Landlord Insurance or Lessors Risk Only (LRO) can be complex. Owning commercial property can definitely yield a sizeable ROI, however, there are some things you need to keep top of mind when it comes to your investment properties. With the explosion of commercial growth in Austin, I've had the privilege of spending a lot of time with building owners and investors. Here are some tips that will help you navigate the waters of Business Insurance when it comes to Lessors Risk Insurance (LRO), also known as Landlord Insurance.
1. Tenant Insurance Requirements
Make sure to check with your insurance company on this requirement. Typically, at the very minimum, your tenants should carry liability limits equal to or greater than yours and also list you as an Additional Insured on their policy. Bottom line, it should be in the lease and followed up on.
2. Keep an Eye on Vacancy
Insurance companies do not like vacant spaces. If you are at less than 70% occupancy, it could have an impact on how your policy will respond should there be a claim/loss, especially a vandalism, theft or water claim.
3. Business Income
Being able to pay banks and taxes if a covered peril were to happen could make or break your investment. Don't skimp on this coverage. Also make sure your tenants carry it.
4. Building Limit (Property value)
Inflation is inevitable. As we've seen recently, labor and material costs can increase quite rapidly, makes sure you review your policy limits. Also make sure you insure at Replacement Cost. It might cost more than Actual Cash Value, but come claim/loss time, you'll be glad you did. This limit does not include land.
Review your property deductible and your wind/hail deductible. Sometimes they are the same, sometimes they are not. Make sure you are comfortable with your deductible.
6. Building Updates
Insurance companies love updates. Make sure you let your insurance agent know if you update any of the following:
It could save you money, enhance coverage or prevent a nonrenewal.
These are just 6 tips or suggestions. If you want to discuss in more detail or have questions about Business Insurance please feel free to contact me. I am local and would love to work with you.
Commercial Insurance Agent