Fire Damage Legal Liability
CGL coverage for damage to premises rented to the insured caused by fire, with a separate sublimit typically $100,000 or higher.
What It Is
Fire Damage Legal Liability, also called Damage to Premises Rented to You, is a sublimit within the CGL policy that covers the insured's legal liability for fire damage to premises rented to or temporarily occupied by the insured. The standard ISO CGL form includes a default sublimit, most commonly $100,000, though it can be increased by endorsement.
This coverage applies only to fire damage — not to other perils like water damage, explosion, or vandalism. It is an exception to the standard CGL exclusion for property in the insured's care, custody, or control, which would otherwise bar coverage for damage to a rented premises.
The limit applies per premises, meaning that if the insured rents multiple locations, the sublimit applies separately at each. This is not an aggregate limit — it resets with each separate premises.
Why It Matters for Brokers
Commercial lease agreements almost universally require tenants to carry fire damage legal liability coverage, often at limits exceeding the standard $100,000. A landlord renting a 10,000 sq. ft. commercial space may require $500,000 or $1,000,000 in fire damage coverage. Brokers must compare lease requirements against the CGL sublimit and increase it when necessary. Failure to match the lease requirement exposes the tenant to breach of contract and the broker to E&O claims.
Real-World Example
A restaurant tenant leases a 3,200 sq. ft. space in a strip mall. The lease requires $500,000 in fire damage legal liability coverage. The tenant's CGL policy has the standard $100,000 sublimit. A kitchen grease fire causes $380,000 in damage to the landlord's building. Because the broker failed to increase the sublimit to match the lease, the CGL policy pays only $100,000, leaving the tenant personally liable for the remaining $280,000. The tenant sues the broker for the gap.
Common Mistakes
- 1Leaving the fire damage sublimit at the default $100,000 without checking lease requirements, which commonly require $300,000 to $1,000,000.
- 2Confusing fire damage legal liability with fire legal liability on a property policy — they are different coverages responding to different exposures.
- 3Not verifying the sublimit on renewal when the client has moved to a new, higher-value premises with updated lease requirements.
How brokerageaudit.com Handles This
Policy Checker extracts the fire damage legal liability sublimit from the CGL policy and compares it against lease requirements stored in the account record. It generates an alert when the sublimit is lower than the contractual requirement. COI Manager displays the fire damage sublimit on certificates and flags any discrepancy between the certificate amount and the actual policy sublimit.