Growing Pains– Insurance

[whiskey]

We have finally decided to bite the bullet and rent a space for inventory storage/processing. We have found an ideal space with about 300′ of office space and 450′ garage/storage/sallyport whatever it is called. We are paying about 50 cents a square foot and are all over it.

We are required to have insurance. Here is the question before we go to the agent:

Does our umbrella policy cover it? Assuming it doesn’t, what questions do we ask of our agent to make sure we are fully covered and that we aren’t paying more than we need to?

Since we are hitting the road in the RV in about a year, we are choosing to rent instead of build, so that is off the table.

David

[Amatino]

Our umbrella policy covers liabilities, not insurance, which means if someone sues us for tripping over something, not loss. Dunno what yours covers. Renter’s insurance is pretty cheap, though.

[Jay]

–Who is requiring you to have insurance?
–What are they wanting you to insure?

[whiskey]

The Lessor is requiring it. Specifically it says:

Tenant shall maintain a policy of commercial general liability insurance (sometimes known as broad form comprehensive general liability insurance) insuring Tenant against liability for bodily injury, property damage (including loss of use of property) and personal injury arising out of the operation, use or occupancy of the Property. Tenant shall name Landlord and Landlord’s management company as additional insureds under such policy, including providing such endorsements as required by Landlord to evidence such coverage.

We have shot an email to our agent to figure out what we need to do. The lease we would sign is fairly onerous and significantly more involved than it needs to be. Back in my day job days I had clients that wanted to draft bullet proof barely understandable agreements to “protect” themselves. They were usually the reason for most of the problems.

[Jay]

Yeah, so your existing umbrella insurance policy on your home wouldn’t cover this business. Obviously he wants to make sure he doesnt get sued if someone gets hurt. And that his property is covered if you cause a fire etc. You guys could renegotiate the contract with the landlord. The part you quoted here doesnt sound unreasonable.

[whiskey]

Spot on. Thanks Jay.

I am not worried about the insurance provision. There is a littany of other provisions and riders that are cumbersome and most don’t apply. It is just a pain to work through and unnecessary but it is what it is.

[Jay]

Yeah, often a landlord might just download some boiler plate contract that has a lot of stuff unnecessary. He probably didnt even think you’d read it!

[whiskey]

I think he believes that as well. It’s funny. Property is held in a trust. Dad died. Mom is the local contact and showed us the space. Super nice and salt of the earth. She was actually making fun of son who lives 1500 miles away but takes care of the business side. Said his lease is out of control and that it takes him 8 pages to say what can be said in 3. She said she refuses to read the whole thing.

We emailed him to apply and sure enough, out of control lease and very terse correspondence. In fact, on Mother’s Day, the mom emailed us to tell us that he received our email and would respond in due to.

Ultimately we will work with mom on all the local stuff and she is a sweetheart, but son needs to learn from her.

[Author]

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