As a commercial real estate investor, it's crucial to understand the various types of insurance that can help protect your investment. While building insurance covers the physical structure of your property and tenants are typically responsible for insuring their own business personal property, there are instances where investors may need to consider contents insurance.

In this article, we'll explore what contents insurance is, what it covers, and why it's important for commercial real estate investors to be aware of.

What Is Contents Insurance?

Contents insurance, also known as business personal property insurance, is a type of insurance that covers the movable items within a commercial property. This is different from building or structural insurance, which covers the physical structure of the property itself, such as walls, roofs, and foundations.

When Commercial Real Estate Investors Need Contents Insurance

While tenants are generally responsible for insuring their own business personal property — and as a landlord, you should require they have sufficient coverage — there are situations where commercial real estate investors may need to purchase contents insurance:

1. Common areas: Investors are typically responsible for insuring any movable items in common areas, such as lobbies, hallways, and shared amenity spaces. This can include furniture, artwork, and decorative items.

2. Landlord-owned equipment: If the investor provides any equipment for tenant use, such as shared kitchen appliances or fitness equipment, contents insurance can help protect these items.

3. Property improvements: In some cases, investors may make improvements or install fixtures in a commercial property. Contents insurance can help determine whether these items would be covered under the investor's building insurance or if separate coverage is needed.

Factors Affecting Contents Insurance Premiums

Several factors can influence the cost of contents insurance for commercial real estate investors, including the type and value of the items being insured, the property's location and security features, and the deductibles and coverage limits selected.

Best Practices for Managing Contents Insurance

To effectively manage contents insurance as a commercial real estate investor, consider the following best practices:

Conduct a Thorough Inventory

Regularly assess the movable items in common areas and any landlord-owned equipment to ensure adequate coverage.

Clearly Define Insurance Responsibilities in Leases

Use lease agreements to specify that tenants are responsible for insuring their own business personal property, while the landlord is responsible for insuring common area contents and any provided equipment.

Work With an Experienced Insurance Broker

Collaborate with a knowledgeable insurance broker who can help you determine your contents insurance needs and find the right coverage for your commercial properties.

Conclusion

While tenants are typically responsible for insuring their own business personal property, commercial real estate investors should be aware of instances where they may need contents insurance. By understanding the role of contents insurance in protecting common area items and landlord-owned equipment, investors can ensure comprehensive coverage for their properties.

Lining up all the right types of insurance can seem overwhelming. Let us step in to help you. We'll walk you through the insurance needs your properties have and leverage our comprehensive network of top-rated insurers to find the best coverage that works for you.

In this article:

What Is Contents Insurance?
When Commercial Real Estate Investors Need Contents Insurance
Factors Affecting Contents Insurance Premiums
Best Practices for Managing Contents Insurance
Conduct a Thorough Inventory
Clearly Define Insurance Responsibilities in Leases
Work With an Experienced Insurance Broker
Conclusion
Get Financing

Protecting Your Commercial Property's Contents