Two separate policies, two separate claims
After any commercial storm, there are almost always two distinct insurance situations in the same building. The building owner's commercial property policy covers the structure — roof, walls, foundation, HVAC systems, and common areas. The tenant's policy covers everything inside the leased space that belongs to the tenant.
About 40% of commercial property claims involve landlord-tenant disputes about coverage responsibility, adding 90–120 days to resolution times, according to industry data from AgencyHeight. Understanding the split before a storm is the only way to avoid becoming part of that statistic.
The hard rule
The building owner's insurer will not pay for: your inventory, equipment, furniture, leasehold improvements you paid for, or your lost revenue while the building is repaired. That is not a coverage gap — it is intentional policy design. You need your own coverage for all of it.
What the building owner's policy covers
Commercial property insurance for building owners typically covers:
- Structural repairs — roof, walls, foundation, exterior systems
- Building systems — HVAC, electrical, plumbing within the structure
- Common areas — lobbies, parking structures, shared spaces
- Loss of rental income — the owner's lost rent while the building is being repaired
- Liability — third-party injury claims related to the building
What it does not cover: tenant property, tenant business losses, or tenant improvements the tenant paid for. The landlord can also pass the cost of building insurance to tenants through operating expense charges in the lease — so tenants may be paying for a policy that explicitly excludes their losses.
What the tenant must carry independently
As a commercial tenant, your essential coverages are:
- Business personal property (BPP) — covers contents, inventory, equipment, and furnishings you own inside the leased space
- Business interruption (BI) — covers lost revenue and ongoing fixed expenses during forced closure due to covered damage
- Tenant's improvements and betterments — covers build-outs and improvements you paid for that are now physically attached to the building (which technically belong to the landlord but were paid for by you)
- General liability — protects against third-party injury or damage claims within your space
After Hurricane Ian (2022), countless Gulf Coast tenants discovered their BPP limits were set at values from years earlier — before inflation drove equipment and inventory replacement costs 25–40% higher. Review your BPP limits annually against current replacement costs, not original purchase prices.
The coordination problem after a major storm
After a storm, both claims must proceed simultaneously but independently. The building owner calls their insurer about the roof and structure. The tenant calls their own insurer about contents and business interruption. The two claims are handled by two different adjusters on two different timelines.
The problem: the tenant's business interruption coverage typically requires "direct physical damage to their property." If the damage is primarily structural — to the building owner's roof — the tenant's insurer may deny the BI claim on the grounds that the tenant's property wasn't directly damaged. This is a documented claim dispute pattern after major storms. The solution is a BI policy that covers "loss of access" or "civil authority" triggers in addition to direct physical damage — language that applies when a building is rendered inaccessible even if the tenant's own property is undamaged.
Additional insured status — what it does and doesn't do
Some landlords require tenants to list the landlord as an "additional insured" on the tenant's liability policy. This protects the landlord from certain liability claims. It does not give the landlord access to the tenant's property coverage or BI coverage. Additional insured status is a liability tool, not a property coverage tool.
What your lease probably says — and why it matters
Commercial leases typically specify which party carries which coverages, required minimum limits, and whether each party must list the other as an additional insured. Read your lease's insurance section carefully before a storm. Specific clauses to look for:
- Waiver of subrogation — both parties typically waive the right to have their insurer go after the other party. Without this clause, your landlord's insurer could sue you for damage you caused, or vice versa.
- Restoration obligation — does the landlord have an obligation to rebuild? Some leases allow termination after a major casualty. If the landlord walks away, your BI coverage needs to survive the gap.
- Rent abatement — does rent stop during repairs? If not, you're paying rent on unusable space while your BI coverage is also running.
- Improvements and betterments — who owns and insures tenant-paid build-outs? Most leases say improvements become landlord property upon installation, but the tenant paid for them.