On the other hand, Property Coverage is insurance that provides protection against most risks to property from such events, including fire, theft, or weather damages that a company owns or is required to insure via contract. This coverage is afforded regardless of whether the damage is the fault of the tenant.
What if the lease or rental agreement requires Property Coverage?
In some situations, a Landlord may require property coverage for their building, usually found in a “triple net lease.” In this case, the tenant takes full responsibility for the reconstruction costs, regardless of whether or not the tenant’s negligence caused the damages. In this situation, a tenant is required to:
- Determine the building replacement cost value
- Understand what qualifies as a covered event – Basic policies will provide coverage for damages caused by fire, smoke, collapse, wind, and water, to name a few. Earthquake and/or flood insurance (water entering from outside the building) are not directly covered and must be requested.