Insurance Inquiries

Most people believe that insurance is waste of money while others believe that it is the best form of security to protect your investment and to minimize your risk of a loss.

In commercial lease agreements, typically the landlord will insure its property against several risks. The primary insurance is an “all risk coverage” to insure the property’s improvements against the risk of a loss by fire, storm, water, burglary and hurricane (and other forms of loss) to which the landlord will get paid money to renew, replace or reinstate any such damage. A landlord will also insure against “loss of rent” which typically follows damage to a property by fire, water or hurricane. A landlord will also insure the common areas of the property (i.e. the areas of the property not leased to tenants) against any third-party claims.

On the other hand, tenants are typically required to insure their leasehold improvements, inventory, furniture, equipment and displays against all risks of damage. Similarly, tenants are also required to carry consequential loss coverage which typically is to insure against its loss of revenue after a storm, fire, burglary, hurricane, etc. The tenant is also required to have third-party insurance on the premises in the event of any accidents happening within the tenant’s premises.

While the cost of insurance may appear high at first, it certainly is miniscule in comparison to when you are faced with having to pay for a significant loss when you don’t have it!

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