If you’re a tenant, you might feel that you’ve avoided many loss exposures, such as fire damage to the structure, normally associated with ownership of buildings. But have you read your lease lately? Really read it?
Many leases contain extensive insurance requirements that the tenant must agree to maintain. Although these usually include liability arising from the tenant’s actions and responsibility to cover their property for loss, sometimes overlooked is the extent to which the tenant might have agreed to cover exposures normally assumed to be the responsibility of the building owner.
For example, in retail shopping areas, there’s often an abundance of external glass windows. Although these are clearly the property of the building owner, many leases transfer any responsibility for damage to the windows to the tenant. The idea is that because the tenant most directly controls the potential loss exposures for the glass (such as vandalism, accidental breakage, maintenance inspections, and so forth), the tenant should provide the insurance. Similar reasoning might lead to the tenant being held responsible under the lease for other loss exposures not directly attributable to their own negligence.
If you’re a tenant, now’s the time to pull out that copy of your lease. Review it with your legal counsel to see if there might be language or agreements that need addressing. Then let us review the lease for the insurance implications (and be forewarned — they won’t all be contained in a paragraph titled “insurance”).
Our risk management professionals can help you take ownership of your loss exposures by sitting down with you to review what your lease requires, how well your current program meets these requirements, and the options for making any necessary changes to your protection.