When operating from rented or leased premises, many business owners are unsure whether they need business buildings insurance. It is a common point of confusion, especially given the responsibilities typically shared between tenant and landlord.

In this article, we explain how business buildings insurance works in a rental context, when tenants may need additional cover, and how to avoid insurance gaps that could expose a business to financial risk.

What Is Business Buildings Insurance?

Business buildings insurance is designed to protect the physical structure of commercial premises. This includes the walls, roof, floors, windows and permanent fixtures such as fitted lighting or plumbing systems. The policy may cover damage caused by risks such as:

• Fire or explosion

• Flood or storm

• Theft or vandalism

• Accidental impact or structural collapse

This type of cover is typically arranged by the property owner or landlord, as it insures the building as a capital asset. However, lease agreements can vary significantly, and so can the insurance responsibilities assigned to tenants.

If You Rent, Are You Still Responsible for Buildings Insurance?

In most cases, landlords are responsible for insuring the building itself. However, this is not always guaranteed. Some commercial lease agreements pass on partial or full responsibility for building insurance costs to the tenant, either through direct arrangement or via service charges.

It is essential to check the terms of the lease to understand:

• Whether the landlord insures the building

• If tenants are expected to contribute to the policy

• Whether the landlord’s policy includes adequate cover for your business activities

If the lease requires tenants to arrange their own cover, business buildings insurance may need to be sourced independently.

What Insurance Might Tenants Need?

Even when the landlord handles buildings insurance, tenants may still require other types of protection. These may include:

Contents Insurance

Tenants are usually responsible for insuring their own equipment, furnishings, computers and stock. Business contents insurance could protect these assets against risks such as fire, theft or flood.

Tenants’ Improvements Cover

If you have invested in alterations or fittings within the building, such as partitions, shelving or specialist lighting, these may not be covered by the landlord’s policy. Tenants’ improvements cover could help protect these customisations.

Public Liability Insurance

If a customer, supplier or member of the public is injured while visiting your premises, public liability insurance could protect against claims for injury or property damage.

Business Interruption Insurance

If damage to the premises causes operational downtime, business interruption cover may help support ongoing costs or lost income during the repair period.

Why It Matters to Understand Your Coverage

Assuming that the landlord’s buildings insurance covers all aspects of the premises could leave your business exposed. For example, a policy arranged by the landlord may only insure the structure, not the fixtures, fittings or tenant-specific assets inside.

Additionally, if there is a dispute over liability following damage, inadequate cover could delay claims processes or lead to uncovered costs.

We recommend reviewing the lease carefully, asking the landlord for confirmation of insurance arrangements, and working with a broker who can help identify any areas where separate cover may be appropriate.