What Is Lessor's Risk?
- This type of policy will cover general liability, meaning protection from loss due to any bodily injury or property damage that occurs because of a direct or indirect action of the insured. The policy can also be expanded to include coverage for more specific forms of liability, including loss of important data, documents or loss from crime.
- Lessor's Risk Coverage is commonly purchased by owners of apartment buildings, office buildings, retail buildings, strip malls, warehouses, gas stations or mixed use buildings. Property coverage commonly might include the building, accounts receivable, business income, computer equipment, contents, equipment breakdown, outside signs or valuable documents, among other items.
- The Small Business Administration notes that because the definition of property is very broad, an "All-risk" policy, such as lessor's risk insurance, is a necessity for owners of commercially leased property. The SBA also notes that simply structuring your business as a corporation or LLC does not eliminate the need for business insurance. While the business structure can limit personal liability, owners of leased property still need protection against events that would result in lost income through business interruption.
- Be sure that you understand the exact nature of your policy's coverage. The flexible nature of lessor's risk insurance means that it can be adapted to fit the needs of the property owner. Specific things such as fire, smoke, severe weather, vandalism or crime may not be covered unless added to the policy. The crime coverage portion of the policy can be expanded, for example, to encompass theft of money and securities, robbery or a safe burglary inside the premises. Coverage may also specifically include crimes committed outside the building but still on the premises.
