Some of the most misunderstood aspects of general liability claim handling can occur in cases that involve a lease between a tenant and a landlord. Most commercial leases have numerous legal agreements that must be studied and understood by both parties to the lease, and by the adjuster whenever a loss occurs. Typically, commercial leases contain a requirement that the tenant hold the landlord harmless and indemnify the landlord for any liability arising out of the premises, which may (in many states) even include the landlord's own negligence. Leases may also require the tenant to name the landlord as an additional insured on the tenant's liability policies, and to have the tenant's property insurer waive subrogation rights against the landlord. Therefore, if a tenant's employee is injured due to a landlord's negligence on the premises, then the tenant may have to pay workers compensation as well as any damages awarded if the employee brings a claim against the landlord, which is tendered back to the tenant employer.
In one North Dakota case, the lease of a ranch between the owner and the tenant included a hold harmless and indemnification agreement. The owner/landlord had a liability policy, but the tenant did not contribute to it in any way, and the tenant had his own liability policy. A fire broke out on the ranch and moved onto neighboring land, destroying acreage of the neighbors. They brought a lawsuit against the tenant and his farmhand, and against the owner of the ranch, the landlord. The landlord's insurer asked the tenant's insurer to defend the landlord, but the insurer denied the request. The insurer settled on behalf of the landlord, then filed a cross-claim against the tenant and his insurer for indemnification. That insurer argued that the tenant was co-insured under the land- lord's policy, but the court disagreed, finding nothing in the lease or the law that would cause a landlord's insurer to provide coverage for a tenant's negligence. North Dakota's Supreme Court, on appeal by the tenant's insurer, affirmed the trial court's ruling.
Knowing how leases and contracts work is part of the adjuster's profession, and is one of the subjects taught by Crawford Educational Services. For complete course listings, please visit our website. |
