Legal Liability Coverage for a Lessee?

We have an insured who has signed a lease that makes him responsible only for the roof. I interpret the damage to premises rented to you coverage under the CGL form to apply to this exposure if the insured is legally liable for the damage. But, the CGL form is a negligence contract, and if damage is caused by hail or an act of God, something for which the insured is not liable, the insured would have no coverage. Is this correct? Or does the damage to rented premises coverage apply no matter what the circumstances of the loss? Finally, would the legal liability coverage form be of use to the insured?

Indiana Subscriber

The coverage under the damage to premises rented to the named insured clause is for fire damage only. It applies to premises rented to the named insured under a long term rental agreement. The insured does have coverage for property damage, other than damage by fire, to premises rented to him for a short term period of seven or fewer consecutive days. However, this coverage applies to damage for which the insured is legally liable, whether that liability is established by statute, by contract or by tort law. If an act of God causes damage, and the insured is in no way responsible for that damage, there is no coverage for the insured under the CGL form. The same is true for CP 00 40 04 02, the legal liability coverage form. Coverage depends on the insured being liable for the property damage. Perhaps an insurer could be found that would be willing to provide coverage for the roof only.

The damage to property exclusion on the CGL form (exclusion j.) applies to property damage to property that the named insured owns, rents, or occupies. But, at the end of the listed exclusions, the form states that exclusions c. through n. do not apply to damage by fire to premises while rented to the named insured or temporarily occupied by the named insured. This means that there is no coverage for property damage to premises that the insured rents or occupies except for fire damage that is caused by the insured. The damage to premises rented to the named insured clause simply establishes the limit that the insurer will pay for fire damage that the insured caused.

 

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