Do you run a business from a rented building? If so, you need a tenant legal liability insurance policy to keep you protected from third-party claims of property damage and bodily injury. We know insurance can feel daunting to think about, so we’re making it easy!
In the following sections, you’ll find out everything you need to understand about tenant legal liability insurance coverage (including how to get the right policy for you from Canada’s leading insurers!).
What Is Tenant Legal Liability Insurance Coverage?
Otherwise known as commercial tenant insurance, tenant legal liability insurance is a type of commercial general liability insurance that keeps your business safe against daily operational risks within a rented space.
Usually, it covers the payments of claims and lawsuits associated with third-party bodily injury and property damage.
Landlords typically request you purchase a tenant legal liability insurance policy before they are willing to lease their space to you.
Common Tenant Legal Liability Claims Examples
Consider the following real-world claims examples to give you a clearer understanding of how tenant legal liability insurance coverage can protect your business:
Example One: Bodily Injury Claim
While browsing your store, a customer (we’ll call them Jane) trips over an item that appears to have fallen from the shelf. Jane sprains her wrist and decides to sue your business for bodily injury.
Jane is successful with her claim, but thankfully the bodily injury section of your tenant legal liability insurance pays the medical and legal fees, equalling $5,000.
Example Two: Vandalism Claim
You lock your rented office space for the night and go home. While you’re asleep, somebody vandalizes your business premise.
Fortunately, none of your office equipment is harmed. However, the walls have been spray-painted, and a vast window has smashed.
You call your landlord to tell them about the incident. You then claim on your tenant legal liability insurance which covers the cost of replacing the window and professionally removing the graffiti, totalling $15,000.
Example Three: Water Damage Claim
You are decorating your office space. As you’re drilling a hole, you accidentally hit a water pipe. The resulting water onslaught destroys the carpet in your office.
Fortunately, your tenant legal liability insurance policy pays for the carpet repair, which ended up costing $15,000.
What Does Tenant Legal liability Insurance Cover?
While all policies are slightly different, tenant legal liability insurance typically covers the legal costs and damages related to the three coverage areas listed below:
- Bodily injury liability — This part of the policy covers damage and injuries to a third party as a result of your business operations.
- Third-party property damage — It covers the costs of repairing or replacing the property of a third party. It also includes damage to your landlord’s property and premises.
- Personal and advertising injury liability — This section of the policy covers allegations of false advertising, slander, defamation of character, or libel due to your services.
Common covered perils are fire, smoke, explosions, water, and leaks.
What Doesn’t Tenant Legal Liability Insurance Cover?
Tenant legal liability insurance covers accidental injuries and property damage to third parties. Therefore, the policy doesn’t provide coverage for the following:
- Contractual liability
- Bodily injury to your employees or yourself
- Intentional, wrongful acts
- Deliberate damage to the property
- Gradual wear and tear
- Existing property damage
- Damage caused by animals
- Damage caused to property not owned by the landlord
- Damage caused while you were vacant from the property for more than 30 days
- Errors and omissions
- Your personal property
- Third-party bodily injury or property damage due to alcohol-related incidents
- Products you sell, manufacture or distribute
How Much Does Tenant Legal Liability Insurance Coverage Cost?
For a small business with a basic tenant legal liability insurance policy, you can expect to spend around $60 per year. However, since every business is different, insurers consider the following multiple factors before determining the price of your premium:
- The size of your business — The more people present in your business space, the more likely accidents and mistakes occur. Therefore, you should anticipate paying more for your tenant legal liability insurance policy.
- The value of the landlord’s covered items — In other words, the amount of coverage you need to take out to cover the replacement or repair of all items. The higher your policy limit, the more you should expect to pay.
- The property’s age — As with other kinds of property-based insurance policies, the building’s age matters. Older properties are considered higher risk than newer builds.
- The location of your business — Areas prone to adverse weather conditions (i.e., storms, hail, winds) or that have a high crime rate (particularly vandalism and theft) often come with higher insurance premiums. You’re more likely to make a claim if there is a bigger chance you’ll experience external peril.
- Your company’s annual and forecasted gross revenue — The more money your business earns (and is expected to earn), the more you will pay for insurance. Third parties typically ask for more in damages if they know your income can withstand the request.
- Your company’s previous insurance claims history — Insurers see you as a bigger risk to them if you have a history of making consistent insurance claims. Therefore, you stand a better chance of receiving attractive rates if you have a clean claims record.
How Can You Get Tenant Legal Liability Insurance Coverage in Canada?
With LiabilityCover, acquiring the optimal level of tenant legal liability insurance in Canada is straightforward. Our short four-step guide below walks you through the entire process:
- First, complete our quick and easy online inquiry form.
- One of our expert team members analyzes your insurance requirements.
- We assign you one of Canada’s leading tenant legal liability insurance providers with experience covering others in your industry.
- Your perfect insurer contacts you to help you obtain the coverage you require.
Why Choose LiabilityCover?
We are trusted by countless of Canada’s leading insurance providers. Over the years, we’ve helped hundreds of clients find their perfect insurer, thanks to our unbeatable working relationships with the country’s best.
Our process is straightforward, allowing you to focus on running your business. We’re well-versed in analyzing the insurance needs of companies like yours to take the confusion out of insurance.
Why not let us do the hard work for you? Get started by completing our intuitive inquiry form.
