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In the insurance business, insuring something means more than purchasing a policy.  Risk management includes mitigating risk in other ways.  Sometimes, purchasing an insurance policy is the most expensive way to mitigate risk.

Our office specializes in working with clients that own real estate.  These clients want to know that their asset is protected not only from property loss but also from any liability that could occur while they aren't directly overseeing the property.  Our clients will employ property managers to mitigate some risk and liability, but often times when you have tenants in a building that's not enough.  Clients want to make sure that whatever activities happen at their property there is sufficient liability coverage to protect them in the event of a claim.

One way a building owner or landlord can transfer their risk to protect themselves is through collecting and managing certificates of insurance on their tenants.  These certificates should name the building owner and the address as an additional insured.  This puts the tenant's policy as the primary policy to respond should their business or personal activities be the cause of a liability claim.  However, these certificates are only good if the policy is up-to-date and accurate.  An expired policy doesn't do anyone any good.  And, you need to be proactively managing this, because your tenants won't.

Which leads us to our second way to transfer risk.  Is your broker currently helping you manage this process?  Brokers can aid clients in advising, collecting, and monitoring certificates for clients.  We help our clients come to satisfactory limits for tenants, and then craft documents for the landlords to give to their tenants.  Also, we can aid in securing coverage for those tenants at the desired limits should tenants not have insurance.  This way, the landlord is taking proactive steps in making sure that risk is appropriated in the correct order.

Bottom line is, when you think about insuring something, don't just think "how much will my policy cost?".  Think about ways to transfer risk to parties that could be proximate causes for a claim.  
Posted 8:01 AM  View Comments

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