What Can Lessor's Risk Insurance Do for Property Owners?
By Pekin Insurance · Jul 15, 2019 ·1 min read
Owning property comes with risks, even when you put safeguards in place.
You take big chances when you don't have Lessor's Risk insurance. Here's what it can do for you.
Why Is Lessor's Risk Insurance Important?
A Lessor's Risk policy helps protect you and your investment from people who sustain injuries and damages on your property. To qualify for Lessor's Risk insurance, you can't occupy more than 25% of the building you lease out.
Depending on your coverage, this policy can cover:
- Theft of a tenant's property or a tenant's customer's property.
- Vandalism of a tenant's property or a tenant's customer's property.
- Litigation expenses from lawsuits and legal processes.
- Repair or replacement of tenant's belongings.
- Financial assistance in case of injury on premises.
At the very least, you should require tenants to carry general liability and business property coverage. Make this a mandate on your lease and name yourself, the property owner, as an additional insured to provide extra shielding against potential lawsuits.
How Lessor's Risk Insurance Can Make a Difference
1. A Fall in a Hardware Store
You lease out commercial retail space to a hardware store. They sell everything from power tools to landscaping supplies.
A customer comes in and buys three big bags of landscaping rocks. He says he doesn't need a dolly, so he carries his purchase.
The customer trips over an uneven floorboard on his way out of the building. He falls, and the landscaping rocks smash his hand.
The customer files suit against the building owner (you) for medical expenses. He's a general laborer, and his injury prevents him from working. The difference of his lost income is added to the lawsuit, plus additional losses.
2. A Burglary at a Tech Start-Up
You lease out commercial space to a tech start-up.
There's a break-in, and the business loses laptops, monitors, personal valuables, office supplies, and more.
An initial inspection finds poor security procedures made it easy for the burglars to access the building. You could get blamed for this and have to pay for the losses.
3. A Bone Break at a Bakery
You lease out commercial space to a bakery.
An employee heads to the basement to grab flour. She breaks her ankle when she falls down the stairs. She blames the injury on lack of proper lighting and files a suit against you.
Your commercial property insurance does not cover these situations. You pay out of pocket.
Depending on the severity of the injury and litigation expenses, you could have substantial losses. The same situation can happen if damage is caused to your tenant's property within or around the building.
Cover as Much as Possible
As a business owner, it's important to find in-depth coverage for your investment.
Lessor's Risk insurance only covers specific liability claims, particularly those outlined throughout the post above. If your building is damaged due to accidents within your tenant's business space, these liabilities won't be covered under Lessor's Risk Only (LRO) policies.
Don't have the coverage you need? Don't sweat it! Your local Pekin Insurance agent will help you find Lessor's Risk, general liability, and commercial property coverage for your needs.