- Mall: If the landlord is renting out spaces in a mall to a number of tenants, the insurance premium for the entire property is split among the tenants according to the amount of space each tenant takes up.
- Retail store: A landlord may occasionally lease the entire space to a single shop, such as Walmart or Big Bazaar, and this retailer alone is responsible for paying the commercial property's insurance premiums. But big retail chains may convince the landlord to pay some of the insurance premiums because of their strong brand recognition and high foot traffic.
- Office building: The insurance premium should be paid to the tenant on a pro rata basis based on the total amount of space used in the office building, similar to malls. However, due to their notoriety, a Fortune 500 firm or a well-known bank may be able to bargain for a reduced insurance load from the landlord.
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Who is Responsible for Buildings Insurance on a Commercial Property?
Trisha
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2024-04-18T12:00:48+00:00 2024-04-18T12:00:49+00:00Comment
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