Rancho Mesa's Alyssa Burley and Account Executive Kevin Howard discuss the elements of a lessor’s risk insurance policy.

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Director/Host: Alyssa Burley

Guest: Kevin Howard

Producer/Editor: Lauren Stumpf

Music: “Home” by JHS Pedals, “News Room News” by Spence

transcript

[Introduction Music]

Alyssa Burley: Hi! This is Alyssa Burley with Rancho Mesa’s Media Communications and Client Services Department. Thank you for listening to today’s top Rancho Mesa news brought to you by our safety and risk management network, StudioOne™. Welcome back, everyone. My guest is Kevin Howard, Account Executive with Rancho Mesa. He specializes in commercial insurance for the solar and roofing industry. Today, we're going to talk about the elements of a lessors risk insurance policy. Kevin, welcome to the show.

Kevin Howard: Thank you so much. I'm excited to talk about lessors risk.

AB: Of course. So, we have many clients who personally own the building that their companies rent, or they're just landlords for other businesses. What risk exposures does a landlord have on their commercial property?

KH: Yeah, great question. As a landlord or a lessor, you're going to have a less-ee, right? So that’s who you're leasing your building too. So there's a multitude of exposures there. One would be if your building actually causes property damage or bodily injury, right, the most prime example I can think of is if like the roof were to cave in and somebody got hurt inside.

AB: Right.

KH: Right. So who's going to be responsible for those, that injury or if there's a lawsuit? The other part of it is the exposure to your building. Right? This is your asset. You own it. There's value to that. How do you protect that asset to make sure that, you know, if there was a fire, or theft, or vandalism, what do we do? So that's in essence, the exposures at hand.

AB: Okay. So what is a lessors risk insurance policy? What does it cover?

KH: Right. So let's just use the word landlord, you know, and you're the landlord and you're the lessor. So we're covering everything that could potentially occur that could cause a claim. Right? We're transferring the risk to an insurance provider in that lessors risk policy. And there's really two parts to that. You know, we're going to be talking about the property itself and then the liability as the other half. And all of those together creates a lessors risk policy.

AB: Okay. So what should a building owner avoid to minimize the risk?

KH: As a building owner, if you had been traditionally purchasing insurance through the same outfit, let's say, like State Farm or Farmers, and we're just going to make sure that the building is insured, you know, so that it's protected. Make sure you're thinking about the other side, like the liability piece. What could happen and what type of exposure do I have to risk if somebody were to slip and fall in my parking lot? Right? What would be the next step there? And so a full lessors risk policy is equipped to really tackle any type of claim.

AB: Yeah. Can you go into a little more detail on the liability portion of the lessors risk policy?

KH: Right. So let's and, you know, general liability, let's think of that as a double protection and we're protecting you as the owner of the building from if somebody were to get injured or if there was property damage. Right?

AB: Ok.

KH: Those are the two main elements of a general liability policy. So if we split that in half and we use the example of somebody slipping and falling in the parking lot. Hey, they were riding their bike, they slipped, we didn't maintain our parking lot well enough. This policy is going to react. Typically, there's $1,000,000 per occurrence and $2 million aggregate for the year. And you can add layers to that by purchasing excess liability. So that's the first part of it. And then the other really important part is the building itself, right now with costs going up and inflation, I would definitely say it's important to go in, look at your policy during the renewal period, make sure that it's valued on replacement cost where it should be because construction costs are going up.

AB: Right.

KH: If you've been just renewing for years and years and not looking at it, things have changed. You know, some policies I was looking at recently have like a 125% inflation guard. So they automatically give you some really good wiggle room. There's a lot of new green code that's going in as far as like it has to have this type of sprinkler system.

AB: Right, and if you're not thinking about that in the policy, you could be very well under insured.

KH: Yeah, exactly. So, you know, building burns down. We built it in 1960 and oh, my gosh, we have to rebuild it with all of these new per code items that are green or based on, you know, what your state is saying that you have to build it with. It's really important to make sure your policy includes some of those features.

AB: Okay. So, Kevin, if listeners have questions about their lessors risk policy or they actually need to get one, what's the best way to get in touch with you?

[Outro Music]

KH: Oh, thanks. Yeah, I would say give me a call and my direct line is the best way, which is 619-438-6874. Or just shoot me an email, khoward@ranchomesa.com. Let's take a look, let's make sure that that everything makes sense and that you're protected.

AB: All right. Well thank you, Kevin, so much for joining me in StudioOne™.

KH: Thank you so much. Thank you.

AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning in to our latest episode produced by StudioOne™. For more information, visit us at ranchomesa.com and subscribe to our weekly newsletter.