Tenant’s Legal Liability 101
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Should a tenant or a tenant’s employee damage the premises occupied by the tenant, the tenant could be held responsible for such damages. If the building owner insures the building and the owner’s insurer repairs the damages, the owner’s insurer may subrogate for the damages paid from the tenant. The tenant’s premises liability will not respond because these premises are in his care, custody and control. Such a loss would be covered if the tenant has a tenant’s legal liability coverage.
What Does Tenant’s Legal Liability Insurance Cover?
Tenant’s legal liability may be written on a restricted form which will only cover losses caused by the tenant and caused by the perils of fire, smoke, explosion (limited) and leakage from fire protection equipment. Coverage can be obtained on a broad form (all risk) but subject to a deductible. The latest Insurance Bureau of Canada commercial general liability includes the broad form tenant’s legal liability but may be subject to a low limit.
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This may be another one of the coverages considered to be a “frill” coverage that is not reviewed with the client. Since it may be included with the liability wording or in some other package form, it is often overlooked in the review of insurance requirements with the insured.
Tenants must be told that just because they have liability insurance and may pay as an adjustable operating cost a proportionate share of the landlord’s insurance, that may not be enough to protect the tenant against claims by the landlord’s insurer. If the landlord’s insurer subrogates back to the negligent tenant and the tenant’s legal liability limit is inadequate, the tenant may be held personally responsible for the damages that exceed the limit of his tenant’s legal liability. To establish an adequate limit, the square footage of the area occupied by the tenant, construction cost of the building, etc. must be taken into account.
An ALIGNED Insurance Broker can provide expert guidance about tenant’s legal liability or other coverages in your insurance policy as well as risk management best practices for your organization.
Talk to one of our expert business insurance brokers today about how we can help you secure the best products, services and insurance solutions for your business.
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