Damage to Rented Premises
Published On -
If you cause a fire that damages a commercial location you rent, does your general liability policy cover it? The answer is a bit more complicated than you might think.
What a General Liability Policy DOESN’T Cover
A general liability policy covers damage and/or bodily harm to third parties. If one of your employees forgets to put up the wet floor sign, and that causes a slip-and-fall, your general liability policy should cover it. If you neglect to fill in a pothole and it damages someone’s car, your general liability policy should cover it.
A general liability policy does not cover any of your property—including any permanent changes to the property you rent. For that, you’ll need a commercial property policy. Since the rental property itself, however, isn’t yours, you might think the general liability coverage will protect you if your landlord sues you for damage to their property.
This is not the case. General liability policies usually contain specific clauses excluding your rented property from coverage. If it’s yours or you treat it like it’s yours, general liability policies probably don’t cover it.
Damage to Premises Rented to You Coverage
Damage to Premises Rented to You coverage is a separate coverage tacked on to most general liability causes that give back a limited amount of coverage in the case of fire damage. If you cause a fire that damages your landlord’s property, this will kick in. It’s important to note this coverage only includes fire damage.
This coverage is also a lower limit of your general liability aggregate. The limit is most commonly $50,000 or $100,000, but some carriers will let you purchase higher limits if your landlord requires it.
Why Your Landlord Needs a Commercial Property Policy
Damage to Premises Rented to You coverage—as you’ve seen—is extremely limited. To make sure they’re covered for any other damage you could cause, your landlord needs a commercial property policy. This will cover most damage you could cause and damage from perils like hurricanes and lightning.
Conclusion
We discussed some general terms, but you need to look at your specific policy to understand how it affects you. That’s why it’s important you talk to an independent insurance agent. If you don’t have an independent insurance agent or would like a second opinion, feel free to reach out to us at D&A Insurance!