You've saved up your pennies and invested in a commercial building. You find a nice tenant and start leasing the space. You decide to do a triple net lease to keep your overhead down.
Why that wasn't such a good idea:
- This is one of your biggest assets, wouldn't you want to make sure it's covered properly? Tenants don't have skin in the game when it comes to your building and are going to do the least possible to adhere to your requirements. They are already paying you rent and see the insurance as an additional cost.
- Your tenant could forget to pay the premium and you could be on vacation when the warning of cancellation comes in the mail. The policy cancels, there's a fire, and you don't have coverage.
- Crimes committed by the named insured (your tenant) are excluded. For instance, your tenant could purposely burn down the building (commit arson) and the insurance company would deny the claim. Yes, this would be the worst case scenario, but a disgruntled tenant who vandalizes your building would also leave you with uncovered property damage.
|Photo by Alex Patru|