When Commercial Tenants Do Damage
Landlords may require tenants legal liability insurance.
Do you lease space in your commercial building to a tenant? If so, do you require proof of insurance from the tenant?
Taking a tenant’s word that they are adequately insured for damage they cause to your building could prove to be an expensive error. For example, most tenants obtain a commercial general liability (CGL) policy that provides limited insurance for fire damage caused by the tenant to the building (in some policies, this is known as fire legal liability coverage). The policy may also include coverage for other damage caused by the tenant, such as water or vehicle damage, but only for a limited time (e.g., damage must occur within the first seven days of occupying the landlord’s space).
Landlords may choose to require that, in addition to a CGL policy, the tenant also carry liability insurance specifically designed for damage they cause to the building. Such insurance often called tenants legal liability insuranceis available through many insurance companies.
Should you require your tenant(s) to carry this insurance? Or are you content with the coverage in their CGL policy? For information about these important questions, contact your insurance agent or broker.
Reprinted with permission, The Mines Press Inc.