|So if you recall, my insured owns a commercial property and a large national retailer wanted to rent some space from him. The potential tenant sent my insured their “standard contract” to sign. After he and his attorney read through the terms of the proposed contract, my insured wanted me to review the insurance section of the lease.|
The insurance section stated, “insurance shall be endorsed to provide that the (lessor’s) insurance shall be primary and not contributory to any similar insurance carried by Tenant and shall contain…a waiver of subrogation clause…”. This statement is an attempt to shift the responsibility for ALL liability claims occurring at the insured’s location, even if the claim was caused by the actions of the tenant, to the landlord.
I told my insured that he should never agree to such a broad condition and that his insurance company would not agree to these conditions either. I began a process of breaking down the wording and spoke with my insured’s attorney advising him as to what terms will be acceptable to the insurance company and suggesting alternative wording in an effort to make the lease work for both parties. After all, these are difficult times and building owners need to fill their buildings with tenants!
After several calls and back and forth discussions we finally arrived at a lease which accomplished what we all wanted. The national retailer had its space, the insured and the insurance company had a set of terms that they could live with and my insured had his anchor tenant.
This story is a reminder that when negotiating a contract and the contract has an insurance provision in it, do not hesitate to have it reviewed by your trusted insurance agent at Mid-State. While there may be some give and take and some nervous moments, it is always wise to address any questionable provisions up front to avoid much bigger problems down the road.