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Building Owner's Risk: An Overview for Agents

Slip and Fall Accidents Can Happen on Any Property

of property and liability claims stem from third-party slip and falls.

According to a report by The Hartford, slip-and-fall accidents cost about $20,000 on average. That stat that should tell your commercial building and vacant lot owners one thing: third-party bodily injuries can happen anywhere and cost property owners big time. Make sure your client is prepared for the unique risks that come with owning commercial buildings and unoccupied lots. Talk to them about Lessor's Risk and Vacant Lot Insurance.

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Important Insurance Policies for Clients Who Own Commercial Buildings and Vacant Land

Whether it’s a skyscraper or an empty lot, non-owner occupied property presents a number of risks to your client. A landlord most likely wants to protect their assets from the trouble tenants can bring, but the owner of an empty lot faces similar exposures.

Unfortunately, few building and lot owners recognize the perils they face, and even fewer understand that a drop in tenancy may cause a loss in coverage. It’s up to you to point them toward the policies that suit their needs, so let’s review the basics of building and lot owner's insurance.

Lessor's Risk Insurance

Lessor’s Risk Insurance is a multi-line policy that offers liability and property coverage to clients who rent out space in their buildings. Generally, it covers your client’s responsibility for a tenant’s....

  • Property loss or bodily injury.
  • Employee’s property loss or bodily injury.
  • Customer’s property loss or bodily injury.

How can your client be responsible for these kinds damages? Perhaps the easiest example is to consider building maintenance. If a tenant or a visitor suffers an injury after tripping over a loose floorboard, your client could be sued for their medical bills and lost wages. Lessor’s Risk can help cover the expense.

Vacant Land Insurance

Vacant Land Insurance is also a multi-line policy that offers liability and property coverage for owners of vacant lots or buildings. For reference, property is considered vacant when 70 percent or more of its total square footage is either not rented or not used to conduct usual operations.

The property portion of the policy can help pay for damages caused by:

  • Fire.
  • Vandalism.
  • Windstorm.
  • Hail.
  • Lightning.

The liability risks may be harder to imagine in the case of an empty lot or vacant building, but it may help to think about the visitors your client may have, such as potential buyers or lessees. Additionally, these empty spaces can be attractive to young children. Any time someone steps foot on the property, your client faces some liability risk that may warrant coverage.

Tips for Classifying Building and Lot Owners

Property owners who lease space may see significant changes to their risk profile as the demand for their space fluctuates. That means your client may start out needing Lessor’s Risk Insurance, but could benefit from a switch to Vacant Lot Insurance if their occupancy drops.

Here's how to tell which camp your client might fall into.

Lessor's Risk Insurance can help out clients who own and rent out commercial buildings and lots that aren't non-owner occupied, such as…

  • Retail stores.
  • Warehouses.
  • Factories.
  • Office space.
  • Apartments.

Vacant Land Insurance can help out clients who own commercial buildings or land that have few or no tenants, such as…

  • Commercial property with low occupancy.
  • Vacant buildings they intend to rent space in.
  • Vacant building they are planning to sell.
  • Vacant lots.

Two of the biggest factors for determining if your clients should consider Lessor’s Risk or Vacant Land coverage are:

  1. Percentage of occupancy.
  2. Time left vacant.

Each carrier has its own standard for insuring a non-owner occupied property. For example, one insurer may decide a building at 60 percent vacancy for more than 60 days requires Vacant Land Insurance, while another says Lessor’s Risk. The change in class distinction also impacts carrier appetite, which can limit the insurers available to your client.

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