As performers, mobile vendors, and event planners, you may be working in spaces you rent. For example, a performer may rent a studio space, an event planner may rent an office space, and a vendor may rent a storage space for their merchandise. A typical Commercial General Liability (CGL) policy has exclusions for others' property left in the insured's care, custody, or control (CCC), which can leave renters exposed if their operations cause damage to a rented property.
So what happens if an insured's business operations cause a fire at a property they rent? That is where the Damage to Rented Premises coverage (formerly known as Fire Legal Liability) comes into play — it closes that coverage gap by providing limited protection for damage to a rented property caused by a fire.
Damage to Rented Premises is a specific part of CGL coverage that pays for damage by fire or smoke to a rented premises, presuming the insured (the tenant) is liable for the fire. This is an important part of a CGL policy — if this coverage isn't afforded, there is no coverage should a tenant cause a fire in a property they rent.
Damage to Rented Premises typically covers:
- Fire damage
- Smoke damage
- Explosion damage related to a fire
This coverage typically does not cover:
- Damage to the insured's own equipment (this would be Inland Marine coverage)
- Damage an insured causes to a venue that is not rented to them (this would fall under their Each Occurrence limit)
- Damage caused by intentional acts
- Damage not related to fire, smoke, or an explosion (unless a policy states otherwise)
SIA Performer and Vendor clients have limits of $300,000 for this coverage part, which is above the industry standard. Our MPEP clients have limits of $100,000, which is considered industry standard. Most insurers will not write higher limits because the property owner is still responsible for insuring their building. The coverage is intended only for the portion of damage tied to an insured's occupancy and operations, not to replace the venue's property insurance.
Event organizers sometimes ask our clients for limits of $1MM, but this request is usually based on a misunderstanding of how the coverage works. Again, Fire Legal Liability is only for fire damage on property rented to the insured. Alternatively, the Each Occurrence limit would cover damages caused by an insured's operations in the following scenarios:
- To property an insured do not rent (applies to any type of damage caused by the insured)
- To property rented to an insured for seven days or less (and the damage is not fire related)
Think about it like this:
- If a fire breaks out in the exact space an insured rented and the insured is found to be the cause of the fire, the Damage to Rented Premises limit applies. Any losses above that limit should be covered by the owner's property insurance.
- If the insured accidentally damages someone else's property that they do not rent (e.g., an insured's mermaid tank cracks and causes water damage to the venue during a gig), that falls under the Each Occurrence limit ($1MM - $3MM for SIA policies, depending on the coverage limits purchased).
- If the insured rents a space for seven days or less and causes property damage that is not fire-related, the loss would fall under the Each Occurrence limit.
Example: A performer uses electrical equipment in the studio space they rent all year, which overheats and causes a fire. This would likely be a covered claim under Damage to Rented Premises coverage.
If you have any questions regarding this coverage, please reach out to our office by calling 715-246-8908 or emailing info@specialtyinsuranceagency.com!
