Owning a commercial building for lease is an outstanding achievement that comes with risks. Landlord insurance or lessor’s risk insurance is a type of insurance designed to protect building owners who rent their property as commercial spaces for retail, office space, or warehouse.
It provides coverage for property damage and liability coverage in case of a lawsuit against you by tenants injured due to an event in your building.
Covered risks include weather damage, water damage, injury due to slip or fall, vandalism, theft, fire, and auto accidents on the property. Other risk coverage includes options for earthquake coverage, loss of rental income, crime insurance for employee dishonesty, and site pollution due to possible contaminants.
Apart from your tenants, the policy also covers the medical expenses and associated costs for employees, suppliers, and customers who suffer injuries while on your property.
Lessor's risk insurance is not a substitute for building policies and general liabilities, covering your building, items within your property, and liabilities for injuries unrelated to the lessee's business activities.
Requirements of LRO
To qualify for lessor's risk for property owners, you must rent 75 percent of your building. A single lessor's risk insurance covers a single property. If you own multiple buildings, you may need to take more than one commercial landlord insurance cover.
Choosing a limit for your coverage
It is wise that you go for the highest amount of coverage you can afford to maximize your property's protection. If you go for a lessor’s limit, which is less than the lessor’s bodily or loss liability claimed, you would pay out of pocket for the difference.
In addition, the type of business you tenants determine the limits you should choose. In case they engage in high-risk businesses such as manufacturing, you may need to increase your limit.
Buying a policy
Lessor's risk supplemental protection providers do not work directly with clients. The providers make lessor's policies that you can buy through brokers and agents specializing in business insurance.
Some lessor's risk policy list a ton of losses covered in their plan to enable you to repair your property without breaking the bank.
Shop around for rates and compare the plans to get an LRO that meet the specific need of your building. Expert lessor’s risk providers will take time to learn about your rental property's specific risks and come up with a perfect policy for you.
LRO can be tailored to meet the needs of a specific building. You may also need to add specific hazards when purchasing a cover, as the requirements differ from area to area.
Depending on the square footage, LRO may not cover some buildings. In addition, buildings with malfunctioning smoke detectors, several electrical hazards, or lack of fire extinguishers are not covered.
Although it is not necessary to have a lessor's risk insurance, not having a cover can cause you to suffer severe losses when something wrong occurs to your property. LRO is an essential financial tool for protecting a commercial building against liabilities. It can save you from lawsuits if someone sustains or property damage or bodily injuries while on your property.
Please contact TWFG Insurance at 713-388-6681 to receive a free quote today.