Leasing Space to Open a Shop? Check your Lease Before You Sign!

PPIB Tattoo Insurance - Leasing Shop Space

We are seeing more and more shops opening in malls, and more and more landlords requiring very high limits of coverage. Many new shop owners get a shock after they give the insurance requirements to their insurance company and get the price back for their coverage. You wouldn’t tattoo a name on someone before checking the spelling several times…don’t sign that lease until you understand what they require for your insurance!

You need to carefully read your lease requirements before signing. In some cases Landlords will negotiate their requirements in order to lease the space out. However, this typically is NOT true for malls – malls generally refuse to change requirements to lease their space.

Here is are some things to watch for:

1. If your lease requires $1 Million per Occurrence and $2 Million Aggregate, this is fairly standard. But if the lease requires $2 Million per Occurrence and $2 Million Aggregate or higher, your premium can suddenly increase by more than 40%.
2. Check “Fire Legal Liability”. The building owner should have Fire Insurance. Fire Legal Liability provides an amount that could go to the Landlord in case you started the fire. A limit of $50,000 is fairly standard and included in your policy for no additional charge. But recently we have seen landlords requiring $500,000 or more of Fire Legal Liability which adds a big charge to your premium. Sometimes this is as much as the entire value of their building.
3. In some states you may be forced to by a Worker’s Compensation policy for your employees if you open a shop in a mall.
4. You may be required to have Property coverage for your contents. It’s a good idea to carry this coverage anyway, but you should be able to decide if you want to buy insurance or just replace everything yourself if that is your choice.

Your insurance agent should be able to help you understand the insurance requirements in your lease before you sign on the dotted line!

Name: Sue Redenbaugh Date: 07/17/12

PPIB Corporation