Author, Kevin Howard, Account Executive, Rancho Mesa Insurance Services, Inc.
As a landlord and owner of commercial property, you have exposures like fire, theft and bodily injury that must be addressed to protect your investment and, in many cases, a family asset from risk. As you look to finance these properties, most lenders will require checks and balances to ensure that your property is properly insured and that the mutual investment is protected.
The Building and Property Area Must Be Protected
A lessor’s risk insurance policy, also known as an LRO, is set up to protect the replacement value of the building from fire, theft, and damage caused by a vehicle, third party, water/burst pipe and vandalism to name some common areas of coverage. There are extensions that will add ample benefits to LRO policies for building owners like ordinance and law coverage which would cover any needed updates required based on city code when rebuilding. Or an “Increased replacement cost limit up to 125%” which would protect a building owner from inflationary costs. There are several solid options for lessor’s risk policies but it is always wise to speak with a broker that can guide you through the process.
Liability Insurance in Case You Are Sued as the Building Owner
The second and equally important part of a lessor’s risk policy is the business liability portion. As a landlord/building owner, if someone were to slip and fall in front of your building or in your parking lot, you may be named in a lawsuit. The second key component to a lessor’s risk policy should include business liability. LRO policies will typically offer $1,000,000 per occurrence and $2,000,000 aggregate. If you are a landlord who is renting your building to a business, you would need this liability policy in the event you are sued for injuries sustained by your tenant as the builder owner.
If you own a Building, Avoid this Mistake
Do not only rely on the sole procurement of a standalone property insurance policy. If you own a building, it is critical that you procure a lessor’s risk policy. A lessor’s risk policy is the best alternative in protecting your family asset through the risk transfer process.
Rancho Mesa has access to several A+ rated lessor’s risk carrier options. So, if you have any questions or need help securing this coverage, reach out to me at (619) 438-6874 or khoward@ranchomesa.com.