Lessor’s Risk Protection
Lessor’s Risk policies are designed to provide liability and property coverage when a property owner occupies less than 75% of the building and leases out the remainder of the space. The property coverage rate is developed in part by common rating factors, such as year of construction, construction materials, fire protection class, prior losses, etc. In some cases, the structure may be leased to and occupied by a single business entity. In these instances the rate is subject to a single occupancy class code, each of which is developed based on loss data and considers the degree of risk associated with the occupant’s business operations. A sandwich shop, for example, will have product liability concerns and hopefully it will see a much higher volume of foot traffic than an investment brokerage office. So, the property occupancy class code will vary, based on the occupancy.
As you might imagine, when there are multiple occupancies in the same building, each operation is assigned a class code and the overall rate is developed with the sum of these occupancies. Over time, there will be some tenant turn over. As each term expires, the agency and insured should discuss the lessees of the building and strive to keep the policy data up to date and accurate. A prudent property owner will also require each lessee to secure their own general liability coverage and then list the property owner as an additional insured on their policy. However, the property owner is still exposed to the risk of a liability claim or suit being brought against him, by merely owning the property. Therefore, Lessor’s Risk coverage is designed to pickup where each lessee’s general liability coverage ends and provide liability coverage that will protect the insured property owner.
Claimant minded individuals have bilked millions from grocery and department stores through fraudulent slip and fall type claims. The vigilant use of surveillance cameras has helped reduce these losses dramatically. However, claimant minded individuals are now turning to convenience stores and small strip malls, that don’t have cameras, to continue exploiting business owners. Surveillance cameras technology has become very affordable and costs far less than the hassle and expense of wrestling with frivolous and fraudulent claims. Call, email, or stop by if you have questions or would like us to work on your Lessor’s Risk Coverage.