Commercial Tenant Insurance in Switzerland: What is Mandatory?

As a commercial tenant in Switzerland, you are faced with the question: Which insurances are actually mandatory and which are merely recommended? The good news is that many insurances are voluntary. The bad news: some are practically indispensable. In this article, you will find out which insurances you should obtain as a commercial tenant to optimally protect your company and your inventory. We look at commercial general liability, building insurance, inventory insurance, and other important coverages for your commercial space.

Insurance Requirements for Commercial Tenants in Switzerland

Unlike private tenants, there is no legally prescribed insurance requirement for commercial tenants in Switzerland. Although the Swiss Code of Obligations (CO) regulates many aspects of tenancy law, it does not make any concrete specifications regarding insurance for tenants of commercial premises. Nevertheless, certain insurances are practically indispensable as they protect you from significant financial risks.

Many landlords of commercial real estate explicitly require proof of certain insurances in the lease agreement, especially commercial general liability insurance. This is legally permissible and serves to protect the property as well as the landlord. It is therefore worth clarifying before signing the contract which insurances the landlord requires.

As a general rule, as a commercial tenant, you are responsible for damage caused by your operations or occurring to your rented inventory. The landlord, on the other hand, is responsible for building insurance. This clear distinction helps you identify the right insurances for your commercial space.

Commercial General Liability Insurance – Usually Indispensable

Although commercial general liability insurance is not legally required, it is essential for almost every business. It protects you against third-party claims for damages arising from your business activities. These can be personal injury, property damage, or financial losses caused by you or your employees to third parties.

Imagine a customer tripping over a cable in your retail space and suffering a serious injury. Or an employee damaging a customer's car during a delivery. Such cases can quickly lead to high claims that, without insurance, could threaten your existence. In such cases, commercial general liability insurance covers the costs of justified claims and defends against unjustified ones.

What does commercial general liability insurance cover?

Commercial general liability insurance typically covers the following risks:

Personal injury resulting from your business activities
Property damage to third-party property
Financial loss resulting from personal injury or property damage
Tenant damage (damage to your rented commercial premises)

The last point is particularly relevant: if you, as a tenant, damage the rented premises—for example, due to a fire or water damage—commercial general liability insurance kicks in. This is an important reason why many landlords make this insurance a condition of the lease.

Costs and coverage amounts

The costs of commercial general liability insurance vary depending on the industry, company size, and desired coverage limit. For a small office or a coworking workspace, premiums can start at just a few hundred Swiss francs per year. Industrial companies or businesses with higher risks pay correspondingly more.

Coverage limits should be chosen sufficiently high. Experts recommend at least CHF 2 to 5 million for personal injury and CHF 1 to 2 million for property damage. If in doubt, it is worth consulting an insurance expert.

Building Insurance – The Landlord's Responsibility

Building insurance is mandatory in most Swiss cantons and is taken out by the property owner. As a commercial tenant, you do not need to worry about this insurance – it is the responsibility of your landlord.

Building insurance covers damage to the building itself, such as from fire, natural hazards like storms or hail, as well as water damage. In some cantons, building insurance is mandatory through the cantonal building insurance institution (KGV), while in others, private insurance companies can be chosen.

Do commercial tenants have to contribute to building insurance?

As a rule, the costs of building insurance are passed on to tenants as prepayments via service charges (Nebenkosten). This means that as a commercial tenant, you indirectly bear a share of the insurance costs, but you are not directly responsible for taking out the policy. The details should be regulated in your lease agreement.

It is important to understand: the landlord’s building insurance only protects the building, not your inventory or business equipment. You must take out separate insurance for these risks yourself.

Inventory Insurance for Commercial Premises

Inventory insurance is one of the most important coverages for commercial tenants. It protects your business inventory, office equipment, machines, stock, and other movable assets from damage caused by fire, water, burglary, and other risks.

Unlike building insurance, inventory insurance is not mandatory, but it is essential for most businesses. A fire or water damage can destroy your entire business equipment and, without insurance, lead to existential financial ruin.

What does inventory insurance cover?

A typical inventory insurance policy for commercial premises covers the following causes of damage:

Fire and lightning strikes
Tap water damage
Burglary and vandalism
Natural hazards such as floods or landslides (often as additional coverage)
Glass breakage (also often as additional coverage)

When choosing coverage, you should ensure that all major risks are covered. Natural hazards in particular are not automatically included and often have to be booked separately. This is particularly relevant in areas with an increased risk of flooding.

Choosing the right sum insured

The sum insured should reflect the actual value of your inventory. Underinsurance can lead to a reduction in compensation in the event of a claim. It is therefore worth keeping an updated inventory list and adjusting the sum insured as needed.

Many insurance companies also offer replacement value insurance, where not just the current value but the replacement value of the damaged items is reimbursed in the event of a claim. This is particularly sensible for high-value machinery or IT equipment.

Other Relevant Insurances for Your Business

In addition to commercial general liability and inventory insurance, there are other insurances that may be useful or even necessary depending on the nature of your business.

Business Interruption Insurance

Business interruption insurance protects you against loss of income resulting from a covered claim. If your commercial premises are temporarily unusable after a fire, for example, this insurance covers ongoing costs such as rent, wages, and lost profits. This coverage is highly valuable, especially for businesses that are heavily reliant on their premises.

Legal Expenses Insurance

Commercial legal expenses insurance covers the costs of legal disputes, for example in conflicts with the landlord, suppliers, or customers. This can be especially helpful with complex commercial lease agreements, for instance, if disagreements arise regarding service charges or notice periods.

Cyber Insurance

For companies that rely heavily on IT systems or process sensitive customer data, cyber insurance is becoming increasingly important. It protects against the financial consequences of hacker attacks, data loss, or business interruptions caused by IT failures.

Professional Indemnity Insurance

For certain professions, such as architects, fiduciaries, doctors, or lawyers, professional indemnity insurance is indispensable and sometimes even mandatory. It covers damages caused by errors in professional practice and protects against high compensation claims.

Conclusion – Insurances You Should Have as a Commercial Tenant

In summary: as a commercial tenant in Switzerland, you are not legally required to take out specific insurances. Nevertheless, some coverages are practically indispensable to protect your business from existential risks.

The most important insurances for commercial tenants are:

Commercial General Liability Insurance – protects against claims for damages by third parties and is required by many landlords
Inventory Insurance – protects your business inventory against fire, water, theft, and other risks
Business Interruption Insurance – covers loss of income in the event of business interruptions

Building insurance is the responsibility of the landlord, but its costs are usually passed on to you via service charges. Depending on the industry and specific risks of your company, other insurances such as legal expenses, cyber, or professional indemnity insurance may be advisable.

Our tip: Before signing your lease, clarify which insurances your landlord requires, and get advice from an insurance expert to find the right coverage for your business. This ensures you are optimally protected and avoid unpleasant surprises in the event of a claim.

Note: This article is for informational purposes only and does not constitute legal or insurance advice. For specific questions regarding your individual situation, we recommend consulting an insurance expert or lawyer.