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Whether you’re the lessor (the building owner) or the lessee (the business renting the property), commercial leases and their insurance provisions and requirements need special attention.

Before signing a commercial lease agreement and buying insurance, be sure to get answers to four big questions:

  1. Who pays? Whose responsibility is it to maintain the insurance?


  2. Leases are specific as to who pays for the expense of maintaining the building (including insurance), but depending on who is responsible for paying, there are specific coverages that should be considered.

  3. Who receives? Who can collect from the insurance after a loss?


  4. Names and entities listed on a policy affect who can initiate a claim, to whom a claim can be paid, and who receives defense coverage in the event of a claim.

  5. What is covered? Is there coverage for lessee furnishings, alterations or betterments, etc.?


  6. Coverage for these items can often be added if not included, so work with your agent to identify any gaps.

  7. What is not covered? What are the exclusions?


  8. Knowing what’s not covered by insurance will inform your risk management strategies.


Knowing the answers to these questions prior to initiating or amending your current coverage can help you and your agent determine the proper coverages and limits you will need or are required via the terms of your lease.   Be sure to advise your agent if you sign a new lease. Your Sparks Insurance agent is here to help you find the solution, contact us today!


SOURCE - Mines Press - COPYRIGHT ©2018. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is understood that the publishers are not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert advice is required, the services of a competent professional should be sought. 2/18.

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