What Is Tenants Legal Liability Insurance?

Small business owners who rent or lease a commercial property to run their businesses can be held financially liable for damages to the rented or leased space. 

Business owners leasing commercial property should consider tenants legal liability insurance. This coverage protects their finances against loss or damage to the commercial property caused by their actions or inactions.

This brief guide offers an overview of what tenants legal liability insurance is, why it’s important for business owners, what it covers and does not cover, and how much it may cost.

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What Is Tenants Legal Liability Insurance?

Tenants legal liability insurance is a type of general liability insurance. It protects your business from risks that arise when operating within a leased, rented, or occupied space.

This type of coverage is often included in a general liability insurance policy, or it can be added to your coverage if you’re renting or leasing a commercial property for your small business.

What Does Tenants Legal Liability Insurance Cover?

Tenants legal liability insurance is designed to cover a business owner for damages claimed by their landlord to a rented or leased commercial property they do not own, whether that damage is accidental or caused by negligence.

Commercial property landlords often include in a property lease contract that the tenant is responsible for damages to the property, and many landlords may require a business owner to provide proof of insurance that includes tenants’ legal liability insurance.

Even if a landlord does not require a lessee business owner to provide proof of coverage, it’s highly recommended that business owners invest in this type of policy to protect their finances from unexpected incidents.

For example, if a business owner accidentally leaves a scented candle burning in their leased shop and it causes a fire that damages the unit, tenants legal liability insurance may cover the cost to repair or replace the damages up to the policy’s coverage limit.

What Does Tenants Legal Liability Insurance Not Cover?

There are many incidents that a tenants legal liability insurance policy is not designed to cover. These include:

• Intentional damage to a commercial property caused by the business owner (i.e., vandalism).

• Gradual damage caused by wear and tear, such as ageing appliances, loose stairwell railings, or worn-out floors and carpets.

• Third-party bodily injuries or property damage to customers or visitors to your business premises (that would be covered by general liability insurance).

• Damages caused to adjacent premises or property outside of the leased unit. For example, if a sink overflows in your rented unit and causes water damage to other commercial units next door (that, too, may be covered by general liability insurance).

• Errors and omissions (E&O) claims made by a customer alleging you provided incorrect advice or made a mistake that caused them physical or financial harm (E&O insurance or professional liability insurance covers those scenarios).

• Third-party bodily injuries or property damage to a customer caused by a product you sold to them (product liability insurance covers these types of claims).

• Damage to your business’s equipment caused by sudden and unexpected electrical or mechanical malfunctions. For instance, if your office’s photocopier stops working due to a power surge. Equipment breakdown insurance covers repairing or replacing your equipment if unexpected malfunctions damage it.

• A cyber-attack or data breach that exposes your business’s and customers’ confidential information (you need cyber liability insurance to address those types of claims).

Frequently Asked Questions About Tenants Legal Liability Insurance

Does tenants legal liability insurance cover accidental damages to a rented property caused by a business owner’s employees?

Tenants legal liability insurance may help cover the cost of repairs to a rented commercial property accidentally caused by an employee of the business owner if the employee is found to be liable for those damages.

Does tenants legal liability insurance cover damages to a commercial property’s fixtures and furniture owned by the landlord?

Yes. Tenants legal liability insurance covers unexpected damages to a commercial property landlord’s fixtures and furniture, such as lighting fixtures, installed counters, and other furniture included in the lease agreement.

What is the difference between tenants insurance and tenants legal liability insurance?

A tenants insurance policy is coverage for a residential tenant or renter of a rented or leased residential space (an apartment, home, or condominium). It covers their personal possessions, personal liability if a third party is injured on a rented residential property, and offers additional living expenses coverage to pay for temporary accommodation if a renter’s unit is uninhabitable following an insurable loss (such as a fire).

Tenants legal liability insurance protects business owners who are tenants or lessees of a commercial property. It protects the landlord’s property by covering a business owner’s costs if they’re found liable for damages to a leased or rented commercial property.

How much does a tenants legal liability insurance policy cost?

How much the annual premium is for tenants legal liability insurance depends on a variety of factors about your business’s operations, including the size of the commercial property and its location, the deductible you select, the number of employees (if applicable), and your business’s insurance claim history.

A basic tenants legal liability insurance policy’s price is typically included in your general liability premium although higher limits may be purchased. 

How to Get Comprehensive, Low-Cost Tenants’ Legal Liability Insurance Quickly

Zensurance is Canada’s leading small business insurance provider, helping more than 500,000 small business owners, independent professionals, and entrepreneurs get the comprehensive, low-cost protection they need quickly and easily.

Complete our online application for a free quote in less than five minutes.

Our knowledgeable team of licensed insurance brokers will shop our partner network of over 50 insurers to find the right coverage to suit your needs, customize it per your specifications and budget, and issue your policy documents and a certificate of insurance in 48 hours or less.