Commercial Building Owner with No Coverage Other Than Tenant's BOP...how Can He Be Covered Properly.

[CC1975]

Ran into a prospect that owns (via a corporation he is president of) a restaurant building and sez he has no coverage of his own...no GL, no property coverage at all.

He shows me a "binding confirmation" of coverage his tenant is paying for...that has his tenant as the named insured, with both property coverage for the building and BPP and G Liability....

also for Additional Insured... on the form shows "None" (that is the owner is NOT listed on the BOP coverage as a named insured)

Obviously.....this owner needs a lessors risk GL/Property coverage policy of his own...but...

is it possible the way this is written...

for coverage to be in place to respond and cover ...say damage to the building for a covered peril.... even though the tenant...the only named insured .......is not the building owner...and the owner himself has no additional coverage?

Regarding liability....isn't it possible for the owner of the property to be found liable and the tenant not...and since the owner has no coverage, and since he isn't even a additional insured on the tenant's coverage...

he would &&%$%#$# out of luck...when sued?

This is the first time I have ever ran across one like this....

is it possible for a building owner to be covered properly via relying solely on a tenant's BOP coverage? (Like if he DID GET LISTED as an additional insured on the tenant's BOP.....but....as I noted above..... I still don't see how he could be covered from all exposures this way)

Comments from all you seasoned commercial pros would be appreciated....thanks.

 

[b61mack]

He has what they call, deep pockets. Lets say a piece of the building falls off and hits a person walking by. The person sues, then the person ends up the new owner of the building.

 

[Guest]

He has what they call, deep pockets. Lets say a piece of the building falls off and hits a person walking by. The person sues, then the person ends up the new owner of the building.

How do YOU know how deep his pockets are?

 

[Tucker444]

First you need to advise him to get confirmation he is named as an additional insured and if not get named real fast.

He needs the tenant to give him a COI showing this.


Second advise him it would be best if he takes out the building policy himself. He can add the cost to the monthly rent.


Carriers will write it for the tenant but I know my Carriers prefer to have the LL take out the coverage.


Then present him with a lessors risk quote.


He should be named by the tenants BOP for the GL but he really needs his own as well.


The above is the "clean" and simple way to handle this risk. (IMO)

 

[greatfish]

Ran into a prospect that owns (via a corporation he is president of) a restaurant building and sez he has no coverage of his own...no GL, no property coverage at all.

He shows me a "binding confirmation" of coverage his tenant is paying for...that has his tenant as the named insured, with both property coverage for the building and BPP and G Liability....

also for Additional Insured... on the form shows "None" (that is the owner is NOT listed on the BOP coverage as a named insured)

Obviously.....this owner needs a lessors risk GL/Property coverage policy of his own...but...

is it possible the way this is written...

for coverage to be in place to respond and cover ...say damage to the building for a covered peril.... even though the tenant...the only named insured .......is not the building owner...and the owner himself has no additional coverage?

Regarding liability....isn't it possible for the owner of the property to be found liable and the tenant not...and since the owner has no coverage, and since he isn't even a additional insured on the tenant's coverage...

he would &&%$%#$# out of luck...when sued?

This is the first time I have ever ran across one like this....

is it possible for a building owner to be covered properly via relying solely on a tenant's BOP coverage? (Like if he DID GET LISTED as an additional insured on the tenant's BOP.....but....as I noted above..... I still don't see how he could be covered from all exposures this way)

Comments from all you seasoned commercial pros would be appreciated....thanks.

He has some issues.

Property - I would advise him to be the one purchasing and making sure that the building is insured. It is better for him in that he doesn't need to be an insurance babysitter making sure that his tenant doesn't let his coverage laspe. Even if lease is a triple net he can purchase the building coverage and then bill his tenant the premium cost. That way he stays in control and can verify that there is coverage and the right coverage.

Liability - This is a huge problem. Right now he has no coverage at all. He should always be named an additional insured on the tenants general liability but he needs to have his own coverage as well. You are correct in your assement that he could be liable without the tenant being liable.

He has either had very poor advice from another agent or more likely doesn't realize what his true exposure is.

LRO policies are so cheap, there is really no reason for him to self insurance his liability exposure.

 

[CC1975]

Thanks for your input Tucker .....all your points are duly noted.

However, rather than initially directing him back to the source of his current predictament....

wait a minute that's probably not totally true....

I was gonna say ...his current agent is at fault... but I don't know the whole story yet but ...this guy's may....probably is like the great majority ...they only care about one thing....(till their a%^ gets burnt good because of lousy coverage)...yeah ..price.

This owner probably thinks he's making out like a bandit...that he's soooo smart...."I got some else paying for my coverage...I'm brilliant!"

Anyway.....I'm gonna first show him a LSO policy....long with a BOP for the tenant. This owner is not happy with the current agent's refusal to get him added on the tenant's BOP. MOF...I'm thinking the current tenant;s carrier WON"T ALLOW any additional insureds..It's an excess /surplus lines carrier. (HEY ALL YA PROS OUT THERE.....IS THIS TYPICAL.....FOR EXCESS LINES TO NOT ALLOW AN ADDITIONAL INSUREDS TO BE ADDED????) When he talked with the agent he was basically told there was nothing they could or would do. Remember, he NOT the agent's client...the tenant is.

First you need to advise him to get confirmation he is named as an additional insured and if not get named real fast.

He needs the tenant to give him a COI showing this.


Second advise him it would be best if he takes out the building policy himself. He can add the cost to the monthly rent.


Carriers will write it for the tenant but I know my Carriers prefer to have the LL take out the coverage.


Then present him with a lessors risk quote.


He should be named by the tenants BOP for the GL but he really needs his own as well.

Oh one other question that I asked but wasn't adressed...I'm just curious..it their is a significate property claim to the BUILDING....how the heck would that settlement go????
The insured...the tenant....would just take the claim money and repair the building for the owner? Or give him the money for him to repair? May be it's addressed in the lease. But I bet it isn't....I think this owner has never even had a moment's thought as to what could happen.




The above is the "clean" and simple way to handle this risk. (IMO)

- - - - - - - - - - - - - - - - - -

He has some issues.


Thanks greatfish for your input....please see my comments above in reply to Tucker....I would welcome any additional comments you have.

What is a triple net lease?

Is it that easy in the middle of a lease to just add on the additional cost of insurance to the tenants bill? I guess so if it's written to say yes they can....so maybe my question should be ...do most commercial leases provide the power for owners to do that...mid term.... not waiting till renewal......which could be years on commercial leases.

Why is this owner in this deal? Bad advice....no doubt...but I think it mainly IN THE ENDLESS PURSUIT OF CHEAPNESS.........(I have such a great attitude eh?)


Property - I would advise him to be the one purchasing and making sure that the building is insured. It is better for him in that he doesn't need to be an insurance babysitter making sure that his tenant doesn't let his coverage laspe. Even if lease is a triple net he can purchase the building coverage and then bill his tenant the premium cost. That way he stays in control and can verify that there is coverage and the right coverage.

Liability - This is a huge problem. Right now he has no coverage at all. He should always be named an additional insured on the tenants general liability but he needs to have his own coverage as well. You are correct in your assement that he could be liable without the tenant being liable.

He has either had very poor advice from another agent or more likely doesn't realize what his true exposure is.

LRO policies are so cheap, there is really no reason for him to self insurance his liability exposure.

This LRO policy doesn't look to be cheap......this is a building built in the 70s....MSB come back RCost value 320,000 and best premium I've found so far is Hartford at 2500 annual. Doesn't help that it's a rest't either...as some admitted carriers won't quote it just because it that.