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PRESCRIPTION OF THE MONTH |
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Charles Malmquist, CPCU, ARM, AAI 770.913.1201
Paul Tuggle, CPCU 770.913.1208 |
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John Lowden 770.913.1209 Ron
Cuen Kevin
Chojnacki |
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Like many physician practices that rent their office
space, your lease with a landlord and/or management company legally obligates
you to fulfill some insurance requirements. Whether you have been a long
standing tenant in your existing space, or have recently acquired new space, it is prudent
that you review your lease. A lease outlines the responsibilities of the
landlord versus those of the tenant. There will be an indemnification section,
in which you agree not to hold the landlord responsible for incidents, as well
as a section that addresses insurance requirements for the tenant. These
requirements vary from one lease to another, so it is important that you, your
attorney, and your insurance agent conduct a thorough review of what is
required. A requirement that often comes as a surprise is that a landlord
typically requires a tenant to purchase more than just a standard property
policy. Most landlords opt to transfer the risk for any incident that may
occur on their premises, thus requiring the tenant to carry multiple insurance
policies.
_ What type of insurance
am I being required to carry? Property? General Liability? Worker’s
Compensation? Automobile Liability? Business Interruption? Umbrella Liability? Do
I currently have the necessary policies in place? _ What is the definition
of “Tenant’s Property?” Many leases include this to mean not only your
belongings, but
also any improvements and betterments that either you or the landlord has made
to the space, fixtures within a building, and even certain portions of the
building. _ Does the lease require
you to cover any of the building’s systems, such as the heating and air
conditioning? _ Is the landlord
requesting other coverages outside of the norm, such as flood and earthquake
coverage (even if you aren’t located in a flood or earthquake
zone)? _ What are the maximum
deductibles being allowed on your policies? _Is the landlord and/or
the management company being asked to be listed as an Additional Insured on your
General Liability policy? _ Does the lease require
that the tenant’s policies be primary and non-contributory
coverage? _ Are Waivers of
Subrogation being required on the General Liability or Workers’ Compensation
policies? _ Does the lease require
that the insurance policies be issued by insurance companies licensed to
do business in your state with a specific AM Best
rating? _ Does the
Indemnification/Hold Harmless agreement have wording that is mutually agreeable
for both the landlord and tenant? Is the wording in this section broad by
stating the tenant must indemnify the landlord for
“any” and “all” liability regardless of negligence? It is important to
understand that you may be agreeing to indemnify and hold the landlord harmless
for more than what can be covered under an insurance
policy. A
lease agreement is a legal and binding contract between a landlord and a tenant.
It should not be entered into lightly, and should be reviewed by an attorney in
its entirety prior to the tenant signing the lease. Don’t assume that changes
cannot be made to the agreement. An informed tenant is able to negotiate more affectively with his
landlord. Your insurance agent
can also assist with the review of the insurance requirements, to ensure that
the coverages being required by the landlord are executed in an insurance
policy. It may be
determined that existing policies for a practice may need to be tailored or
amended to incorporate the requirements of a new lease. Your partnership with
Potter-Holden & Company gives you an edge when it comes to reviewing your
lease. Your agent and dedicated team are ready to assist you with any questions
that you may have, and with your review. |
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Insurance Requirements in your Lease |
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900 Ashwood Parkway | Suite 100 | Atlanta, GA 30338 | Main 770.399.6760 | Fax 770.399.6647 | www.potterholden.com |
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February 2009 |
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Sign up to receive the Prescription of the Month email at www.potterholden.com.
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The information contained above is intended to be illustrative and
discusses general insurance issues. It is not designed to give any
specific legal advice pertaining to any specific circumstance. It is not
intended as a policy of insurance, binder, or state of coverage or as an
amendment, modification or waiver of the terms and conditions of any policy of
insurance. In every instance, a policy is the only accepted statement of
coverage, and it is important to read and understand your policy. Contact your
agent if you have questions regarding your coverage. |
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