Damage to Rented Premises

Any time a business rents or leases a space to operate from they sign a contract. In that contract are insurance requirements stating that the tenant will carry certain liability limits. Normally they will ask the tenant to carry a commercial general liability policy, and more often than not they ask for at least $1,000,000 per occurrence limit. The reason they ask for this is that if the tenant is the cause of a fire or other type of damage to the rented building, the landlord wants to make sure that the tenant’s insurance will pay for the damages, and not their own insurance.

Commercial General Liability takes care of a lease contract with two different types of coverages. The first is the coverage I mentioned above of $1,000,000 per occurrence limit. This coverage, however, only gets the tenant half way there. The per occurrence limit doesn’t cover for actual areas of a building that the tenant rents or leases. It will pay for only the part of the building that is not rented by the tenant. An example might help explain this better.

Example:

Let’s say that business XYZ, Inc rents unit A of a four unit office building. If XYZ, Inc causes a fire that extends damages to both unit A and unit B, the per occurrence portion of their insurance policy will only cover damages to unit B. It will not pay for damages to unit A because it is leased or rented by them.

Damage to Rented Premises (sometimes called Fire Legal Liability) is the other coverage a tenant needs when they rent space. This coverage is often included in a general liability policy as well but many times is not specifically mentioned in lease contracts. In the example above, Damage to Rented Premises would be the coverage that would pay for unit A that XYZ, Inc. rented.

The reason I bring this up as a blog article topic is because the Damage to Rented Premises is often overlooked. Since it is left out of many lease contracts, businesses don’t think to check with their insurance carrier about the coverage. Your typical commercial general liability policy will only include $100,000 to $500,000. If company XYZ, Inc. in the above example rented a large space, this may not be enough coverage, and they could pay for some of the damages out of pocket.

So next time you rent a space for your business be sure to have Fey Insurance Services review the lease and double check your commercial general liability insurance limits to make sure you are covered in case of a large fire.

Deductible Basics

When a covered insurance claim happens the insured, in many cases, will be responsible for the first few dollars of most losses. The amount they are responsible for is called the deductible. More often than not, deductibles are only associated with property damage of the insured’s own possessions whether that is a vehicle that was damaged or damage to their contents, their buildings or even their loss of income. On some occasions you may see deductibles on liability claims but not in many.

Deductibles can come in many different forms on insurance policies. You can have a given dollar amount, say $500. Often times you see this type of deductible on home insurance or business property insurance. Some deductibles might be a percent of the loss like 1% or 10%. Sometimes you will see this type of deductible on a home or business but many times it will be associated specifically with earthquake coverage. Deductibles can be vanishing deductibles. As the insured racks up years of no losses, their deductible gradually drops each year until eventual it is $0.

In most cases the deductible is per claim. This means that each time you have a claim you pay a deductible. It isn’t like your typical health insurance policy where you have an out of pocket deductible for the year and once you meet that limit you are done with the deductible. In property and casualty, if you have a $500 flat per claim deductible you will pay $500 each time you have a claim no matter how many you have in a given year.

Deductibles can be a helpful cost savings tool. They can be raised to help drop premiums but the insured needs to understand that by raising deductibles they have taken on a bit more of the burden of possible claims.

It is important for insureds to understand what their deductible is so that they can be prepared to financially meet its requirement if a claim were to happen. I mention this more in connection with a percentage deductible. The insured should know if the percent is on the cost of the claim or on the coverage limit. For example, if a person had a $200,000 house and an insurance policy with a 5% deductible (on the coverage limit) it would be best to know that you have a $10,000 deductible before you have a claim. Someone that doesn’t know their policy might think that it is 5% per the cost of the claim.

Deductibles are just one of many facets to an insurance policy. Be sure to familiarize yourself with your policy and policy coverages and consult your independent insurance when ever you have any questions.

Mobile Phone Rule Changes: How CMV Drivers Communicate on the Road

Here is recent information about cell phone use in CMV published by RiskControl360:

All drivers of Commercial Motor Vehicles (CMV) should know by now about the new rule restricting their use of hand-held mobile telephones and devices. This rule was adopted by the Federal Motor Carrier Safety Administration (FMCSA) and the Pipeline and Hazardous Materials Safety Administration and went into effect on January 3, 2012.


The purpose of the rule is to help reduce distracted driving and prevent roadway accidents, injuries and fatalities. According to the FMCSA, the odds of a driver being involved in a safety-critical event, such as an unintentional lane deviation, crash or near-crash, are 6 times greater when dialing a mobile phone while driving than when not doing so. Similarly, CMV drivers are 23 times more likely to be involved in a safety-critical event while texting and driving versus when not texting and driving.

Therefore, the rule restricts CMV drivers from reaching for or holding a mobile telephone while operating their vehicle, or pushing more than one button to operate the device. What this means is that the device must either be mounted or otherwise securely within reach at the control panel. In short, CMV drivers who use a mobile phone while driving can only operate a hands-free phone located in close proximity and cannot unsafely reach for a device, hold a mobile phone, or press multiple buttons.

So what are drivers still permitted to do?

-Locate the mobile phone so it is operable by the driver while restrained by properly adjusted safety belts.

-Utilize an earpiece or the speaker phone function.

-Use voice-activated or one-button touch features to initiate, answer, or terminate a call.


Drivers found not in compliance with these rules can face civil penalties of $2,750 and disqualification for multiple offenses. In addition, employers are prohibited from requiring or allowing their drivers to text or use a hand-held mobile phone while driving and may be subject to civil penalties up to $11,000.

CMV drivers wishing to comply with the new rules and improve roadway safety can follow FMCSA’s simple slogan: No Call, No Text, No Ticket!

For more information, please contact RiskControl360’s Group Safety Coordinator, Lisa Shaver at (877) 360-3608 ext. 2367.