Commercial / Industrial Issues

The primary difference between insuring commercial or industrial space and insuring residential space is price, with commercial and industrial insurance almost always more expensive. When renting commercial or industrial space, ask the building owner and/or manager about which types of policies s/he has, amounts of coverage, and any exclusions that might affect your use of the space. In addition, if you are renting a commercial space, obtain your own policy that specifically covers your space, equipment and artwork.

If renting in a multi-unit building, check the owner’s policy. Many insurance providers will not cover certain hazards and perils unless they can insure the entire building. In addition, if you have a net lease you might be expected to assist in paying these costs, which could become expensive due to other tenants' activities. Ensure that your use of the space is compliant with the lease. For more detailed information on insurance issues associated with leasing commercial and industrial property, see Chapter 7: Commercial and Industrial Leases.

For example, perhaps you operate a small office with two employees, but your neighbor runs a large restaurant that is always busy. The risk from high public use of the restaurant space might inflate the price of the liability insurance. You might be expected to help shoulder the cost of a service you do need.

If you are purchasing a commercial space, expect your insurance premiums to be higher. Depending on whether the space is owner-occupied or leased to others, you might face a variety of insurance policies, which are covered later in this chapter.

TIP: Being under-insured involves risks. Read the fine print to be sure you have the type of coverage you need.

TIP: Also be careful about over-insuring.

TIP: Most property insurance policies do not cover artwork. You might have to add an insurance rider or get an entirely different policy to cover your work. Review the resource section of this chapter for a list of insurance providers that specialize in the arts.

TIP: If you are considering purchasing a space, see Chapter 8: Buying Real Estate and Chapter 11: Models of Ownership for more information on insurance issues.