Leasing your facility can cost you money

Gymnastics rings empty gym

Did you know getting a little extra income can cost you more than its worth?

  • By leasing your facilities to outside third parties without being listed as an additional insured on their policy, you bear the cost of any injuries that occur during their event.
  • This can also affect the amount of coverage available to you for your defense costs and settlement.
  • Increased claim costs can have an overall effect on premium rates.
  • What you think may be a positive experience may result in a catastrophic injury because your lessee may not have the qualifications and safety concerns you do. This can cost you your time, which is money, to attend court appearances and depositions, and may involve bad publicity. These may result in your facility being forced to close.

Ways you can prevent this from happening are:

  • Don't do it at all!
  • Check your contract to see if it is legal to sublease your space. You may be in violation of your contract and you may be asked to leave your facility.
  • Confirm your lessee has insurance that lists you as an additional insured and has limits equal to or greater than yours. You should also require the lessee provide you with a hold harmless agreement which includes your business and landlord, if you do not own the building.
  • An independent contractor must have their own insurance. They are not covered under your policy.
  • Discuss your plan to lease your facility with your insurance agent or company before you proceed.
Gymnastics rings empty gym
This document is intended for general information purposes only, and should not be construed as advice or opinions on any specific facts or circumstances. The content of this document is made available on an “as is” basis, without warranty of any kind. This document can’t be assumed to contain every acceptable safety and compliance procedures or that additional procedures might not be appropriate under the circumstances. Markel does not guarantee that this information is or can be relied on for compliance with any law or regulation, assurance against preventable losses, or freedom from legal liability. This publication is not intended to be legal, underwriting, or any other type of professional advice. Persons requiring advice should consult an independent adviser. Markel does not guarantee any particular outcome and makes no commitment to update any information herein, or remove any items that are no longer accurate or complete. Furthermore, Markel does not assume any liability to any person or organization for loss of damage caused by or resulting from any reliance placed on that content.

*Markel Specialty is a business division of Markel Service, Incorporated, the underwriting manager for the Markel affiliated insurance companies.
Was this helpful?

Tags