New Commercial Tenant? Call Your Insurance Broker

For owners of mixed-use buildings here in the New York City market, finding the right commercial tenant is getting even harder.

As reported earlier this year in “What’s Happening with New York City Building Insurance,” a number of insurance companies have limited the types of commercial occupancies allowed in mixed-use properties. Common in the New York City area, these buildings have commercial space on the ground floors, with apartments above.

Even though a restaurant previously occupied the space, for instance, the building insurance company may not approve a new restaurant tenant. This development offers yet another reason to contact your insurance broker when considering a new commercial tenant.

Commercial Tenant Checklist

Before entering the negotiation stage, call your insurance broker and . . .

• Review exposures associated with the specific tenant type. (During this conversation, he or she will let you know whether you’ll run into any difficulties with your building insurance company. Your broker can also present other available insurance options.)
• Find out what types of insurance proof the business requires.

When negotiating a new commercial lease . . .

• Require commercial tenants to carry a minimum liability policy of $1 million.
• Confirm that the tenant has the required insurance for their specific business type.
• Make sure the tenant’s policy identifies the landlord as an additional insured.

Naturally, you’ll also want your attorney to review the contract and ensure you’re protected. At this time, your insurance broker should also review the insurance paragraph and certificate of insurance. (The right insurance partner will typically provide this service at no charge.)

Last, but not least, your broker should also check the financial rating of the tenant’s insurance carrier. Some building insurance policies specify a minimum rating for tenant insurance.

Do you have any questions about commercial tenant insurance? Call us at 877-576-5200 for a complimentary insurance review. Or post your question below.