A Tenant’s Insurance Policy Doesn’t Necessarily Protect The Property Owner

Most leases require the tenant to take care of legal responsibility insurance coverage, which covers the chance that somebody will get harm on the property and sues. As a result of that injured individual will most likely sue each the tenant and the property proprietor, leases sometimes require the tenant’s insurance coverage to call the owner as an “extra insured.” That approach, the insurance coverage firm could have an obligation to guard each the tenant and the property proprietor when the litigation begins.

All of that ought to give the property proprietor consolation. However the consolation is just not full, as demonstrated but once more in a recent New York case. There, somebody tripped and fell on the sidewalk. They sued each the tenant and the property proprietor. The property proprietor was named as a further insured on the tenant’s insurance coverage coverage and requested the tenant’s insurance coverage firm to cope with the litigation.

The tenant’s insurance coverage firm denied protection to the property proprietor. The corporate acknowledged {that a} legal responsibility insurance coverage coverage covers an “extra insured” provided that the legal responsibility arises from the negligence of the policyholder, on this case the tenant. If the tenant had been answerable for sustaining the sidewalk and negligently failed to take action, then the insurance coverage firm would have lined each the tenant and the property proprietor.

On this case, nonetheless, the tenant clearly had no duty for the sidewalk, so couldn’t have been negligent in sustaining it. The one potential negligent social gathering was the property proprietor, who was legally answerable for sustaining the sidewalk. Thus, the property proprietor acquired no profit on this specific litigation by being named as a further insured on the tenant’s legal responsibility coverage.

The case teaches many acquainted classes.

First, the world of insurance coverage is stuffed with surprises, typically involving variations between the precise protection supplied and the protection that one may assume is supplied. These variations and the surprises they produce are typically disagreeable.

Second, even when a property proprietor requires a tenant to take care of legal responsibility insurance coverage, that protection most likely received’t shield the proprietor towards legal responsibility for its personal negligence. Thus, if any conceivable foundation exists on which an proprietor may need publicity to legal responsibility based mostly by itself actions or omissions, it ought to take care of its personal insurance coverage.

Third, as a result of the world of insurance coverage is stuffed with surprises, an proprietor most likely ought to take care of its personal backup legal responsibility insurance coverage, even when it thinks no potential foundation exists on which it is likely to be deemed negligent due to its personal actions or omissions.

Fourth, a property proprietor ought to perceive the allocation of dangers and obligations in its leases, and plan its insurance coverage program accordingly. Within the New York case mentioned above, the lease made the tenant answerable for its personal premises, however not for the sidewalk. The proprietor remained answerable for the sidewalk, and that’s the place the accident occurred. In consequence, the property proprietor couldn’t depend on the tenant’s insurance coverage coverage, though the proprietor was a further insured on that coverage.