(800) 869-8643

admin@hayesbrokers.com

Commercial Lease Agreement: Insurance Requirements Crash Course for Renters

Commercial Lease Agreement: Insurance Requirements Crash Course for Renters

Ah, the thrill of finally finding the perfect office space. The location is right, the monthly rent is right, even the view is exactly what you hoped for. There’s just one thing standing between you and the keys: the commercial lease agreement. Amidst all the legal jargon about parking spaces and maintenance is the section about insurance requirements. Do you have the right kind? Do you have enough? Be sure to find out before you sign on the dotted line…   Are Those Requirements Really Required? Before a lessor or landlord can require you to provide proof of insurance, they must have a legally insurable interest in the items for which they are requesting coverage. Do they require contents coverage (property insurance)? If the landlord is providing or leasing furnishings or equipment to you (other than the building) they can require proof of contents coverage with them listed as the loss payee. Usually this is not the case, so the landlord cannot require this coverage. It is a good idea to have this coverage anyway, so please consult your insurance broker to find out how to include this coverage in your insurance portfolio. Do they require liability insurance? Some landlords may require that you carry “x” amount of liability insurance, and some may require that you name them as an additional insured on the policy. In the event of an injury on the tenant’s premises a plaintiff’s attorney will often sue the tenant, the landlord and anyone else associated with the premises. If the claimant was injured on your premises or due to your negligence, your landlord will want...
Stop! Don’t Sign That Contract Yet!

Stop! Don’t Sign That Contract Yet!

As a benefit to current, new and prospective clients, Hayes Brokers offers risk management services that include contract review of the insurance terms of any contract.  As insurance professionals we feel it is our duty not only to protect your business, but also to save you money. There are many parts to a contract and insurance is just one of them. It is important to review a contract prior to signing for many reasons, most of them fiduciary in nature.  Here are 5 things you should always check before signing. Prevailing Wages Many government entities require that contractors on their projects pay prevailing union wages to all employees of a contractor or subcontractor, even if those employees are not union employees.  Failure to do so can result in larger payouts over time, as well as fines to the contractor for failure to comply. In New Bedford, MA an electrical contractor tried to get around the prevailing wage law by incorrectly classifying his electricians as laborers. After an investigation the contractor was ordered to pay not only the $83,000 in restitution, but also $42,500 in fines and penalties.  That will cut into your profit margin! A California heating & air conditioning company was recently required to pay $99,000 in back wages to plumbers and pipefitters who were incorrectly classified as unskilled laborers on a project in Hawaii.  The Department of Labor got involved in the case because these were federal contracts outfitting Army barracks on the island of Oahu.  Bonds Does your contract require any type of bonding be done?  Some developers may require bid bonds, performance bonds, payment bonds,...

Finally, a Helpful Guide to Additional Insured

With any written contract there are certain obligations that must be met by both parties, including work to be performed, timelines and requirements for a smooth working relationship.  This is true whether it is a contract for work being done or space being occupied. Most contracts today now have certain insurance requirements that must be met.  One of those usually requires the second party of the contract to include the first party as an additional insured. So what is an additional insured, and why does everyone want it?   Additional Insured is NOT a Co-Insured The first additional insured endorsement added to a General Liability policy was the CG 2010 1185 (Additional Insureds – Owners, Lessees or Contractors).  This form was intended only to add an additional insured to the policy for notification purposes in the event of a policy cancellation. However, due to the vague nature of the form, courts began awarding coverage to the additional insured under the named insured’s policy.  This effectively made the additional insured a co-insured or an additional named insured under the policy and covered the additional insured’s operations, as well.  This was not the intention of the endorsement.   Additional Insureds Do NOT Get (Much) Coverage The Insurance Services Office created several endorsements later that were intended to correct this issue.  Subsequent endorsements were designed to offer notification and limited legal representation to additional insureds. One endorsement that replaced the CG 2010 1185 was the CG 2037 0704 (Additional Insured – Owners, Lessees or Contractors – Completed Operations).  This endorsement allows for notification of the additional insured.  It also offers some legal...