Who Pays for Building Insurance – Landlord or Tenant?

No one wants to talk about insurance until suddenly… guess what, things go wrong and you need it. If you’re a landlord, rental property owner, or even a tenant, the questions about who should have insurance and on what is common. One that comes up sometimes: who pays for building insurance – landlord or tenant? Having building insurance is important, since so much can go wrong from natural disasters to fires… but who is responsible for it?

As one of the top Atlanta Georgia property management companies, we need to be well-versed on these types of topics. It’s certainly helpful to get an overview of just what these types of insurances are and who should be on top of it and when. Let’s explore who pays for building insurance – landlord or tenant – and go over a few of the related questions you might have.

Table of Contents

• Who Pays for Building Insurance – Landlord or Tenant?
• FAQ
• Why Having a Property Manager Can Help You With Everyday Tasks

Who Pays for Building Insurance – Landlord or Tenant?

When you hear the phrase “building insurance,” it can be a little confusing because it sounds like something everyone involved in a property might need. It is often a part of homeowners or commercial property insurance… it’s a type of insurance policy designed to provide financial protection specifically for the physical structure of a building, as well as any permanently installed fixtures. The truth is that who actually pays for it depends a lot on whether you’re talking about a residential or commercial lease.

For residential rentals, the landlord almost always carries the building insurance. It’s part of the insurance they need, whether it is landlord insurance in Georgia or a component of the insurance landlords need to get in Texas. Wherever they are, it’s part of the bigger picture they have. It’s because it covers the structure itself, not the belongings inside, which is what tenants are thinking about. Tenants usually don’t have to worry about this type of coverage at all. Instead, they may be required to carry renters insurance, which protects their personal property and sometimes covers liability if damage or injury happens inside the unit.

Commercial properties, on the other hand, often work differently. A landlord still needs building insurance to protect the structure, but commercial tenants may be asked to contribute to the cost through what’s called a “triple net lease” or similar agreement. In those setups, tenants pay not just rent but also a portion of the property taxes, maintenance, and insurance. For business owners, it’s pretty common to budget for this as part of their lease.

So here’s the thing. In residential situations the responsibility usually sits solidly with the landlord, while in commercial arrangements it can shift partly onto the tenant depending on the lease terms. That’s why it’s always important to actually read the lease closely… and hey, ask questions!

Here are some situations where the tenant may pay for insurance:

• Commercial leases with a triple net (NNN) structure
• Specific lease agreements that pass on part of the insurance cost
• Business tenants that are required to insure their own space or operations

FAQ

What does builder’s insurance cover?

Builder’s insurance, sometimes called “builder’s risk insurance,” is basically protection during a construction or renovation project. It usually covers the building itself while it’s being worked on, plus materials, equipment, and sometimes even temporary structures. The idea is that if a storm, fire, theft, or some other unexpected event happens while the place is still under construction, the insurance helps cover the costs.

It’s also important to understand the difference between “builder’s insurance” and “building insurance”. What we described above, the topic of this article, is building insurance, insurance on a building (not construction on it).

How much does building insurance cost?

The cost of building insurance can swing a lot depending on the type of property, its location, and what’s being covered. Landlords often ask themselves how much insurance do I need to get. A small residential rental might only cost a landlord a few hundred bucks a year, while bigger properties or commercial buildings could run into the thousands. Factors like how old the building is, what it’s made of, and even the crime rate in the neighborhood all come into play.

Is home insurance different to building insurance?

Yes, and it’s an important difference. Home insurance is kind of an umbrella—it usually covers the structure, the contents inside, and liability for accidents. Building insurance, on the other hand, is just about the physical structure itself: walls, roof, floors, and sometimes fixtures. So a landlord might carry building insurance to protect the property, while a tenant carries renters or home insurance to protect their belongings. They complement each other but don’t do the exact same job.

Why Having a Property Manager Can Help You With Everyday Tasks

As you get into a landlord/tenant situation, whether it is residential or commercial property, it helps to take some time to review your insurance. Your existing insurance policies probably aren’t going to cut it… and that could leave you exposed to unexpected costs. If you’ve been asking yourself who pays for building insurance – landlord or tenant – then you probably could benefit from expert advice. That’s when we can come in.

Contact Us Today! 

At Bay Property Management Group, we’re here to help. We’ll walk you through the right insurance coverage and make sure your property, your tenants, and you are fully protected. We can also protect your property in other ways by handling basic management, undergoing regular inspections, thoroughly screening tenants, and so much more. Reach out to us today to get help from the professionals. We’re a certified property management company in Sandy Springs and Atlanta areas, as well as Texas, Maryland, Massachusetts, Washington D.C., and elsewhere.