If your business leased or rented space from another party are you liable for damage to the building even if it was not your fault?
That will depend on what is in your lease. One of the most common mistakes made by business owners is they fail to read the lease requirements or ask their insurance agent to review the insurance requirements and who is responsible for damage to the leased property to be sure that the insurance coverage they are purchasing is the proper coverage. Many insurance agents and business owners assume you are properly covered under the General Liability coverage, Damage to Premises Rented by You, formerly known as fire damage legal liability, but this may not be the case and may leave you exposed to damages assumed in your lease.
When leases hold tenants liable for damage to leased property, the potential damage should be insured under a Property insurance policy not a general liability policy. The building owner may purchase insurance, or it may require the tenant to ensure the property only the lease will provide the details you need to determine what coverage to purchase. Many building leases are broad, rendering the tenant liable for damage for a wide range of perils, not just fire. These contracts may hold tenants responsible for damages that occur during the period of the lease, even if the tenant did not cause the damage. If this is the case, your general liability insurance policy will not cover you because the damage may not be a result of your actions. If the lease states that you assume responsibility for any damage to the building then you should purchase coverage under your Property policy.
The general liability coverage damage to premises rented to you generally has sub limit of $100,000, so be sure you purchase the appropriate amount based upon your needs.
Before you choose an insurance agency for your business insurance needs, make sure they understand your exposures and be sure they are providing you with the proper insurance. Choosing an educated insurance agent can be the difference between being covered or a catastrophic loss.
For more information contact our office.