When it comes to leasing commercial properties, particularly in triple net leases, there’s a crucial decision that building owners must make: Should they require their tenants to purchase insurance or should they carry their own landlord policy and bill the tenant for the coverage? While both options have their merits, there are compelling reasons why building owners should strongly consider taking charge of their own insurance coverage. Let’s delve into the benefits of building owners carrying their own landlord insurance and billing tenants for it, rather than leaving the responsibility to the tenants.
1. Ownership of the Insurance Process
One of the most significant reasons for building owners to have their own landlord insurance is the issue of control and ownership. When the tenant purchases the insurance on a triple net lease and names the owner as an additional insured, potential problems can arise. For instance, in the unfortunate event of a loss to the building, the insurance carrier might issue the claims check directly to the tenant, creating unnecessary complications in the claims process. Additionally, insurance carriers might deny building coverage as the tenant does not actually own the building. By carrying their own landlord insurance, building owners ensure that they remain in control of the insurance process and claims payouts.
2. Continuous Coverage Awareness
Allowing tenants to purchase insurance might lead to a dangerous situation where the building owner is unaware of any lapses or changes in coverage. This lack of awareness could be detrimental, as the building owner might mistakenly believe there’s active coverage when there isn’t. By taking charge of the insurance and billing tenants for it, building owners stay informed about the policy’s status and can promptly address any coverage gaps or changes, providing them with peace of mind.
3. Liability and Claims Control
Triple net leases often necessitate additional insured clauses, where the tenant names the building owner as an additional insured on their policy. While this can provide an extra layer of protection, it can also lead to complications if the tenant exhausts the policy limits before the landlord can access them. Carrying a separate landlord insurance policy empowers building owners with their own liability limits, ensuring that they are adequately covered and protected from potential claims. This separation of coverage provides a safeguard against any limitations in the tenant’s policy.
In conclusion, the benefits of building owners carrying their own landlord insurance and billing tenants for it cannot be overstated. By taking control of the insurance process, maintaining continuous awareness of coverage, and ensuring their liability and claims control, building owners position themselves for a more secure and streamlined leasing experience. It’s a proactive approach that not only safeguards their interests but also helps establish a robust foundation for a successful landlord-tenant relationship.
At Insurance Incorporated, we understand the intricate dynamics of commercial leasing and insurance. If you’re a building owner seeking the best insurance solution for your properties, we’re here to guide you every step of the way. Contact us today to explore your insurance options and make the right choice for your peace of mind and financial security.
