How much does commercial landlord insurance cost?

Commercial landlords pay an average of $68 per month, or $816 annually, for general liability insurance, the most common type of liability coverage.

General liability insurance protects small businesses against third-party risks, such as a client breaking an ankle while tripping or having their personal belongings damaged during a rental property showing.

This insurance also covers attorney's legal fees and defense costs if someone sues your business over advertising injuries, such as copyright infringement or defamation.

The average general liability policy for landlords that purchase from TechInsurance:

Premium: $68 per month
Policy limits: $1 million per occurrence; $2 million aggregate

The per-occurrence limit is the maximum amount your insurance provider will pay for a single covered incident. The aggregate limit is the maximum the insurance provider will pay for all claims during the policy period.

Many commercial landlords also consider purchasing lessor's risk only (LRO) coverage, which is a policy that specifically covers landlords against tenant lawsuits.

For example, your LRO policy would help pay if a tenant sues over a covered loss, such as weather damage from a windstorm or other property damage, such as a fire. This policy would only provide coverage for tenant lawsuits, not for other third parties.

Another option for commercial landlords is building insurance, which protects landlords who rent buildings to commercial tenants. This policy covers damage to the building structure from events such as natural disasters, vandalism, and fires.

General liability insurance costs depend on a variety of factors, including the coverage limits and deductible you choose, your business size, the types of services you provide, your annual income, and any additional insured endorsements you choose to add.

Real estate businesses, including commercial landlords, pay an average of $68 per month, or $815 annually, for errors and omissions insurance (E&O), also called professional liability insurance.

E&O covers the cost of client lawsuits over claims that your work was negligent, late, never completed, or otherwise unsatisfactory.

For example, suppose a tenant claims that their landlord did not fulfill the requirements of their contract by failing to provide scheduled inspections, resulting in water damage. This leads to uninhabitable units and forces the tenant to stay in short-term housing while their unit is repaired.

The tenant could sue over negligence and attempt to recoup their temporary housing costs and other damages. In this instance, the commercial landlord would need professional liability coverage to avoid paying legal and settlement expenses out of pocket.

Below is the average cost of E&O insurance for commercial landlords who buy from TechInsurance:

Premium: $68 per month
Policy limits: $1 million per occurrence; $1 million aggregate
Deductible: $1,000

A variety of factors influence the cost of E&O coverage, including the number of tenants you have, your claims history, the size of your leased properties, and the number of workers you employ.

The cost of your premium increases as you add more risk factors and as your commercial rental portfolio grows. Compared with other types of real estate businesses, commercial landlord E&O policies typically carry higher premiums because the role of a commercial landlord involves greater levels of risk.

Reducing your risks also helps you avoid liability claims and lower your costs. This includes clear communication with clients and proper documentation throughout the process.

Workers’ compensation insurance costs an average of $124 per month, or $1,492 annually, for commercial landlords.

This policy covers medical expenses and lost wages related to workplace injuries for commercial landlords and their employees. It would not cover injured tenants or renters. Workers' comp typically includes employer's liability insurance to protect against lawsuits from workers who sue over their injuries.

Most businesses that hire staff must purchase workers' comp to comply with state requirements and avoid penalties.

For example, all commercial landlords in New York, California, and Pennsylvania must purchase workers' comp if they have one or more employees. In Florida, businesses with four or more employees need coverage, while in Texas, coverage is optional (but highly recommended).

Independent contractors and sole proprietors are encouraged to purchase workers' comp as well, even though it's typically not required. This is because health insurance plans can deny claims for injuries related to your job.

The cost of workers' comp depends on several factors, including the number of employees you have and their occupational risks.

You can save money on workers' comp coverage by classifying your employees correctly and ensuring you're regularly engaging in risk management to avoid work-related injuries and medical claims. Other factors, such as the cost of healthcare in your state, can also impact your premium.

Commercial landlords pay an average of $371 per month, or $4,451 per year, for a business owner’s policy (BOP).

A BOP bundles general liability coverage with commercial property coverage to navigate third-party risks and protect your business property. It typically costs less than purchasing each policy separately.

This bundle protects your business against third-party property damage and injuries, vandalism, and damage to your business equipment.

Keep in mind that a BOP will not cover damage to tenants' personal property within their dwelling. For that, tenants will need a separate rental property insurance policy. Renters insurance would cover tenant belongings, furniture, and other items.

The average BOP for commercial landlords that buy from TechInsurance:

Insurance premium: $371 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $1,000

Small, low-risk commercial property landlord offices are often eligible for a business owner's policy.

Larger, higher-risk businesses should consider a commercial package policy (CPP). A CPP also combines your general liability coverage with property insurance, but offers more flexibility than a BOP. 

The average CPP policy cost for commercial landlords is $476 per month, or $5,706 per year.

Endorsements, such as business interruption insurance or equipment breakdown coverage, are recommended to help prevent financial losses if a covered event forces your business to cease operations for an extended period.

The cost of a business owner's policy is based on various factors, including the value of your business property, your location, your annual income, your industry, and how many employees you have.

Commercial landlords pay an average of $73 per month, or $876 per year, for commercial auto insurance.

Commercial auto insurance pays for legal costs and medical expenses if your company vehicle is involved in an accident that results in injuries or property damage. It typically also covers vehicle theft, weather damage, and vandalism.

Most states require commercial auto insurance for business-owned vehicles. For personal, rented, or leased vehicles used for work purposes, consider hired and non-owned auto insurance (HNOA) instead, as a standard commercial auto policy will not cover any vehicle that isn't company-owned.

The cost of commercial auto insurance for commercial landlords depends on various factors, including the policy limits you select, your coverage options, the number and value of your vehicles, and the driving records of anyone permitted to drive.

Real estate businesses spend an average of $58 per month, or $692 per year, on cyber insurance, also known as cyber liability or cybersecurity insurance.

Cyber insurance provides financial assistance to your business after a cyberattack or data breach. It covers cyber extortion payments, data breach investigations, and expenses related to complying with your local data breach laws.

A cyber insurance policy is necessary for commercial landlords who store sensitive client information, such as names, email addresses, home addresses, credit card details, and Social Security numbers.

The cost of cyber insurance depends largely on the amount of sensitive information you handle at your commercial landlord business.

Surety bonds cost commercial landlords an average of $27 per month, or $326 per year.

Surety bonds provide reimbursement payments for your client if you're unable to fulfill the terms of a contract or agreement.

Some clients or tenants, particularly commercial tenants, may require a surety bond before they agree to sign a contract or work with you.

The cost of a surety bond depends mostly on the size of the bond you choose to purchase.