Frequently Asked Questions
Is Tenant Liability Insurance a Legal Requirement in Canada?
It is not a legal requirement to acquire tenant legal liability insurance in Canada. However, it’s quite common for landlords to request you hold insurance coverage before they’re prepared to lease their property to you. Therefore, you will likely need to acquire a policy before you sign a lease.
Is Commercial Tenant Liability Insurance The Same as Commercial General Liability Insurance?
Commercial tenant liability insurance is designed to cover your liability towards your building’s landlord in property damage or bodily injury cases.
Commercial general liability insurance is similar but applies to all businesses, not just those who lease spaces. It protects against bodily injury and property damage caused by your company to third parties.
Will a Commercial Tenant Insurance Policy Cover Company’s Property and Equipment?
No, your company’s assets and equipment aren’t covered by a commercial tenant liability insurance policy. Instead, it’s designed to cover your (i.e., the tenant’s) legal liability toward the landlord of the space you occupy. Make sure you purchase a commercial property insurance policy to protect your equipment and property.
Which Tenant Legal Liability Insurance Providers Does LiabilityCover Work With?
We work with the best insurance providers in the country, including:
- AM Fredericks Underwriting Management Ltd.
- Ace Insured
- Beacon Underwriting Ltd.
- First Media
- Eagle Underwriting Group Inc.
- Elliott Special Risks Ltd.
- Cowan Insurance Brokers
- Coast Underwriters Limited
- Chubb Insurance
- Chutter Underwriting Services
- CFC Underwriting
- Chesterfield Canada, Inc.
- Berkely Canada
Is Tenant Legal Liability Insurance Alone Enough to Fully Cover Your Business?
It’s safe to assume that only acquiring tenant legal liability insurance isn’t enough to cover your business from all eventualities. After all, you likely face many more risks than those covered under the policy.
Therefore, you may need to think about acquiring some of the coverages found below:
- Legal expense insurance coverage — It’s no secret that hiring a lawyer is expensive, especially when employing a highly-skilled, ultra-qualified one! Legal expense insurance offers free legal advice on a variety of common business situations. Alongside that, it covers the cost of retaining the lawyer to handle the listed situations. Often, the coverage areas include:
- Employment disputes
- Tax protection
- Statutory license protection
- Property protection
- Contract disputes
- Debt recovery
- Bodily injury
- Product liability insurance coverage — If you sell products, including food and beverages, you need product liability insurance coverage. It protects your company against claims alleging third-party bodily injury or property damage caused by a product you sell, distribute, or manufacture. The most common covered cases include marketing, design, and manufacturing defects like incorrect labels and insufficient safety warnings. We can help you decide how much coverage you require and connect you with the leading product liability insurers specializing in providing the policy to others in your industry.
- Errors and omissions insurance coverage — The policy protects you from clients alleging financial loss due to your services. Misconduct, omissions, errors, failure to deliver a service as advertised, and negligence are also usually included. We suggest E;O policies to any business providing advice, offering services, or developing devices. You should expect to spend about $250 per year on a basic errors and omissions policy with the lowest limit (i.e., $100,000). However, the price varies depending on your experience, industry, business size, business location, and annular revenue, to name a few influencing factors.
- Cyber liability insurance coverage — Cyber liability insurance covers the costs of responding to and dealing with cybercrime involving your clients’ data and technology systems. You need the policy if you use point-of-sale systems, provide software, use cloud services, or store customer data. Essentially, it’s vital if any part of your business is conducted or managed online. It typically covers the following:
- Legal, forensic, and breach management fees
- Incident response costs
- System damage and restoration costs
- System business interruption
- Social engineering (an optional coverage that financially protects you if an employee is manipulated into providing system access or transferring funds)
- Business interruption insurance coverage — Business interruption insurance covers any net income lost after an insured property loss (e.g., fires and other natural disasters). Depending on your policy, it may also cover your overhead costs (i.e., rent and water) after a specified period (usually 12 to 24 hours, but ensure you check with your broker). Keep in mind that the coverage does not extend to:
- Pandemics, viruses, or communicable diseases (meaning illnesses that spread through contact with bodily fluids, air transmission, blood products, or insect bites)
- Undocumented income that you haven’t already listed on your company’s financial records
- Broken times due to a covered event
- Flood or earthquake damage
- Acts of terrorism, although some policies will cover bomb threats
- Commercial auto insurance coverage — Sometimes called commercial vehicle insurance or business auto insurance, the policy offers coverage for vehicles (cars, trucks, trailers, vans, etc.) used for work purposes. Any automobile used to transport tools, equipment, packaged goods, materials, or people requires a commercial auto policy. There are plenty of additional coverages to add to your commercial auto insurance policy, including:
- Collision or upset coverage
- Comprehensive coverage
- All perils coverage
- Specified perils coverage
- Directors and officers insurance coverage — If you have executive-level company members, you need to protect them with a directors and officers insurance policy. It covers those serving on your board and their assets if they’re personally named in a lawsuit. Specifically, the policy provides coverage in the following circumstances:
- Allegations of misrepresentation or negligence
- Breach of legal or fiduciary duties
- Claims made by your company
- Competitor claims
- Mergers and acquisitions
- Inaccurate or insufficient disclosure, reporting errors, or misleading statements
- Wrongful dismissals
- Failure to abide by provincial and federal laws
- Decisions made that have adverse financial consequences for your shareholders
- Corporate manslaguhter