Rental Property Investor · Dayton, OH · Member since 2022 · 103 posts · 49 votes
Hi BP friends we have a small mixed use property and plan to rent out one of the rooms downstairs to a small business owner and use the rest of space for our own business. We still plan to sign a full commercial lease with the tenant although it is a small space. The space does have its own lock and be separate from our space, in the same building though. We will share the same restroom. In our formal commercial lease, it says tenants need to carry general commercial liability insurance with minimum limits of $1 million for personal injury or death per person, not less than $500,000 for property damage and list us as additional insured. Just wondering if we should reduce the required amount a bit due to the small size of the space? Anybody has similar experience? Any thoughts are appreciated! Thank you!
In my experience, even with my small properties, my Business Owner policies have always had a minimum of $1 million of liability insurance. I am not sure if this is how the carriers operate or if this is because my independent agent put it at $1 million, but I have never had a Business Owner policy without $1 million of liability coverage. This being said, I would keep it at $1 million.
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
I recommend being cautious when renting out part of your mixed-use property. It's essential to follow the laws and regulations. Don't rush to reduce insurance coverage based solely on the small size of the space. Consult with an attorney to find a balanced approach that protects both parties. Local zoning laws are crucial to consider too. Seek advice from property owners who've been in similar situations or talk to a property management professional. Being well-informed will help you make the right decisions. Good luck!
Summerville, SC · Member since 2018 · 553 posts · 252 votes
3y
Be sure once tenant gets insured, you are given a copy. Further, you will need to check periodically on their coverage. Some tenants either let it lapse, or cancel it later on.
Rental Property Investor · Dayton, OH · Member since 2022 · 103 posts · 49 votes
3y
Thank you all for the valuable input! That absolutely makes sense! If the one room catches fire, the whole building might be in jeopardy! We will put that in the lease and ask for a certificate for record. You all have a great week!
Be sure once tenant gets insured, you are given a copy. Further, you will need to check periodically on their coverage. Some tenants either let it lapse, or cancel it later on.
Isn't it a big breach of contract if they let it lapse and don't get it? Like example say their renewal was in January but didnt get it until April (that's 3 months without any coverage) and is grounds for eviction no? I'm not aware of any insurers who would backdate policies months back (maybe a few weeks) I tried looking into this more and found in several different states with supreme courts in different states (NY, Minnesota, Wyoming, Alabama etc) that even a lapse of 1 day poses a potential significant long term liability to the landlord
Rental Property Investor · Dayton, OH · Member since 2022 · 103 posts · 49 votes
2y
@Peter Anag We will get a notice if they stop paying the premium because we request to be additional insured. Then we usually reach out to tenants asking them to resume paying.