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
When it comes to Business Insurance a lot of companies have some level of risk when it comes to professional liability. This kind of coverage is not just for lawyers, accountants or doctors. Your business might have a risk in this area and you’re not even aware. Depending on the exposure, we recommend Professional Liability Insurance to many of our clients.
If you perform any of these services, you should consider Professional Liability Insurance sooner rather than later:
How to Reduce the Likelihood of a Claim
Most companies purchase general liability insurance to protect their business against certain kinds of claims. These claims could include bodily injury and property damage. It is very important for businesses to understand the difference between professional liability and general liability. As much as we want to run a perfect business, at the end of the day, mistakes (errors) can happen. If the mistake financially harms a client, you could be sued. Being prepared can go a long way to not only save your business, but give you peace of mind.
Lastly, just because Professional Liability isn’t required for a client/contract doesn’t mean you don’t need it or you’re off the hook. Being in Austin, TX, I work with a lot of tech startups. Some of these tech firms just want General Liability, and say, “that’s all I need right now”. Maybe they are waiting on funding, or it’s not required, or they’re just trying to save money. Some will go as far as getting an Umbrella because they think it will protect them. I’m not against Umbrella Insurance, just don’t think an Umbrella is going to pick up a professional liability risk when you don't have a Professional Liability Insurance policy for it to go over. If you have any questions about Professional Liability Insurance or any other Business Insurance, please feel free to contact me.
Commercial Insurance Agent
Business Insurance can be very complex, so it may take some patience when it comes to getting an insurance quote. Typically when companies contact me for a quote, one of my first responses is, tell me about your business. If it's a common, low risk, small business that fits into a pretty little insurance classification box (and there are no claims/losses), you might be in luck and turnaround time will be quick. When I say quick, I mean within 24 hours for a BOP or General Liability quote. I would say 70% of the businesses I work with in the Austin area are very unique and/or are requesting multiple insurance policies, so it may take more time. Below are some factors that can impact turnaround time:
- Incomplete Applications
Underwriters can be quite picky when it comes to incomplete paperwork and unanswered questions. I had an underwriter tell me incomplete apps go to the bottom of the pile. They made it sound like they were an elementary school teacher and treated it like incomplete homework. Your agent should guide you through this and make sure they don't send them off incomplete apps.
- Expiring/Renewal Date
Some underwriters work off your x-date (expiring date), so if your renewal is 2 months out and you need a quote next week, you might not hit that deadline.
- Claims and Losses
When it comes to claims, sometimes management and senior underwriters need to get involved and review Loss Runs. This can take some time, which will delay the quote.
- Multiple Policies
Need a BOP, Umbrella, and Commercial Quote? It may take a few days to quote, especially if you are working with an independent agent. A captive agent can probably get this turned around much quicker. Quoting with one market versus multiple makes a difference. I like to tell people the more time we have, the more markets we can reach.
People get frustrated when underwriters come back with questions, which is a normal response. To them their business makes sense, but getting an underwriter to wrap their heads around it can be a challenge. Going back to what I said initially, try to have patience. Understand that questions are good. Think about it this way, the more questions they ask, the more they will understand the risk and can properly classify your business. If you would like a Business Insurance quote, or are in the Austin area and want to meet with an agent, feel free to contact me.
Commercial Insurance Agent