Q: My Bakery Burned Down, Does the Landlord Pay?
My business is in a leased space, and the building burned. Is my landlord responsible for my damages?
I own a bakery in a leased space that's part of a larger building. Last week, an electrical problem started a fire that severely damaged the building, including my shop. As a result, I have to close for the immediate future and am losing out on business, and will also have to replace a lot of very expensive equipment. My landlord is responsible for covering these losses, right?
A: No. It is a common misconception among business owners who lease their office or retail space that the building owner is responsible for covering these types of damages. Your landlord is responsible only for covering the cost of repairs to the structure of the building itself; you must cover your own business property and can do so with an appropriately-built commercial insurance policy. If you do not have this coverage, you will need to replace your lost property on your own.
There is, of course, an exception. In the event that your landlord knowingly allowed the building to operate under hazardous conditions, such as with an overloaded circuit box, this is negligence and you can sue for coverage of your losses. However, you will need to be able to prove negligence and there are no guarantees that you will receive compensation.
It is important that you look at the big picture and take all potential hazards into account when you are building a business insurance plan. This is why it is so helpful to work with a Trusted Choice® independent insurance agent who deals with commercial insurance. An experienced agent can help you realize the exposures faced by your business and can recommend appropriate coverage to cover those risks.