Damage to Premises Rented to Others Limit of Insurance

August 23, 2010

Our insured has a businessowners policy. The policy dec page shows the following commercial general liability limits of insurance: each occurrence limit $2,000,000; damage to premises rented to others $300,000; medical expense limit $5,000; general aggregate limit $4,000,000; personal and advertising limit $4,000,000; products – completed operations aggregate limit $4,000,000.

Our insured owns an online sporting goods sales operation. He has rented warehouse space (the entire building) without a written lease for more than one year. Is the “damage to premises rented to others” limited to fire or does it pick up all other building damage for which the tenant (our insured) might be liable?  It appears to me that it picks up all damage for which he might be liable. Please give me your take on it.

Ohio Subscriber

Since the insured has been in the building for more than one year, the only damage to premises coverage he has is the fire coverage. The coverage for other than fire damage is limited to a period of seven or fewer consecutive days The exception to exclusion k1 in your policy allows this coverage and states that the limit of insurance that is applicable to a loss is the damage to premises rented to the named insured limit as described in section D. So, if the insured was in the building for seven or fewer days, the $300,000 stated limit is available for a loss caused by fire or any other type of loss.

However, if the insured is in the building for a year, exclusion k1 will prevent coverage for a loss unless that loss is by fire. If that occurs, the limit of insurance available to the insured is the damage to premises rented to the named insured limit shown in the declarations.