Commercial Property: Flood Recovery and Financial Responsibility for Tenants

2/13/2019 (Permalink)

Flood Recovery And Financial Responsibility For Tenants

If your business is run out of a leased facility, you may be wondering what your financial obligations are after a flood or significant water damage. While business and renter's insurance will help you through the inevitable business interruption, there is the bigger picture of culpability and responsibility. Most of the answer depends on where you live and your lease agreement.

1. State Regulations

Most states require property owners to have commercial insurance coverage, and they also hold property owner’s accountable for repairs. However, depending on where you live, owner’s may be able to share responsibility with tenants under certain circumstances.

2. Lease Agreement

You may also want to review your lease agreement because there may be line items that refer specifically to water damage and who is ultimately responsible for the repairs. Your renter's insurance provider may be able to help you understand your rights as a tenant as well.

3. Personal Property

In most states, the property owner is responsible for the structure of the property, and the tenant is responsible for their personal property. In regards to businesses operating out of leased facilities, this means that the owner is responsible for the facility and you would be responsible for damaged equipment, which is likely covered under your business policy.

4. Restoration

While the owner’s property policy likely covers restoration work involving the structure of the facility, any damage done to your business, like inventory and equipment, is considered a personal business loss and will likely be covered by your insurance. You can contact your insurer or a disaster restoration specialist in the Oklahoma City, OK area for more details.

A flood is devastating for a business, but especially when that business operates out of a leased space. In most states, the property owner is responsible for structural issues while your business and renter's insurance is responsible for personal property losses.