Lessor's risk insurance is essential for any commercial property owner who rents out space in their property to other businesses. While you may require your tenants to maintain their own insurance policies as a condition of their leases, it is still a good idea to maintain your own coverage for additional protection. Here's what you need to know.
Lessor's Risk Insurance Basics
Lessor's risk insurance protects you in case any of your tenants suffer losses due to emergencies. For example, fire and storm damage could result in them losing inventory or the ability to operate their shop temporarily. Your coverage would help pay for the damages and get the building back into working order.
This coverage can also protect against any injuries that occur on the commercial property you own, including injuries to your tenants, their employees, customers and suppliers. The coverage can help to pay for their medical costs and other associated expenses.
Lessor's Risk Insurance Requirements
In order to qualify for lessor's risk insurance, you typically must rent out at least 75 percent of your commercial building, though you may maintain the remainder for your own use. The specific usage requirements can vary by jurisdiction, though, so be sure to verify the specific laws in your area, as this is just a general guideline. In most cases, a single lessor's risk insurance policy will only cover a single building, so you'll need multiple policies if you own more than one commercial property.
Choosing the Limits for Your Coverage
In choosing the limits for your policy, it is always a good idea to purchase the highest amount of coverage you can reasonably afford so that you are as protected as possible. Coverage of at least $1 million is fairly standard, though you may wish to increase your limits if any of your tenants engage in high-risk businesses, like manufacturing.
Speak with a Lessor's Risk Insurance Specialist Today
If you are unsure how much lessor's risk coverage you need, the experts here at Southern Colorado Insurance Center will be happy to assist you. We are experts in the insurance industry, and we’ll work with you to understand how you and your tenants use your commercial facility so that we can make appropriate recommendations. We'll then match you with a suitable insurance provider in your area. Call 719-329-4441 today to learn more and get the process started.