Most commercial leases will require the Tenant to maintain certain insurance coverage with specified minimum limits. At a minimum, the Tenant will typically need to maintain a commercial general liability insurance policy. Depending on the nature of the permitted use, additional insurance requirements may be appropriate. For example, a higher risk activity may warrant excess liability coverage. If the Tenant is performing work, then a builder’s risk insurance policy may be appropriate. If the Tenant is a restaurant, liquor license coverage may be required.
Many Tenants will send the insurance requirements to their insurance agents for review before signing the lease in order to make sure the requirements (and premiums) are acceptable.
There may be other aspects of the insurance provisions that an attorney can explain to the clients. For example, many leases contain a mutual waiver of subrogation. This essentially means that in the event of a loss, each party will look solely to their own insurance policy for coverage and the insurers cannot step into the shoes of the insured to seek damages from the other party.
Most leases will require the Tenant to deliver certificates of insurance naming the Landlord as an additional insured.
*Thank you for taking the time to read this article. This article is part of our “Commercial Leasing for Non-Lawyers,” a Blog Series on Commercial Leasing. Other aspects of commercial leasing transactions in New York are discussed in other Parts of this series.
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