How much does insurance cost for commercial landlords?

Commercial landlords pay an average of $68 per month, or $816 annually, for general liability insurance. This policy is sometimes called public liability insurance.

General liability insurance covers common third-party risks at commercial property businesses, such as a tenant who slips on a wet floor at your office and suffers a bodily injury, or accidental damage to a tenant's property.

For example, if you drop and break a tenant's smartphone while they're showing you an issue at your rental property, general liability insurance coverage would pay for the repair costs or legal fees if the client sues over property damage.

It also helps pay for attorney's fees and other legal expenses if someone sues your business over copyright infringement or other advertising injuries, including defamation.

Below is the average general liability policy for commercial landlords who buy from Insureon:

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

The per-occurrence limit is the maximum your insurer will pay for a single covered incident, while the aggregate limit is the most the insurer will pay for all insurance claims during the policy period, typically one year.

In addition to general liability insurance, commercial landlords usually also obtain lessor's risk only insurance. This policy protects landlords against tenant lawsuits over property damage and injury, covering legal fees and providing tenant reimbursements.

It's also common for landlords to carry building insurance, which covers any buildings, structures, and completed additions that they lease to commercial tenants.

General liability insurance costs depend on factors such as the coverage limits and deductible you choose, the size of your business, the types of properties you manage (single-family homes, Airbnb, short-term rentals, etc.), your rental income, and any additional insured endorsements you select.

Learn more about how your insurance premium is calculated and how to save money on your general liability coverage.

Errors and omissions insurance (E&O), also called professional liability insurance, costs an average of $68 per month, or $815 annually, for real estate businesses.

This policy covers the cost of client lawsuits over claims that your work was unsatisfactory, negligent, late, or never completed. Some states require real estate professionals to carry this coverage.

For instance, if a tenant alleges that you were negligent or failed to perform duties as promised in the lease, an errors and omissions policy would cover your legal defense costs, settlement, and other financial losses.

Below is the average E&O insurance policy for commercial landlords and other real estate businesses who buy from Insureon:

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

Several factors influence the cost of errors and omissions insurance, including your risk factors, number of tenants you have, sized of leased properties, your claims history, and the number of employees you have.

The more risk factors you have and the bigger your commercial rental business is, the more expensive your premium will be. Compared to other real estate businesses, commercial landlord E&O policies tend to have higher premiums due to the increased risks that come with being a commercial landlord.

As with other types of insurance, you can save money on your policy by choosing lower limits or a higher deductible.

Reducing your risks also helps you avoid liability claims and keep a lower premium. This includes clear communication with clients and thorough documentation of all communications and agreements.

The average cost of workers’ compensation insurance is $124 per month, or $1,492 annually, for landlords and other commercial rental businesses.

This policy covers medical expenses and lost wages related to employee injuries. It usually includes employer's liability insurance to protect against lawsuits from injured workers.

Businesses with employees typically must purchase workers' comp to comply with state requirements and avoid penalties. For example, all real estate businesses in California, Pennsylvania, and New York must carry workers' comp if they have one or more employees. Florida businesses need coverage when they have four or more employees, and coverage is optional in Texas.

Since health insurance plans can deny claims for injuries related to your job, workers' comp coverage is also recommended for independent contractors as a financial safety net and for peace of mind.

The cost of workers' comp depends on several factors, primarily the number of employees you have and their occupational risks. You can save money on workers' comp coverage by classifying your employees correctly and implementing a risk management plan to avoid work-related injuries and subsequent claims.

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

A business owner's policy, or BOP, bundles general liability coverage with commercial property insurance to cover both third-party risks and your business property. It typically costs less than purchasing each policy separately.

A BOP protects against customer injuries, property damage, and vandalism. One exclusion though is property damage caused by natural disasters. Because of its increased coverage and affordability, it’s the policy most often recommended by Insureon’s agents.

This is the average BOP for commercial landlords who buy from Insureon:

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

Small, low-risk commercial rental businesses are often eligible for a business owner's policy.

Commercial property rental companies that are medium-sized and/or higher risk should consider a commercial package policy (CPP).

A commercial package policy also combines your general liability insurance with property coverage, but offers more flexible protection options than a BOP. The average cost of a CPP for commercial landlords is $476 per month, or $5,706 per year.

Real estate business owners may see higher costs if they choose to add endorsements to their policy. Insurance endorsements, such as business interruption insurance or equipment breakdown coverage, are often recommended to help avoid financial losses if a fire or power outage forces your business operations to cease for an extended period of time.

It's important to note that if you rent your business property, a standard commercial property policy or BOP wouldn't provide the protection you need. Instead, you would need business renter's insurance.

A business renter's insurance policy protects commercial renters in the event of a fire or windstorm, or even against lawsuits.

The cost of a business owner's policy is based on a number of factors, including the value of your business property, where you are located and associated crime rates, your business income, the number of employees you have, and your specialty.

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

This type of liability protection covers legal costs and medical bills if your company vehicle injures someone or damages their property in an accident. It can also protect against vehicle theft, vandalism, weather damage, and other covered losses.

Most states require commercial auto insurance for vehicles owned by a real estate business. For personal, rented, and leased vehicles used for work purposes, look to hired and non-owned auto insurance (HNOA) instead.

The cost of commercial auto insurance depends on several factors, including your policy limits, additional coverage options you choose (e.g., additional insured endorsements), 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. This policy is also called cyber liability insurance or cybersecurity insurance.

Cyber insurance helps your commercial rental business recover financially after a cyberattack or data breach. It can cover data breach investigations, cyber extortion payments, and costs related to complying with your state's data breach laws.

A cyber liability insurance policy is especially crucial for real estate companies that store sensitive client information, such as credit card numbers, Social Security numbers, and email addresses.

Your cyber insurance rates and the coverage you need depend on the amount of sensitive information you handle at your commercial property business.

Real estate professionals pay an average of $27 per month, or $326 per year, for a surety bond.

A surety bond provides reimbursement for your client if you're unable to fulfill the terms of a contract or other agreement. You may need a surety bond to obtain certain types of client contracts.

The cost of a surety bond primarily depends on the size of the bond.