When we think of commercial insurance the first type of policy that normally jumps out is a general liability policy. While a general liability policy is the appropriate coverage tool to protect a business owner’s assets, it is imperative to understand what additional exposures exist relating to your business operations. For commercial property landlords, a general liability policy will likely not provide you with the protection needed should your lessee, lessee’s employees, or lessee’s customers suffer bodily injury and/or property damage while on your property.
Picture this: You are the landlord of a multi-tenant commercial building. One morning your tenant’s employee is walking into work and trips on an uneven walkway on your property. This employee is seriously injured. Who is liable for this employee’s injuries? You as the landlord, or your lessee (the employee’s boss)? While much will depend on the contract maintained with your lessee, a Lessor’s Risk Only insurance policy can provide defense costs should you be sued by this employee or your tenant.
Along with protection again injury claims from a landlord’s lessee, lessee’s employees, or lessee’s customers, an LRO policy can offer protection from liability resulting from a lessee’s property loss, which occurs on the landlord’s property. This type of protection can include theft, vandalism, and damage/destruction of property but remember, the loss must relate to property located in the building owned.
To qualify for lessor’s risk insurance, the insurance underwriter will inquire as to how much of the building is leased out and the location of the building. Typically, an LRO policy will only come into play if the landlord leases out at least 75% of the building space, and LRO policies tend to be location-specific; meaning, one policy would not include various building sites that were owned by one property owner. Nevertheless, each insurance carrier has different requirements so selecting a knowledgeable agent is key to securing a proper LRO policy.
Contact BrookStone Insurance Group for more information regarding LRO insurance and how to protect your property investment.