Office Building Insurance: What Does It Cost?

Owning an office building can feel safe: newer roof, no prior claims, solid tenants. But commercial real estate routinely produces large, sometimes full-limit, losses. Wildfire, wind and hail, frozen-pipe water damage, and fires happen every year across ordinary buildings. The right insurance program is what stands between a bad day and a business-ending event.

Why Office Building Owners Need Insurance

Owning an office building concentrates a lot of capital in a single address. A single fire, burst pipe, windstorm, or lawsuit can erase years of returns. Insurance exists to keep one bad day from becoming a business‑ending event and to satisfy the contracts that allow the property to operate.

The Core Package You Should Build

Start with Property (highest cost, largest risk, most exclusions). Then add General Liability (GL). Ideally keep both with the same carrier for fewer gaps and cleaner claims handling.

1) Property Insurance (Insures Your Building Against Damage)

This pays to repair or replace your building after a covered cause of loss (for example, fire, wind, hail, certain types of water damage).

Must-haves (non-negotiables):

• Agreed Value or Waiver of Coinsurance tied to a credible replacement cost.
  • Why: Avoids painful coinsurance penalties if construction costs spike or your limit lags.
• Ordinance or Law (Building Code Coverage):
  • Undamaged portion coverage, Demolition, and Increased Cost of Construction.
  • Why: After a major loss, code upgrades can be expensive and are often not covered unless you buy them.
• Business Income or Loss of Rents:
  • Why: Keeps cash flows steady while repairs happen and protects debt service and operations.
• Water Damage Coverage (not excluded):
  • If a sublimit is unavoidable, insist on at least $100,000.
  • Why: Burst or frozen pipes are common, costly, and sometimes quietly excluded or limited.
• Theft included (not excluded):
  • Why: Copper or metal theft from roofs and HVAC units is a recurring exposure.
• Roof valuation:
  • Replacement Cost for roofs about 10 to 12 years old or newer.
  • Why: Many carriers automatically depreciate older roofs. Prove age and lock in better terms.
• Manageable deductibles:
  • Scrutinize any wind or hail percentage deductible. A “5%” deductible can be large on a multimillion-dollar limit.
• Equipment Breakdown coverage included:
  • Why: Protects critical systems such as HVAC, electrical panels, and boilers from sudden mechanical or electrical breakdown.

2) General Liability (GL): premises liability

Pays when third parties allege injury or property damage linked to your premises (for example, a trip-and-fall).

Must-haves and gotchas:

• Watch for fine print exclusions that quietly strip protection:
  • Assault and Battery exclusions can gut coverage after an incident such as a parking lot altercation.
  • Animal exclusions can turn a stray-dog bite into your problem.
• Keeping GL and Property with the same carrier often yields smoother claims and fewer coverage disputes.

Tenant Risk Transfer

As a landlord, your tenants risk are now your risk and you need to have a structure in place to where they pay for issues that they cause. This can be executed through certain insurance endorsements.

• Require tenant liability insurance and name you as Additional Insured. Document it with up-to-date COIs (certificates of insurance).
• Have a hold harmless clause in your lease agreement that is reviewed by an attorney.
• Why: Without this, your policy can end up paying for tenant-caused incidents.

What Will It Cost? (Real Examples)

These examples are illustrative for office buildings. Pricing varies by location, construction, protection, roof age, tenant mix, loss history, vacancy, and carrier appetite.

Bottom Line

Although office buildings are lower risk than most real estate, bad weather and catastrophic claims don't discriminate on building type. Build your program around proper valuation, and having excellent terms on your insurance policy.