Get your best tenant legal liability insurance quote for free

What is tenant legal liability insurance?

Tenant legal liability insurance is a type of business insurance, designed for companies that rent or lease a commercial space (e.g., an office). If you or an employee accidentally damages the rented property, this coverage pays for repairs or replacements.. Without this coverage, your business would be financially responsible for these expenses, which could be substantial.

This policy protects you from claims of property damage resulting from your business operations, giving you peace of mind and financial security.

What tenant legal liability insurance covers

Standard tenant legal liability insurance typically covers accidental damage you cause to your rented commercial space. This can include damage from:

• Fire
• Smoke
• Explosions
• Water damage

For example, if a small fire starts in your office kitchen and causes damage to the walls and ceiling, your policy would cover the cost of repairs. Note that this coverage does not extend beyond the rented property, meaning that anything that isn’t part of the rented property will not be covered.

What tenant legal liability does not cover

To ensure you know where you’re covered, it’s equally important to understand what isn’t covered. With that in mind, here’s what tenant legal liability does NOT cover:

• Bodily injury: If you, your employees or a third party visiting your rented space injure themselves on the premises, you will not be covered. For third-party injuries, we recommend commercial general liability (CGL) coverage (though tenant legal liability is usually bundled with it anyway). Furthermore, if someone injures themselves due to alcohol ingestion (for instance, if you run a distillery that serves alcohol), you will not be covered either. For this, you’d need liquor liability coverage.
• Professional liability: If you or your employees make a mistake while serving your clients, leading to a liability lawsuit, you will not be covered. For that, you’d need professional liability, or errors and omissions insurance.
• Intentional damage or injury: If your employees intentionally hurt someone or yourself, or you deliberately damage the rented property, you will not be compensated. The same applies to your employees.
• Personal property: If the property you keep on the rented property gets damaged, stolen or destroyed, this coverage will not protect you. Consider getting commercial property coverage to protect your assets.
• Your product: If a product that you sell or manufacture causes damage to your rented space, you may not get covered. For that, you’d need product liability insurance.

Common types of tenant legal liability insurance claims

Here are examples of the most common tenant legal liability claims:

• Accidental flooding:An employee leaves a tap running, flooding the office and damaging floors and walls.
• Smoke damage caused by equipment: A small electrical fire starts from a piece of your equipment, resulting in smoke damage throughout the unit.
• Renovation damage: During a minor renovation you're conducting, a wall is accidentally damaged, and your landlord requires you to pay for the repairs.

How much does tenant legal liability insurance cost?

On average, small businesses in Canada can expect to pay between $450 and $1,000 per year for a basic commercial insurance policy that includes tenant legal liability. That said, the exact amount would vary on many different factors, individual to your business.

Here are some of them:

• Your industry: Certain industries pose higher risks than others.
• Coverage amount: Higher limits will increase the cost of your policy.
• The size of your rented space: Larger spaces often mean higher potential repair costs.
• The value of the property: More valuable properties will have higher insurance costs.
• Claims history: If you have had files claims in the past, this will increase your rate as insurers will see you as more "risky" to insure..

How to get the cheapest tenant legal liability insurance rates

Finding affordable business insurance – for tenant legal liability or any other coverage – doesn't have to be complicated. Follow these steps to secure competitive rates:

• Bundle policies: Many insurers offer discounts when you bundle multiple policies, such as tenant legal liability and commercial general liability, with the same provider.
• Increase your deductible: Opting for a higher deductible can lower your premium, but make sure it's an amount you can comfortably pay out-of-pocket if you need to make a claim.
• Maintain a good record: A claims-free history demonstrates lower risk to insurers, which can translate to better rates.
• Manage your risk: Implement as many safety protocols as you can. A proactive approach to risk management can lead to lower premiums over time.