If you own a building that leases space to a business of any size, you could be liable if someone is injured or sustains property damage on your premises. Lessor’s risk insurance, also known as landlord’s insurance, protects you against these liabilities by providing you with insurance coverage that will pay for losses that result from a covered event. Although typically available only for commercial properties, some insurance companies provide lessor's insurance for residential apartments as well.
What It Covers
Lessor’s risk insurance covers two types of events: property damage and a variety of events that fall under the category of "liability," such as injuries, accidental deaths or dismemberments that occur on your property. These claims may be brought by a tenant, an employee of a tenant, a customer or a client. The property damage coverage protects against property loss that results in your parking lot and your building and includes automobile accidents, vandalism and flooding. Losses due to contamination or pollution may also be covered, but they generally require the purchase of a rider.
When you purchase lessor’s risk insurance, you will be financially responsible for claim amounts that exceed your coverage level. To ensure you’re adequately covered in the event of a loss, purchase enough lessor’s risk insurance. You might be able to get away with a smaller policy for a suite of small, low-risk businesses, but you’ll want the maximum coverage you can afford for a large industrial or manufacturing complex.
Factors That Affect Cost
Although discounts are not as common for lessor’s risk insurance as they are for personal policies, how much you pay for lessor’s insurance depends on how much of a risk you present. Landlords of high-risk properties will pay more for lessor’s risk insurance than those of low-risk properties. An example of a high-risk property is an industrial complex, where the chance of injury is potentially high. The occupancy rate also has a bearing, with low-occupancy buildings costing more to insure.
Lessor’s insurance cannot be purchased directly through an insurance company and instead must be purchased through an agent. If you’re interested in a lessor’s risk insurance policy, speak with a few agents to get a quote for your property. To find an agent in your area, contact agencies that sell commercial insurance policies.
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