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A Commercial Tenant’s Guide to Fire Legal Liability Insurance

The National Fire Protection Association’s latest statistics show that non-residential structure fires, which include retail and office properties, accounted for 22,000 reported fires and caused $209 million in damage in 2019.  

When it comes to liability for property damage after a fire, a tenant of a commercial rental property has a greater responsibility for those damages. If it’s determined that the tenant is negligent and responsible for the fire that caused the damage, the tenant should be covered under Fire Legal Liability insurance. 

What Is Fire Legal Liability Insurance?

Fire legal liability is usually included under a business owner’s commercial general liability policy. This rider covers the owner if their business goes up in smoke in a rented property. In order for the policy to pay out for fire-related damages, it must be determined that the business owner was the one at fault for the fire. 

This coverage is not only a good thing to have as a business owner, it’s required. If you are unfortunate enough to experience a fire that devastates your business, it’s hard enough to financially recover from the financial fallout of losing your business. Worrying about paying for damages to the building on top of that is overwhelming. 

How Does Fire Legal Liability Insurance Work?

Even if you don’t own the building your business occupies, you are still legally responsible for damage to the building should your negligence cause it. 

For example, let’s say you own a salon that you run out of a rented storefront. One of your stylists leaves her hot tools plugged in and turned on before leaving for the night. Eventually, one of the tools catches the workstation on fire, which then spreads throughout the salon. By the time the fire department has put out the flames, the damage is already in the tens of thousands of dollars. 

When it is conclusively determined that the fire was started by negligence in your salon, the owner of the property is no longer liable to pay for the damages to the building — you are responsible as the owner of the business. 

If it’s determined negligence on your part was to blame for the fire, your fire legal liability insurance will now kick in and cover those charges. 

How Much Is Fire Legal Liability Coverage?

Since this coverage is part of the business owner’s commercial general liability policy, it will be included in that cost. The median cost for this policy is $42 a month. 48% of small businesses pay between $300 and $500 annually. 

Additionally, make sure to have the property re-evaluated every year before you renew your policy. Property values may fluctuate, and you want to make sure you have the appropriate coverage for the property’s true value. 

Things to Know About Fire Legal Liability

One important thing to know is that your fire legal liability coverage does not cover damage if you are contractually obligated to pay for any fire damage. If it’s written in your lease that you will assume responsibility for costs associated with any fire, whether your fault or not, fire legal liability coverage will not cover the damage. That means you should read your lease very carefully before you sign to make sure you know what kind of liability you will have. 

Secondly, your fire legal liability coverage covers fires that are due to your business’ negligence ONLY. That means if your business goes up in smoke because of being struck by lightning or faulty electrical wiring, you will not be covered because it was an Act of God and not negligence. 

If you do experience a fire, it’s important to make sure you have a trusted, experienced disaster restoration contractor to help you. The professionals at Midwest Comfort Homes have quickly built the reputation of being a fire restoration business whose main goal is to support you and get you back to business as quickly as possible. Contact one of our team members today to discuss how we can work together to make sure a fire is only a temporary setback.