Posted April 11, 2023
Building Coverage for Tenants

Why does ICC always quote $25,000 in building coverage to a tenant? This question has come up numerous times over the years. The answer is not immediately obvious and takes a little explanation to alleviate confusion.

Though many leases do not require the tenant to insure the building, they do make the tenant responsible for certain building items. The most common scenario is the rooftop HVAC system that only serves one tenant in a strip mall. The lease may make that tenant responsible for repairing or replacing that unit if it becomes damaged. Since the rooftop unit is owned by the landlord and not the tenant, it clearly is not Business Personal Property or Tenant’s Improvements and Betterments. It is part of the building.

By including a minimum of $25,000 building coverage on a quote, the agent can initiate a conversation with the prospective policyholder. At that point, the business owner can verify the extent of their responsibility or just choose to decline the option. ICC’s intent in providing the quote is to reduce the possibility of an uncovered future loss and an agent’s errors and omissions exposure.

If the rooftop unit is part of the building and the landlord insures the building, shouldn’t there be coverage under the building policy? The short answer is yes. However, if the lease makes the tenant responsible for that piece of equipment, the landlord may choose to have the tenant repair or replace the unit, rather than turn in a claim to their building insurance carrier.

Because many of our customers in the Food and Beverage Industry are tenants, we frequently come across this scenario and others like it. By offering $25,000 in building coverage on the BOP quote for a tenant, you are protecting your client from property losses a less experienced agent may have missed in this specialty market. It’s What We Do.

Learn more about insuring your business with ICC by contacting an ICC agent today. The Find an Agent search on our homepage will help you locate an ICC agent in your area.