Insurance insights.

After working with MTNA members for nearly three years, we have heard a lot of different scenarios regarding the environment in which a teacher provides instruction. These environments range from a home living room to a church to a school classroom. With so many varying environments, our office has reviewed a lot of situations that may arise within these areas. One recurring item that continues to present itself is the lease agreement--specifically the lease agreement that requires you to provide insurance coverage for compliance.

Before starting a business or providing instruction, music teachers, like any business professionals, have to do a lot of research and homework. And insurance, as it pertains to leases, is one area that needs particular attention. Some lease provisions can lead to insurance exposure if they are not reviewed carefully so the proper coverage is provided. Different lease agreements may require the tenant to purchase insurance that may or may not provide adequate coverage at the time of loss. Your insurance agent should look for a way to insure the part of the building that is in your care, custody and control (for example, through a legal liability coverage form).

Another section of the lease agreement refers to a tenant's improvements and betterments. This portion of the agreement is the most difficult to insure. Ask an insurance agent to review the property coverage to understand exactly what is covered.

According to the American Association of Managing General Agents; "Your use interest as tenant improvements and betterments (emphasis mine) is what becomes important when you consider valuation." If a lease is not specific regarding the improvements and betterments or completed additions, it may be necessary for both the tenant and landlord to provide insurance coverage.

An abatement clause is a section of most lease agreements dealing with damage to the portion of the building that may not be occupied by the tenant. This clause may give the tenant or the landlord the right to terminate a lease if repairs to other parts of the building take longer than a specified timeframe. A tenant then loses the use of the improvements and betterments, although no loss has been incurred by them. A leasehold interest form can protect you from this risk and will pay if one of the four conditions occurs:

* Loss of a favorable lease

* Loss of pre-paid rent

* Loss of bonuses paid to acquire a lease

* Loss of use interest in a tenant's improvement and betterments

It takes numerous items to make a business run, and you may lease personal property such as computers, photo copiers, pianos and other instrumental teaching aides. Three types of property coverage are (a) building, (b) business personal property and (c) personal property of others.

When insuring leased business personal property, be certain the property leases specifically require the lessee to insure the equipment. If the lease does not require insurance, include the equipment in the limit under Personal Property of Others.

The final item to consider is a glass coverage section. Some buildings may have a large plate-glass window that the lessee is required to insure, while the property owner insures the rest of the building.

As always, the Robert H. Clarkson Insurance Agency recommends a legal review of all lease agreements before committing to any legal arrangement. RHC can review a number of possible scenarios that may occur if one is not insured properly. Providing MTNA members with as much information as possible to protect themselves, their businesses, their clients and other business associates is a top priority for RHC.

RHC will review MTNA members' current insurance coverage and provide competitive comparisons. RHC, with more than forty years' experience in the insurance industry, will provide customized quotes based on specific situations. To accommodate busy schedules, online applications and quote requests are available at www.rhcgroup.com by clicking on MTNA (under important links); or e-mailing [e-mail], twenty-four hours a day, seven days a week; or calling [phone].

Tammy Wallace has been with the Robert H, Clarkson Insurance Agency since October 2002 as marketing director and MTNA program coordinator. She has nearly fifteen years' experience in the insurance industry and holds life, health, and property and casualty insurance licenses.