Many businesses rent the premises and assets on the premise to operate the office. In the case of a burglary, fire, or another incident, both assets belonging to the owner of the premise and the tenant, can be damaged. In the case of damage to the owner’s assets (used by the tenant), the liability falls on the tenant. Office insurance cover bought by tenants provides protection to this liability under ‘Tenant’s Legal Liability.’
Whenever the insurer admits a claim for damage to the premises due to a covered peril, the tenant’s liability claim is considered. But if the insurer does not admit a claim due to exclusions, any damage to the owner’s assets on a premise under the tenant’s custody is also not admissible for claims.
Case on Tenant’s Legal Liability under Office Insurance
Shyamal Developers Pvt. Ltd. is one of the largest commercial builders in Kanpur. Their trade is to purchase land and develop commercial or residential buildings. Shyamal Dev. also has a housekeeping arm that manages a few of the estates owned by the developer.
Since Shyamal, usually sells residential projects, all the owned buildings are commercial complexes. Overall occupancy of these complexes is more than 80% which includes Shyamal’s own offices and estate management offices.
Vighnesh Towers were the first fully furnished commercial space offered by Shyamal in Kanpur. Within six months of the launch, the towers enjoyed more than 70% of occupancy.
Vighnesh Towers are divided into three categories of office spaces:
- Virtual Office Space
- Entrepreneur’s Lounge and
- Corporate Lounge
Virtual Office Space can be occupied by individuals or small teams of individuals on a booking basis. Facilities provided include furniture, broadband internet, phoneline, and a mailbox, apart from general catering.
Similarly, small offices with common reception are offered to small firms, usually entrepreneurs. These offices have more furniture and facilities, with their own separate catering lounges and conference rooms.
Basically, Vighnesh Towers allowed businessmen and professionals to start working without spending any time or thought on buying office fixtures, electronics, etc. Shyamal’s CEO Abhijeet Gupta quipped that with each office 10% of the office sale price is furniture cost.
One of these offices was occupied by the famous Kanpur jewelers’ group, Hari & Sons. This was one of their largest showrooms fully equipped with a workshop and a clerical office. The workshop used smelting equipment and stored some chemicals within the premise.
One night one of the smelting equipment was left plugged into the supply. This smelter got too hot and caused a fire which burned through much of the furniture kept on the premise. It also caused loss to the wiring and other offices in the vicinity, due to smoke.
Fortunately, Hari & Sons had an office insurance policy covering their contents. Out of the total estimated loss of Rs. 150,000, approximately Rs. 35,000 was for Shyamal’s furnishings. Since they were in the custody of Hari & Sons for use, the insurer accepted the claim under the tenant’s liability clause.
The insurer paid the claim after applicable deductions. The tenant’s liability was limited to up to 10% of the total sum assured, and thus insurer paid prorated amount for the same. Hari & Sons had to bear costs of Rs. 20,000 out of their pockets.