Who Pays for Commercial Property Insurance?

Protecting your property is one of the biggest investments you will make when opening or operating a business. Be it that you outright own the building, lease space or are building a new facility, proper insurance will protect your financial stability. The question that most business owners ask is: who will pay my commercial property insurance?

The solution does not always lie in the yes and no, it will depend on ownership, leasing contracts and the type of project. Let us break it down.

Typically Paying Property Owners.

In the majority of instances, commercial property insurance is bought and maintained by the owner of the property. This sort of cover safeguards the building itself against losses incurred due to some risks like fire, robbery, vandalism, or extreme weather. The owners of property would like to secure their investment therefore buy policies which cover the structure.

The insurance is however paid by the property owners with the costs being passed on to tenants. As an example, the landlords can incorporate part of insurance cost in a renting agreement.

Tenants May Share the Cost

When you rent commercial property, the commercial landlord may ask you to reimburse part of his/her commercial property insurance cover. This is normally specified in your lease agreement as common area maintenance (CAM) fees, or as a direct pass-through expense.

Also, tenants are required to insure their own business assets as the landlord insures the building itself. This consists of equipment, inventory and the improvements that are made to the space. These are items that can be covered by a commercial property insurance policy or a business owner policy (BOP).

During Construction: Builders Risk Insurance.

It is a bit different when a building is being constructed or under renovation. The liability to insurance in this case can be placed to either the builder, the contractor or the owner of the property based on the terms of the contract. Here the issue of builders risk insurance coverage comes in.

What then is Builders Risk Insurance?

The builders risk insurance Texas is a special category of insurance that covers buildings in the state of construction. It includes risks like fire, materials theft, vandalism, and weather damages, which may happen prior to the project completion. Any unforeseen circumstance may result in a huge loss of funds without it.

Who Pays for It?

• The policy of builders risk insurance in Texas and other states depends on the contract.
• The owners usually buy the policy to protect their investment in the new building.
• It can be provided by contractors as a part of their project.
• The cost is also divided between the two parties in some instances.
• It is important to consider the construction contracts to know the party that will bear the builders risk insurance coverage.

Why It Matters

Commercial property insurance is not merely formalistic, it is a business safeguard. In its absence, property owners, tenants or builders might face destructive losses . The right insurance will make sure that your business will recovery fast from an unplanned occurrence.

In case you are in Texas and are about to undertake a new construction project, the builders insurance Texas policies are important. Natural calamities such as hail, powerful wind, and floods can be very devastating and by being covered, you are guaranteed that your investment will not be ruined.

Who then pays the commercial property insurance?

• The building is usually covered by the property owners.
• The tenants have to pay their share and have to insure their own assests.
• Depending on the contract, builders or owners purchase the builders' risk insurance during the construction.

Regardless of your status, whether an owner, tenant or builder, it is also worth knowing your duties and making sure that you have all the necessary coverage.

Contact Us Today for Commercial Property Insurance

At Dunbar Bedding Field, we are in the business of assisting companies in navigating the commercial property insurance complexities including the builders risk insurance coverage in Texas. Never leave your investment unsecured, let our staff direct you towards the appropriate policy.

Get in touch with us and secure your business tomorrow with the appropriate insurance.